24 CFR Part 207

jstallworth on DSK7TPTVN1PROD with CFR

§ 206.308

24 CFR Ch. II (4–1–16 Edition)

(c) Automatic removal from HECM
Counselor Roster for failure to maintain
required State or local licensure. A HECM
counselor who is required to maintain
a State or local registration, license, or
certification and whose registration or
certification is revoked, suspended, or
surrendered will be automatically suspended from the Roster until HUD receives evidence demonstrating that the
local- or State-imposed sanction has
been lifted.
(d) Removal procedure. Except as provided in paragraph (c) of this section,
the following procedures apply to removal of a HECM counselor from the
Roster.
(1) HUD will give the HECM counselor written notice of the proposed removal. The notice will state the reasons for and the duration of the proposed removal.
(2) The HECM counselor will have 30
days from the date of receipt of the notice (or such time as described in the
notice, but in no event less than a period of 30 days) to submit a written appeal of the proposed removal, along
with a written request for a conference.
(3) A HUD official will review the appeal and render a response affirming,
modifying, or canceling the removal.
The HUD official will not be a person
who was involved in HUD’s initial removal decision. HUD will respond with
a decision within 30 days after the date
of receiving the appeal or, if the counselor has requested a conference, within 30 days after the conference was
held. HUD may extend the 30-day period by providing written notice to the
counselor.
(4) If the counselor does not submit a
timely written response, the removal
will be effective 31 days after the date
of HUD’s initial removal notice (or
after the period provided in the notice,
if longer than 30 days). If a written response is submitted, and the removal
decision is affirmed or modified, the removal will be effective on the date of
HUD’s notice affirming or modifying
the initial removal decision.
(e) Maximum time period of removal.
The maximum time period for removal
from the Roster is 12 months from the
effective date of removal for all removed counselors. A counselor who has

been removed must apply for reinstatement on the Roster.
(f) Placement on the Roster after removal. A counselor who has been removed from the Roster must apply for
reinstatement on the Roster (in accordance with § 206.304) after the period
of the counselor’s removal from the
Roster has expired. HUD may require
the counselor to retake and pass the
HECM exam for reinstatement when
the reason for removal from the Roster
was particularly egregious. Typically,
the counselor will not be required to
take and pass the HECM exam; however, HUD must be ensured by the
counselor that the HECM counseling
requirements are understood and will
be followed. An application from a
counselor for reinstatement on the
Roster will be rejected if the period of
the counselor’s removal from the Roster has not expired.
(g) Voluntary removal. A HECM counselor will be removed from the Roster
upon HUD’s receipt of a written request from the counselor.
(h) Other action. Nothing in this section prohibits HUD from taking such
other action against a counselor or
from seeking any other remedy against
a counselor available to HUD by statute or other authority.
§ 206.308 Continuing
education
requirements of counselors listed on
the HECM Counselor Roster.
A counselor listed on the Roster
must receive, on a continuing basis,
training, education, and technical assistance related to HECMs. The counselor must maintain evidence of the
successful completion of such continuing education, and such evidence
must be made available to HUD upon
request. HUD will consider a HECM
counselor’s successful completion of a
HECM course no less than once every 2
years as satisfying the requirements of
this section.

PART 207—MULTIFAMILY HOUSING
MORTGAGE INSURANCE
Subpart A—Eligibility Requirements
Sec.
207.1

Eligibility requirements.

282

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00292

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

Office of Assistant Secretary for Housing, HUD
Subpart B—Contract Rights and
Obligations
207.251

Subpart B—Contract Rights and
Obligations

Definitions.
PREMIUMS

207.252 First, second and third premiums.
207.252a Premiums—operating loss loans.
207.252b Premiums—mortgages insured pursuant to section 223(f) of the Act.
207.252c Premiums—mortgages insured pursuant to Section 238(c) of the Act.
207.252d Mortgagee’s late charge.
207.252e Method of payment of mortgage insurance premiums.
207.253 Termination by prepayment and voluntary termination.
207.253a Termination of insurance contract
207.254 Changes in premiums; manner of
publication.
RIGHTS AND DUTIES OF MORTGAGEE UNDER
THE CONTRACT OF INSURANCE
207.255 Defaults for purposes of insurance
claim.
207.256 Notice to the Commissioner of default.
207.256a Reinstatement of defaulted mortgage.
207.256b Modification of mortgage terms.
207.257 Commissioner’s right to require acceleration.
207.258 Insurance claim requirements.
207.258a Title requirements.
207.258b Partial payment of claim.
207.259 Insurance benefits.
207.259a Waiver of title objection; mortgages formerly Commissioner-held.
207.260 Maintenance and inspection of property.
207.261 Capturing excess bond proceeds.
RIGHTS IN HOUSING FUND
207.263

Responsibility for servicing.

