action agree to the purchase or sale of securities, regardless of the date on which the securities are to be delivered or the right to deliver them may be exercised.

§ 390.51 Suitability of issuer marketing and trading transactions.

Issuers shall enter into agreements to purchase or sell securities only to the extent the transactions are suitable for the issuer in view of its financial capacity and existing contractual obligations, including contracts with the Association. An issuer shall not enter into any agreement to purchase or sell securities if the result of the transaction could materially jeopardize the issuer's ability to continue to satisfy the basic net worth requirements set forth in § 390.3 or its ability to continue to administer its outstanding securities.

§ 390.52 Contract (mark to market) requirements.

(a) An issuer may engage in a regulated transaction only if it undertakes the transaction in accordance with an executed

delayed delivery contract which requires, at a minimum, each of the following (except paragraph (a)(4) of this section which the parties at their option may agree to require):

(1) Both parties shall agree to mark to market at least once each week from the trade date until the settlement date.

(2) A party which deposits collateral pursuant to its obligation to mark to market shall make the deposit with an independent Federally regulated financial institution in the form of: (i) Cash,

(ii) Unmatured, negotiable debt obligations issued or guaranteed by the United States Government or agency or instrumentality thereof, or

an

(iii) Irrevocable, unconditional letters of credit in a form acceptable to GNMA, and issued by a banking institution supervised by the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Federal Reserve Board. The institution at which the collateral is deposited shall be unrelated to, not affiliated with, and in no way controlled by a party to the regulated transaction.

(3) The collateral maintained with the independent financial institution shall be increased or adjusted at least weekly to the extent necessary to assure a deposit, by the party which has a net unrealized loss with respect to all its regulated transactions with the same contra-party, with a value equal to one hundred percent of the net unrealized loss.

(4) The amount of collateral required by paragraph (a)(3) of this section may be adjusted downward to the extent the unrealized loss associated with an issuer's purchase of securities in a regulated transaction is offset by an unrealized gain with respect to a sale (to the same contra-party and on substantially the same terms) of securities, which sale is not a regulated transaction because of the exclusion provided in § 390.50(c)(1).

(5) Both parties shall agree to the method by which the market price of securities will be determined.

(6) Each party shall maintain complete and accurate records of each regulated transaction, including its mark to market calculations and its deposits and adjustments of collateral made with respect to each delayed delivery contract under which it is obligated to make deposits.

(7) The same institution may be the depository for collateral deposited by a party under different delayed delivery contracts. The collateral deposited by a party under one delayed delivery contract may be commingled with collateral deposited by that party under other delayed delivery contracts with the same contra-party.

(b) An issuer may satisfy paragraph (a) of this section by carrying out a regulated transaction through clearing and settlement procedures established by a central clearing facility, which procedures substantially conform with the requirements of this section, as determined by the Association.

§ 390.53 Prudent business practices.

Issuers shall exercise sound and prudent business practices in the marketing and trading of securities, as follows:

(a) Procedures must be established to provide the basis for determining

Subpart A-Procedures for Request

ing Increases in Maximum Permissible Rents for Certain Subsidized Projects

§ 401.1 Applicability of procedures.

The procedures set forth in this subpart shall be applicable to all requests for increases in maximum permissible rents due to increases in operating costs or debt service by the mortgagors of multifamily projects (except for cooperative housing mortgagor corporations or associations) subsidized by: (a) Below-market interest rates pursuant to section 221(d) (3) and (5) of the National Housing Act; (b) interest reduction payments pursuant to section 236 of the National Housing Act; (c) rent supplement payments under section 101 of the Housing and Urban Development Act of 1965; (d) direct loans at below-market interest rates pursuant to section 202 of the Housing Act of 1959; or (e) direct loans at below

At least thirty (30) days before filing an application with HUD for an increase in the maximum permissible rents, the mortgagor shall notify the tenants of the proposed rent increase. Copies of such notice shall be: (a) Delivered directly or by mail to each tenant; or (b) posted in at least 3 conspicuous places within each structure or building in which the affected dwelling units are located as well as in a conspicuous place at the address where the materials in support of the proposed rent increase are to be made available to tenants pursuant to the provisions of the notice format in this section. The notice shall contain the following information in the following format or equivalent thereto:

NOTICE TO TENANTS OF INTENTION TO FILE AN APPLICATION TO HUD FOR AN INCREASE IN THE MAXIMUM PERMISSIBLE RENTS

Date of Notice

Take notice that on [date] we plan to file an application for approval of an increase in the maximum permissible rents for [name of apartment complex] with the United States Department of Housing and Urban Development (HUD). The proposed increase is needed for the following reasons:

1.

2.

3.

The rent increases for which we have applied are: