Laws & Regs

Office of Assistant Secretary for Housing, HUD
mortgagees shall conduct audits in accordance with HUD audit requirements
at part 44 of this title.

Subpart C—Title I and Title II
Specific Requirements
§ 202.11

Title I.

(a) Administrative actions—(1) Types of
action. In addition to termination of
the Contract of Insurance, certain
sanctions may be imposed under the
Title I program. The administrative
actions that may be applied are set
forth in 24 CFR 25.5. Civil money penalties may be imposed against Title I
lenders and mortgagees pursuant to
§ 25.12 and part 30 of this title.
(2) Grounds for action. Administrative
actions shall be based upon both the
grounds set forth in § 25.9 and as follows:
(i) Failure to properly supervise and
monitor dealers under the provisions of
part 201 of this title;
(ii) Exhaustion of the general insurance reserve established under part 201
of this title;
(iii) Maintenance of a Title I claims/
loan ratio representing an unacceptable risk to the Department; or
(iv) Transfer of a Title I loan to a
party that does not have a valid Title
I Contract of Insurance.
(b) [Reserved]
§ 202.12

Title II.

(a) Tiered pricing—(1) General requirements—(i) Prohibition against excess variation. The customary lending practices
of a mortgagee for its single family insured mortgages shall not provide for a
variation in mortgage charge rates
that exceeds two percentage points. A
variation is determined as provided in
paragraph (a)(6) of this section.
(ii) Customary lending practices. The
customary lending practices of a mortgagee include all single family insured
mortgages originated by the mortgagee, including those funded by the
mortgagee or purchased from the originator if requirements of the mortgagee
have the effect of leading to violation
of this section by the originator. The
responsibility of sponsors of loan correspondent mortgagees is also governed
by § 202.8(b)(7).

§ 202.12

(iii) Basis for permissible variations.
Any variations in the mortgage charge
rate up to two percentage points under
the mortgagee’s customary lending
practices must be based on actual variations in fees or cost to the mortgagee
to make the mortgage loan, which
shall be determined after accounting
for the value of servicing rights generated by making the loan and other
income to the mortgagee related to the
loan. Fees or costs must be fully documented for each specific loan.
(2) Area. For purposes of this section,
an area is:
(i) An area used by HUD for purposes
of § 203.18(a) of this chapter to determine the median 1-family house price
for an area; or
(ii) The area served by a HUD field
office but excluding any area included
in paragraph (a)(2)(i) of this section.
(3)
Mortgage
charges.
Mortgage
charges include any charges under the
mortgagee’s control and not collected
for the benefit of third parties. Examples are interest, discount points and
origination fees.
(4) Interest rate. Whenever a mortgagee offers a particular interest rate
for a mortgage type in an area, it may
not restrict the availability of the rate
in the area on the basis of the principal
amount of the mortgage. A mortgagee
may not direct mortgage applicants to
any specific interest rate category on
the basis of mortgage size.
(5) Mortgage charge rate. The mortgage charge rate is defined as the
amount of mortgage charges for a
mortgage expressed as a percentage of
the initial principal amount of the
mortgage.
(6) Determining excess variations. Variation in mortgage charge rates for a
mortgage type is determined by comparing all mortgage charge rates offered by the mortgagee within an area
for the mortgage type for a designated
day or other time period, including
mortgage charge rates for all actual
mortgage applications.
(7) Mortgage type. A mortgage type
for purposes of paragraph (a)(6) of this
section will include those mortgages
that are closely parallel in important
characteristics affecting pricing and

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Pt. 203

24 CFR Ch. II (4–1–06 Edition)

charges, such as level of risk or processing expenses. The Secretary may develop standards and definitions regarding mortgage types.
(8) Recordkeeping. Mortgagees are required to maintain records on pricing
information, satisfactory to the Secretary, that would allow for reasonable
inspection by HUD for a period of at
least 2 years. Additionally, many mortgagees are required to maintain racial,
ethnic, and gender data under the regulations implementing the Home Mortgage Disclosure Act (12 U.S.C. 2801–
2810).
(b) Servicing. Any mortgagee that
services mortgages must be approved
by the Secretary under § 202.6, § 202.7 or
§ 202.10, or be specifically approved for
servicing under § 202.9(a).
(c) Report and corrective plan requirements. If a mortgagee approved for participation in Title II programs is notified by the Secretary that it had a rate
of defaults and claims on HUD-insured
mortgages during the preceding year,
or during recent years, which was higher than the normal rate, it shall submit a report, within 60 days, containing an explanation for the abovenormal rate of defaults and claims,
and, if required by the Secretary, a
plan for corrective action with regard
to mortgages in default and its mortgage processing system in general.

203.14 Builders’ warranty.
203.15 Certification of appraisal amount.
203.16 Certificate and contract regarding
use of dwelling for transient or hotel purposes.
203.16a Mortgagor and mortgagee requirement for maintaining flood insurance
coverage.
ELIGIBLE MORTGAGES
203.17 Mortgage provisions.
203.18 Maximum mortgage amounts.
203.18a Solar energy system.
203.18b Increased mortgage amount.
203.18c One-time or up-front mortgage insurance premium excluded from limitations on maximum mortgage amounts.
203.18d Minimum principal loan amount.
203.19 Mortgagor’s minimum investment.
203.20 Agreed interest rate.
203.21 Amortization provisions.
203.22 Payment of insurance premiums or
charges; prepayment privilege.
203.23 Mortgagor’s payments to include
other charges.
203.24 Application of payments.
203.25 Late charge.
203.26 Mortgagor’s payments when mortgage is executed.
203.27 Charges, fees or discounts.
203.28 Economic soundness of projects.
203.29 Eligible mortgages in Alaska, Guam,
Hawaii, or the Virgin Islands.
203.30 Certificate of nondiscrimination by
mortgagor.
203.31 Mortgagor of a principal residence in
military service cases.
ELIGIBLE MORTGAGORS
203.32 Mortgage lien.
203.33 Relationship of income to mortgage
payments.
203.34 Credit standing.
203.35 Disclosure and verification of Social
Security and Employer Identification
Numbers.
203.36 [Reserved]

PART 203—SINGLE FAMILY
MORTGAGE INSURANCE
Subpart A—Eligibility Requirements and
Underwriting Procedures
DIRECT ENDORSEMENT, LENDER INSURANCE,
AND COMMITMENTS

ELIGIBLE PROPERTIES

Sec.
203.1 Underwriting procedures.
203.3 Approval of mortgagees for Direct Endorsement.
203.4 Approval of mortgagees for Lender Insurance.
203.5 Direct Endorsement process.
203.6 Lender Insurance process.
203.7 Commitment process.
MISCELLANEOUS REGULATIONS
203.9 Disclosure regarding interest due upon
mortgage prepayment.
203.10 Informed consumer choice for prospective FHA mortgagors.
203.12 Mortgage insurance on proposed or
new construction.

203.37 Nature of title to realty.
203.37a Sale of property.
203.38 Location of dwelling.
203.39 Standards for buildings.
203.40 Location of property.
203.41 Free assumability; exceptions.
203.42 Rental properties.
203.43 Eligibility of miscellaneous type
mortgages.
203.43a Eligibility of mortgages covering
housing in certain neighborhoods.
203.43b [Reserved]
203.43c Eligibility of mortgages involving a
dwelling unit in a cooperative housing
development.
203.43d Eligibility of mortgages in certain
communities.

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