207.499

Effect of amendments.

AMENDMENTS

AUTHORITY: 12 U.S.C. 1701z–11(e), 1709(c)(1),
1713, 1715(b), and 1735d; 42 U.S.C. 3535(d).
SOURCE: 36 FR 24537, Dec. 22, 1971, unless
otherwise noted.

§ 207.251 Definitions.
As used in this subpart:
(a) The term Commissioner means the
Federal Housing Commissioner.
(b) The term act means the National
Housing Act, as amended.
(c) The term mortgage means such a
first lien upon real estate and other
property as is commonly given to secure advances on, or the unpaid purchase price of, real estate under the
laws of the State, district or territory
in which the real estate is located, together with the credit instrument or
instruments, if any, secured thereby.
In any instance where an operating
loss loan is involved, the term shall include both the original mortgage and
the instrument securing the operating
loss loan.
(d) The term insured mortgage means
a mortgage which has been insured by
the endorsement of the credit instrument by the Commissioner, or his duly
authorized representative.
(e) The term contract of insurance
means the agreement evidenced by
such endorsement and includes the
terms, conditions and provisions of this
part and of the National Housing Act.
(f) The term mortgagor means the
original borrower under a mortgage
and its successors and such of its assigns as are approved by the Commissioner.
(g) The term mortgagee means the
original lender under a mortgage its
successors and such of its assigns as
are approved by the Commissioner, and
includes the holders of the credit instruments issued under a trust indenture, mortgage or deed of trust pursuant to which such holders act by and
through a trustee therein named.
PREMIUMS

Subpart A—Eligibility
Requirements

jstallworth on DSK7TPTVN1PROD with CFR

§ 207.252

§ 207.1 Eligibility requirements.
The eligibility requirements set forth
in 24 CFR part 200, subpart A, apply to
multifamily project mortgages insured
under section 207 of the National Housing Act (12 U.S.C. 1713), as amended.
[61 FR 14405, Apr. 1, 1996]

§ 207.252 First, second and third premiums.
The mortgagee, upon the initial endorsement of the mortgage for insurance, shall pay to the Commissioner a
first mortgage insurance premium
equal to not less than one-fourth of one
percent nor more than one percent as
the Secretary shall determine of the

283

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00293

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

§ 207.252

24 CFR Ch. II (4–1–16 Edition)

original face amount of the mortgage.
The specific premium to be charged
will be set forth in FEDERAL REGISTER
notice.
(a) If the date of the first principal
payment is more than one year following the date of such initial insurance endorsement, the mortgagee,
upon the anniversary of such insurance
date, shall pay a second premium equal
to not less than one-fourth of one percent nor more than one percent as the
Secretary shall determine of the original face amount of the mortgage. On
the date of the first principal payment,
the mortgagee shall pay a third premium equal to not less than one-fourth
of one percent nor more than one percent of the average outstanding principal obligation of the mortgage for
the following year which shall be adjusted so as to accord with such date
and so that the aggregate of the said
three premiums shall equal the sum of:
(1) One percent of the average outstanding principal obligation of the
mortgage for the year following the
date of initial insurance endorsement;
and
(2) Not less than one-fourth of one
percent nor more than one percent per
annum as the Secretary shall determine of the average outstanding principal obligation of the mortgage for
the period from the first anniversary of
the date of initial insurance endorsement to one year following the date of
the first principal payment.
(b) If the date of the first principal
payment is one year, or less than one
year following the date of such initial
insurance endorsement, the mortgagee,
upon such first principal payment date,
shall pay a second premium equal to
not less than one-fourth of one percent
nor more than one percent as the Secretary shall determine of the average
outstanding principal obligation of the
mortgage for the following year which
shall be adjusted so as to accord with
such date and so that the aggregate of
the said two premiums shall equal the
sum of:
(1) One percent per annum of the average outstanding principal obligation
of the mortgage for the period from the
date of initial insurance endorsement
to the date of first principal payment;
and

