materialmen's liens filed of record subsequent to the recording of such security instrument or instruments regardless of whether such liens attached prior to such recording date, and prior to all liens and encumbrances which may have attached or defects which may have arisen subsequent to the recording of such security instrument or instruments, except such liens or other matters as may be approved by the Commissioner, that the amount stated in the instrument of assignment is actually due and owing under the security instrument or instruments, that there are no offsets or counter claims thereto, and that the lender has a good right to assign such note and security instrument or instruments;

(d) All hazard insurance policies held on property serving as security for the loan, together with a copy of the lender's notification to the carrier authorizing the amendment of the loss payable clause substituting the Commissioner as the holder of the security instrument;

(e) The assignment to the Commissioner of all rights and interests arising under the note and security instrument or instruments so in default, and all claims of the lender against the borrower or others arising out of the loan transaction;

(f) All policies of title or other insurance or surety bonds, or other guarantees and any and all claims thereunder; including evidence satisfactory to the Commissioner that the original title coverage has been extended to include the assignment of the note and security instrument or instruments to the Commissioner.

(g) Any property held by the lender or its agents or to which it is entitled and, if payment is requested in debentures, any cash held by the lender or its agents or to which it is entitled, including deposits made for the account of the borrower, and which have not been applied in reduction of the principal of the mortgage indebtedness;

(h) All records, ledger cards, documents, books, papers and accounts relating to the loan transaction;

(i) Any additional information or data which the Commissioner may require.

$220.822 Claim computation; items included.

(a) Assignment of loan. Upon an acceptable assignment of the note and security instrument, the Commissioner shall pay the claim of the lender in an amount equal to the unpaid principal balance of the loan plus:

(1) Any accrued interest due as of the date of execution of the assignment of the loan to the Commissioner.

(2) Any advances approved by the Commissioner made previously by the lender under the provisions of the note of security instrument or instruments.

(3) Reimbursement for such reasonable collection costs, court costs, and attorney's fees as may be approved by the Commissioner.

(4) Reimbursement for premiums paid on any hazard insurance policies held on the property.

(5) If payment is made in cash, an amount equivalent to the debenture interest which would have been earned as of the date insurance settlement occurs, except that when the lender fails to meet any one of the applicable requirements of §§ 220.812, 220.820, and 220.821 within the specified time (or within such further time as the Commissioner may approve in writing), the debenture interest shall be computed only to the date to which the particular action should have been taken or to which it was extended.

(b) Method of payment. Payment of claim shall be made in the following

manner:

(1) Payment in cash. Unless a written request for payment in debentures is filed with the application, payment shall be made in cash.

(2) Optional payment in debentures. Payment shall be made in debentures upon filing a written request with the application.

$220.823 Claim computation; items deducted.

If the lender is to receive payment in cash, there shall be deducted from the total of the added items in §220.822 the following:

(a) Any balance of the loan not advanced to the borrower;

(b) Any cash held by the lender or its agents or to which it is entitled; including deposits made for the account

of the borrower and which have not been applied in reduction of the principal obligation under the note and security instrument or instruments.

§ 220.830 Debenture interest rate.

Debentures shall bear interest from the date of issue, payable semiannually on the first day of January and the first day of July of each year at the rate in effect as of the date the commitment was issued or as of the date the loan was endorsed for insurance, whichever rate is higher. The applicable rates of interest will be published twice each year as a notice in the FEDERAL REGISTER.

[47 FR 26125, June 17, 1982]

§ 220.832 Maturity of debentures.

Debentures shall mature 10 years from the date of issue.

§ 220.834 Registration of debentures. Debentures shall be registered as to principal and interest.

§ 220.836 Form and amounts of debentures.

Debentures issued under subpart D of this part shall be in such form and amounts; and shall be subject to such terms and conditions; and shall include such provisions for redemption, if any, as may be prescribed by the Secretary, with the approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other form as the Secretary by regulation may prescribe.

[59 FR 49816, Sept. 30, 1994]

§ 220.838 Redemption of debentures.

Debentures shall, at the option of the Commissioner and with the approval of the Secretary of the Treasury, be redeemable at par plus accrued interest on any semiannual interest payment date on three months' notice of redemption given in such manner as the Commissioner shall prescribe. The debenture interest on the debentures called for redemption shall cease on the semiannual interest date designated in the call notice. The Commissioner may include with the notice of redemption an offer to purchase the debentures at par plus accrued interest

at any time during the period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the named redemption date, the debenture interest shall cease on the date of purchase.

§ 220.840 Issue date of debentures.

The debentures shall be issued as of the date of the execution of the assignment of the loan to the Commissioner. § 220.842 Cash adjustment.

Any difference of less than $50 between the amount of debentures to be issued to the lender and the total amount of the lender's claim, as approved by the Commissioner, may be adjusted by the issuance of a check in payment thereof.

[59 FR 49816, Sept. 30, 1994]

§ 220.850 Assignment of insured loans. (a) An insured loan may not be transferred or pledged prior to the full disbursement of the loan, except with the prior written approval of the Commissioner which approval may be subject to such conditions and qualifications as the Commissioner may prescribe. Subsequent to full disbursement such loan may be transferred only to a transferee who is a lender approved by the Commissioner. Upon such transfer and the assumption by the transferee of all obligations under the contract of insurance the transferor shall be released from its obligations under the contract of insurance.

(b) The contract of insurance shall terminate with respect to loans described in paragraph (a) of this section upon the happening of either of the following events:

(1) The transfer or pledge of the insured loan to any person, firm, or corporation, public or private, other than an approved lender.