(2) Not less than one-fourth of one
percent nor more than one percent as
the Secretary shall determine of the
average outstanding principal obligation of the mortgage for the year following the date of the first principal
payment.
(c) Where the credit instrument is
initially and finally endorsed for insurance pursuant to a Commitment to Insure Upon Completion, the mortgagee
on the date of the first principal payment shall pay a second premium equal
to not less than one-fourth of one percent nor more than one percent as the
Secretary shall determine of the average outstanding principal obligation of
the mortgage for the year following
such first principal payment date
which shall be adjusted so as to accord
with such date and so that the aggregate of the said two premiums shall
equal the sum of not less than onefourth of one percent nor more than
one percent per annum as the Secretary shall determine of the average
outstanding principal obligation of the
mortgage for the period from the date
of the insurance endorsement to one
year following the date of the first
principal payment.
(d) Until the mortgage is paid in full,
or until receipt by the Commissioner of
an application for insurance benefits,
or until the contract of insurance is
otherwise terminated with the consent
of the Commissioner, the mortgagee,
on each anniversary of the date of the
first principal payment, shall pay an
annual mortgage insurance premium
equal to not less than one-fourth of one
percent nor more than one percent as
the Secretary shall determine of the
average outstanding principal obligation of the mortgage for the year following the date on which such premium becomes payable.
(e) The premiums payable on and
after the date of the first principal payment shall be calculated in accordance
with the amortization provisions without taking into account delinquent
payments or prepayments.
(f) Premiums shall be payable in cash
or in debentures at par plus accrued interest. All premiums are payable in advance and no refund can he made of
any portion thereof except as hereinafter provided in this subpart.

284

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00294

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

Office of Assistant Secretary for Housing, HUD
(g) Any change in mortgage insurance premiums pursuant to this section will apply to new commitments
issued or reissued on or after August 1,
2001 and any notice setting mortgage
insurance premiums issued pursuant to
this section.
[66 FR 35072, July 2, 2001]

§ 207.252a Premiums—operating
loans.

loss

(a) The mortgagee, upon the insurance endorsement of the increase loan
credit instrument covering the operating loss loan, shall pay to the Commissioner a first mortgage insurance
premium of not less than one-fourth of
one percent nor more than one percent
as the Secretary shall determine of the
original amount of the loan.
(b) The provisions of paragraphs (d),
(e), (f) and (g) of Sec. 207.252 shall apply
to operating loss loans.
[66 FR 35073, July 2, 2001]

jstallworth on DSK7TPTVN1PROD with CFR

§ 207.252b Premiums—mortgages
insured pursuant to section 223(f) of
the Act.
(a) The mortgagee, upon the initialfinal endorsement of the mortgage for
insurance pursuant to a Commitment
to Insure Upon Completion issued in
accordance with § 207.32a, shall pay to
the Commissioner a first mortgage insurance premium equal to one percent
of the original face amount of the
mortgage.
(b) The mortgagee, on the date of the
first principal payment, shall pay a
second premium equal to one percent
of the average outstanding principal
obligation of the mortgage for the year
following such first principal payment
date which shall be adjusted as of that
date so that the aggregate of the first
and second premiums shall equal the
sum of one percent per annum of the
average outstanding principal obligation of the mortgage for the period
from the date of the insurance endorsement to one year following the date of
the first principal payment.
(c) The provisions of paragraphs (d),
(e) and (f) of § 207.252 shall apply to
mortgages insured pursuant to section
223(f) of the Act.
[40 FR 10177, Mar. 5, 1975]

§ 207.253

§ 207.252c Premiums—mortgages
insured pursuant to section 238(c) of
the Act.
All of the provisions of §§ 207.252 and
207.252a governing mortgage insurance
premiums shall apply to mortgages insured under this subpart pursuant to
section 238(c) of the Act except that all
mortgage insurance premiums due on
such mortgages in accordance with
§§ 207.252 and 207.252a shall be calculated on the basis of one percent.
[42 FR 59674, Nov. 18, 1977]