(2) The disposal by a lender of any partial interest in the insured loan by means of a declaration of trust or by a participation or trust certificate or by any other device, unless with the prior written approval of the Commissioner, which approval may be subject to such conditions and qualifications as the Commissioner in his discretion may

prescribe: Provided, That this paragraph shall not be applicable to any loan so long as it is held in a common trust fund maintained by a bank or trust company exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank or trust company in its capacity as a trustee, executor or administrator; and in conformity with the rules and regulations prevailing from time to time of the Board of Governors of the Federal Reserve System, pertaining to the collective investment of trust funds: Provided further, That this paragraph shall not be applicable to any loan so long as it is held in a common trust estate administered by a bank or trust company which is subject to the inspection and supervision of a governmental agency, exclusively for the benefit of other banking institutions which are subject to the inspection and supervision of a governmental agency, and which are authorized by law to acquire beneficial intersts in such common trust estate, nor to any loan transferred to such a bank or trust company as trustee exclusively for the benefit of outstanding owners of undivided interest in the trust estate, under the terms of certificates issued and sold more than three years prior to said transfer, by a corporation which is subject to the inspection and supervision of a governmental agency.

Subpart E-Servicing
Responsibilities-Homes

$220.900 Cross-reference.

All of the provisions of subpart C, part 203 of the chapter concerning the responsibilities of servicers of mortgages insured under section 203 of the National Housing Act apply to mortgages covering 1- to 11-family dwellings insured under section 220 of the National Housing Act, except §§ 203.664 through 203.666.

[52 FR 48203, Dec. 21, 1987, and 53 FR 9869, Mar. 28, 1988]

ELIGIBLE MORTGAGEES

221.528 Qualification of lenders.

SUPERVISION OF MORTGAGORS

221.529 Form of regulation by Commissioner.

221.530 Supervision applicable to all mort

gagors.

221.531 Supervision applicable to general mortgagors.

221.532 Supervision applicable to limited distribution mortgagors and mortgagors with projects assisted through the LowIncome Housing Tax Credit program or receiving other government assistance. 221.533 Supervision applicable to cooperative and investor sponsor mortgagors. 221.534 Supervision applicable to cooperative mortgagors.

221.535 Supervision applicable to investorsponsor mortgagors.

221.535a Supervision applicable to builderseller mortgagors.

OCCUPANCY REQUIREMENTS

221.536 Occupancy requirements applicable to all mortgagors.

221.536a Lease and occupancy agreements. 221.537 Additional occupancy requirements; preferred purchasers or tenants.

221.538 Applicability of prevailing wage re

quirements.

221.539 Discrimination prohibited.

INSURANCE OF ADVANCES

221.540 Financial requirements. 221.541

Building loan agreement.

221.541a Insured advances for building com

ponents stored off-site.

221.542 Assurance of completion.

APPLICATION OF NET INCOME

221.542a Accounting for net income. 221.543 Advance amortization.

PROPERTY REQUIREMENTS

221.544 Eligibility of property. 221.545 Development of property. 221.545a Smoke detectors.

221.546 Commercial and community facilities.

221.546a Neighborhood characteristics. 221.546b Projects designed for elderly.

COST CERTIFICATION REQUIREMENTS 221.547 Certification of cost requirements. 221.548 Form of contract.

221.548a Disposition of general contractor's

holdback.

221.549 Certificate as to subcontracts.

221.550 Certificate of actual cost-contents in general.

221.550a Certificate of actual cost-builder's and sponsor's profit and risk allowance. 221.551 Contractor's certification.

Subpart A-Eligibility Requirements-Low Cost Homes

INSURANCE UNDER 221(d)(2)

$221.1 Cross-reference.

(a) All of the provisions of subpart A, part 203 of this chapter concerning eligibility requirements of mortgages covering one- to four-family dwellings under section 203 of the National Housing Act apply to mortgages on dwellings insured under section 221 of the National Housing Act except the following provisions:

Sec.

203.17 Mortgage provisions.

203.18 Maximum mortgage amount.
203.18a Solar energy systems.
203.18b Increased mortgage amount.
203.19 Mortgagor's minimum investment.
203.28 Economic soundness of project.

203.42 Rental properties.

203.43h Eligibility of mortgages on Indian land insured pursuant to section 248 of the National Housing Act.

203.431 Eligibility of mortgages on Hawaiian home lands insured pursuant to section 247 of the National Housing Act.

203.431 Eligibility of mortgages on Allegany Reservation of Seneca Nation of Indians. 203.45 Eligibility of graduated payment mortgages.

203.46 Eligibility of modified graduated payment mortgages.

203.49 Eligibility of adjustable rate mortgages.

203.50 Eligibility of rehabilitation loans. 203.51 Applicability.

(b) For the purposes of this subpart all references in part 203 of this chapter to section 203 of the Act shall be construed to refer to section 221 of the Act.

[36 FR 24587, Dec. 22, 1971, as amended at 41 FR 42949, Sept. 29, 1976; 44 FR 46836, Aug. 9, 1979; 45 FR 76389, Nov. 18, 1980; 47 FR 16779, Apr. 20, 1982; 49 FR 23585, June 6, 1984; 50 FR 4647, Feb. 1, 1985; 51 FR 21874, June 16, 1986; 52 FR 8069, Mar. 16, 1987; 52 FR 28470, July 30, 1987; 52 FR 48204, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 55 FR 34809, Aug. 24, 1990]

§ 221.3 Definition of displaced family.

As used in this subpart, the term displaced family shall mean a family displaced from an urban renewal area, or as a result of governmental action, or as a result of a disaster determined by the President to be a major disaster.