§ 207.252d Mortgagee’s late charge.
Mortgage insurance premiums which
are paid to the Commissioner more
than 15 days after the billing date or
due date, whichever is later, shall include a late charge of 4 percent of the
amount of the payment due, except
that no late charge shall be required
with respect to any case for which HUD
fails to render a proper billing to the
mortgagee.
[43 FR 60154, Dec. 26, 1978, as amended at 44
FR 23067, Apr. 18, 1979]

§ 207.252e Method of payment of mortgage insurance premiums.
In the cases that the Commissioner
deems appropriate, the Commissioner
may require, by means of instructions
communicated to all affected mortgagees, that mortgage insurance premiums be remitted electronically.
[63 FR 1303, Jan. 8, 1998]

§ 207.253 Termination by prepayment
and voluntary termination.
All rights under the insurance contract and all obligations to pay future
insurance premiums shall terminate on
the following conditions:
(a) Termination by prepayment. Notice
of the prepayment in full of the mortgage or loan shall be given to the Commissioner, on a form prescribed by the
Commissioner, within 30 days from the
date of prepayment. The insurance contract shall terminate, effective as of
the date of prepayment. No adjusted
premium charge shall be due the Commissioner on account of such termination by prepayment.
(b) Termination by voluntary agreement. Receipt by the Commissioner of a
written request, by the mortgagor and

285

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00295

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

§ 207.253a

24 CFR Ch. II (4–1–16 Edition)

mortgagee or lender for termination of
the insurance on the mortgage or loan,
on a form prescribed by the Commissioner, accompanied by the original
credit instrument for cancellation of
the insurance endorsement and the remittance of all sums to which the Commissioner is entitled. The termination
shall become effective as of the date
these requirements are met. No voluntary termination charge shall be due
the Commissioner on account of such
termination by voluntary agreement.
(c) Upon termination of the mortgage
or loan insurance contract by a payment in full or by a voluntary termination, the Commissioner shall refund
to the mortgagee or lender for the account of the mortgagor or borrower an
amount equal to the pro rata portion of
the current annual mortgage insurance
premium theretofore paid, which is applicable to the portion of the year subsequent to (1) the date of the prepayment or (2) the effective date of the
voluntary termination of the contract
of insurance.
(d) Notwithstanding any provision in
the mortgage instrument, this section
shall apply to all mortgage or loan insurance contracts terminated by either
prepayment or voluntary termination
where: (1) The mortgage is prepaid in
full or (2) the Commissioner receives a
request for voluntary termination, on
or after May 1, 1972.

jstallworth on DSK7TPTVN1PROD with CFR

[37 FR 8662, Apr. 29, 1972]

§ 207.253a Termination of insurance
contract.
(a) Reason for termination. The happening of any of the following events
shall constitute an additional reason
for terminating the contract of insurance in cases where the mortga- gee
has elected to convey the property to
the Commissioner:
(1) The acquisition by the mortgagee
of the mortgaged property without
conveying it to the Commissioner.
(2) The acquisition of the property at
the foreclosure sale by a party other
than the mortgagee.
(3) The redemption of the property
after foreclosure.
(4) Notice given by the mortgagee
after the foreclosure and during the redemption period that it will not tender
the property to the Commissioner.

(b) Notice of termination. No contract
of insurance shall be terminated until
the mortgagee has given written notice
thereof to the Commissioner within 30
days from the happening of any one of
the events set forth in paragraph (a) of
this section.
(c) Effective termination date. The
Commissioner shall notify the mortgagee that the contract of insurance
has been terminated and the effective
termination date. The termination
shall be effective as of the date any one
of the events set forth in paragraph (a)
of this section occur.
(d) Effect of termination. Upon termination of the contract of insurance the
obligation to pay any subsequent MIP
shall cease and all rights of the mortgagor and mortgagee shall be terminated.
[36 FR 24537, Dec. 22, 1971, as amended at 37
FR 8662, Apr. 29, 1972]

§ 207.254 Changes in premiums; manner of publication.
Notice of future premium changes
will be published in the FEDERAL REGISTER. The Department will propose
MIP changes for multifamily mortgage
insurance programs and provide a 30day public comment period for the purpose of accepting comments on whether the proposed changes are appropriate. After the comments have been
considered, the Department will publish a final notice announcing the premiums for each program and their effective date. The provisions of paragraph (g) of 24 CFR 207.252 shall apply
to any notice of future premium
changes published pursuant to this section.
[66 FR 35073, July 2, 2001]

RIGHTS AND DUTIES OF MORTGAGEE
UNDER THE CONTRACT OF INSURANCE
§ 207.255 Defaults for purposes of insurance claim.
(a)(1) Except as provided in paragraph (b) of this section, the following
shall be considered a default under the
terms of a mortgage insured under this
subpart:
(i) Failure of the mortgagor to make
any payment due under the mortgage
(also referred to as a ‘‘Monetary Event

286

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00296

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

Office of Assistant Secretary for Housing, HUD
of Default’’ in certain mortgage security instruments); or
(ii) A material violation of any other
covenant under the provisions of the
mortgage, if because of such violation,
the mortgagee has accelerated the
debt, subject to any necessary HUD approval (also referred to as a ‘‘Covenant
Event of Default’’ in certain mortgage
security instruments).
(2) For purposes of a mortgagee filing
an insurance claim with the Commissioner, the failure of the mortgagor to
make any payment due under an operating loss loan or under the original
mortgage shall be considered a default
under both the operating loss loan and
original mortgage.
(3) If a default as defined in paragraphs (a)(1) and (a)(2) of this section
continues for a minimum period of 30
days, the mortgagee shall be entitled
to receive the benefits of the insurance
provided for the mortgage, subject to
the procedures in this subpart.
(4) For the purposes of paragraph (a)
of this section, the date of default shall
be:
(i) The date of the first failure to
make a monthly payment that subsequent payments by the mortgagor are
insufficient to cover when those subsequent payments are applied by the
mortgagee to the overdue monthly
payments in the order in which they
became due; or
(ii) The date of the first uncorrected
violation of a covenant or obligation
for which the mortgagee has accelerated the debt.
(5) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance
on or after September 1, 2011, the regulations of paragraph (a) of this section
shall apply, unless the mortgagor demonstrates to the satisfaction of the
Commissioner that financial hardship
to the mortgagor would result from application of the regulations in paragraph (a) of this section due to the reasonable expectations of the mortgagor
that the transaction would close under
the regulations in effect prior to September 1, 2011, in which case, the regulations of paragraph (b) shall apply.
(b)(1) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance

§ 207.255

before September 1, 2011, and for multifamily project mortgages insured under
section 232 of the Act (12 U.S.C. 1715w),
and section 242 of the Act (12 U.S.C.
1715z–7), the following shall be considered a default under the terms of a
mortgage insured under this subpart:
(i) Failure of the mortgagor to make
any payment due under the mortgage;
or
(ii) Failure to perform any other covenant under the provisions of the mortgage, if the mortgagee, because of such
failure, has accelerated the debt.
(2) In the case of an operating loss
loan, the failure of the mortgagor to
make any payment due under such
loan or under the original mortgage
shall be considered a default under
both the loan and original mortgage.
(3) If such defaults, as defined in
paragraph (b) of this section, continue
for a period of 30 days the mortgagee
shall be entitled to receive the benefits
of the insurance hereinafter provided.
(4) Except for mortgages insured
under section 232 of the Act, for the
purposes of paragraph (b) of this section, the date of default shall be considered as:
(i) The date of the first uncorrected
failure to perform a covenant or obligation; or
(ii) The date of the first failure to
make a monthly payment which subsequent payments by the mortgagor are
insufficient to cover when applied to
the overdue monthly payments in the
order in which they became due.
(5) For mortgages insured under section 232 of the Act, for purposes of this
section, the date of default shall be
considered as:
(i) The first date on which the borrower has failed to pay the debt when
due as a result of the lender’s acceleration of the debt because of the borrower’s uncorrected failure to perform
a covenant or obligation under the regulatory agreement or security instrument; or
(ii) The date of the first failure to
make a monthly payment that subsequent payments by the borrower are
insufficient to cover when applied to
the overdue monthly payments in the
order in which they become due.
[76 FR 24370, May 2, 2011, as amended at 77
FR 55135, Sept. 7, 2012]

287

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00297

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

§ 207.256

24 CFR Ch. II (4–1–16 Edition)

§ 207.256 Notice to the Commissioner
of default.
(a) If a default as defined in
§ 207.255(a) or (b) is not cured within the
grace period of 30 days provided under
§ 207.255(a)(3) or (b)(3), the mortgagee
must, within 30 days after the date of
the end of the grace period, notify the
Commissioner of the default, in the
manner prescribed in 24 CFR part 200,
subpart B.
(b) The mortgagee must give notice
to the Commissioner, in the manner
prescribed in 24 CFR part 200, subpart
B, of the mortgagor’s violation of any
covenant, whether or not the mortgagee has accelerated the debt.
[76 FR 24370, May 2, 2011]

§ 207.256a Reinstatement of defaulted
mortgage.
If, after default and prior to the completion of foreclosure proceedings, the
mortgagor cures the default, the insurance shall continue on the mortgage as
if a default had not occurred, provided
the mortgagee gives notice of reinstatement to the Commissioner, in the
manner prescribed in 24 CFR part 200,
subpart B.

jstallworth on DSK7TPTVN1PROD with CFR

[76 FR 24370, May 2, 2011]

§ 207.256b Modification of mortgage
terms.
(a) The mortgagor and the mortgagee
may, with the approval of the Commissioner, enter into an agreement that
extends the time for curing a default
under the mortgage or modifies the
payment terms of the mortgage.
(b)(1) Except as provided in paragraph (b)(2), the Commissioner’s approval of the type of agreement specified in paragraph (a) of this section
shall not be given, unless the mortgagor agrees in writing that, during
such period as the mortgage continues
to be in default, and payments by the
mortgagor to the mortgagee are less
than the amounts required under the
terms of the original mortgage, the
mortgagor or mortgagee, as may be appropriate in the particular situation,
will hold in trust for disposition, as directed by the Commissioner, all rents
or other funds derived from the secured
property that are not required to meet
actual and necessary expenses arising

in connection with the operation of
such property, including amortization
charges, under the mortgage.
(2) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance
before September 1, 2011, and for multifamily project mortgages insured under
section 232 of the Act (12 U.S.C. 1715w),
and section 242 (12 U.S.C. 1715z–7), the
Commissioner’s approval of the type of
agreement specified in paragraph (a) of
this section shall not be given unless
the mortgagor agrees in writing that,
during such period as payments to the
mortgagee are less than the amounts
required under the terms of the original mortgage, the mortgagor will hold
in trust for disposition as directed by
the Commissioner all rents or other
funds derived from the property which
are not required to meet actual and
necessary expenses arising in connection with the operation of such property, including amortization charges,
under the mortgage.
(3) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance
on or after September 1, 2011, the regulations of paragraph (b)(1) of this section shall apply, unless the mortgagor
demonstrates to the satisfaction of the
Commissioner that financial hardship
to the mortgagor would result from application of the regulations in paragraph (b)(1) of this section due to the
reasonable expectations of the mortgagor that the transaction would close
under the regulations in effect prior to
September 1, 2011, in which case, the
regulations of paragraph (b)(2) shall
apply.
(c) The Commissioner may exempt a
mortgagor from the requirement of
paragraph (b) of this section in any
case where the Commissioner determines that such exemption does not
jeopardize the interests of the United
States.
[76 FR 24370, May 2, 2011]

§ 207.257 Commissioner’s right to require acceleration.
Upon receipt of notice of violation of
a covenant, as provided for in
§ 207.256(b), or otherwise being apprised
of the violation of a covenant, the

288

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00298

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

Office of Assistant Secretary for Housing, HUD
Commissioner reserves the right to require the mortgagee to accelerate payment of the outstanding principal balance due in order to protect the interests of the Commissioner.

jstallworth on DSK7TPTVN1PROD with CFR

[76 FR 24371, May 2, 2011]

§ 207.258 Insurance
claim
requirements.
(a) Alternative election by mortgagee.
(1) When the mortgagee becomes eligible to receive mortgage insurance benefits pursuant to § 207.255(a)(3) or (b)(3),
the mortgagee must, within 45 calendar
days after the date of eligibility, such
period is referred to as the ‘‘Eligibility
Notice Period’’ for purposes of this section, give the Commissioner notice of
its intention to file an insurance claim
and of its election either to assign the
mortgage to the Commissioner, as provided in paragraph (b) of this section,
or to acquire and convey title to the
Commissioner, as provided in paragraph (c) of this section. Notice of this
election must be provided to the Commissioner in the manner prescribed in
24 CFR part 200, subpart B. HUD may
extend the Eligibility Notice Period at
the request of the mortgagee under the
following conditions:
(i) The request must be made to and
approved by HUD prior to the 45th day
after the date of eligibility; and
(ii) The approval of an extension
shall in no way prejudice the mortgagee’s right to file its notice of its intention to file an insurance claim and
of its election either to assign the
mortgage to the Commissioner or to
acquire and convey title to the Commissioner within the 45-day period or
any extension prescribed by the Commissioner.
(2) For mortgages funded with the
proceeds of state or local bonds, Ginnie
Mae mortgage-backed securities, participation certificates, or other bond
obligations specified by the Commissioner (such as an agreement under
which the insured mortgagee has obtained the mortgage funds from thirdparty investors and has agreed in writing to repay such investors at a stated
interest rate and in accordance with a
fixed repayment schedule), any of
which contains a lock-out or prepayment premium, in the event of a default during the term of the prepay-

§ 207.258

ment lock-out or prepayment premium, and for any mortgage insured
under section 232 of the Act, the mortgagee must:
(i) Request a 90-day extension of the
deadline for filing the notice of the
mortgagee’s intention to file an insurance claim and the mortgagee’s election to assign the mortgage or acquire
and convey title in accordance with the
mortgagee certificate, which HUD may
further extend at the written request
of the mortgagee;
(ii) Assist the mortgagor in arranging refinancing to cure the default and
avert an insurance claim, if the Commissioner grants the requested (or a
shorter) extension of notice filing deadline;
(iii) Report to the Commissioner at
least monthly on any progress in arranging refinancing;
(iv) Cooperate with the Commissioner in taking reasonable steps in accordance with prudent business practices to avoid an insurance claim;
(v) Require successors or assigns to
certify in writing that they agree to be
bound by these conditions for the remainder of the term of the prepayment
lock-out or prepayment premium; and
(vi) After commencement of amortization of the refinanced mortgage, notify HUD of a delinquency when a payment is not received by the 10th day
after the date the payment is due.
(3) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance
on or after September 1, 2011, the regulations of paragraph (a)(2) of this section shall apply, unless the mortgagor
demonstrates to the satisfaction of the
Commissioner that financial hardship
to the mortgagor would result from application of the regulations in paragraph (a)(2) of this section due to the
reasonable expectations of the mortgagor that the transaction would close
under the regulations in effect prior to
September 1, 2011, in which case, the
regulations of paragraph (a)(2) shall
not apply.
(4) Acknowledgment of election. For
mortgages insured pursuant to section
232 of the Act, if the lender provides
notice to the Commissioner of its election either to assign the mortgage to
the Commissioner or to acquire and

289

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00299

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

§ 207.258

24 CFR Ch. II (4–1–16 Edition)

convey title to the Commissioner, the
Commissioner shall, not later than 90
calendar days after the expiration of
the Eligibility Notice Period, as defined in paragraph (a)(1) of this section,
as the same may have been extended,
acknowledge and accept, or reject for
cause, pursuant to program requirements, the lender’s election, provided
that the Commissioner may, in the
Commissioner’s discretion, extend such
90-day period by no more than an additional 90 calendar days if the Commissioner determines that such an extension is in HUD’s interest.
(b) Assignment of mortgage to Commissioner— (1) Timeframe; request for extension. (i) If the mortgagee elects to assign the mortgage to the Commissioner, the mortgagee shall, at any
time within 30 calendar days after the
date HUD acknowledges the notice of
election, file its application for insurance benefits and assign to the Commissioner, in such manner as the Commissioner may require, any applicable
credit instrument and the realty and
chattel security instruments.
(ii) The Commissioner may extend
this 30-day period by written notice
that a partial payment of insurance
claim under § 207.258b is being considered. A mortgagee may consider failure
to receive a notice of an extension approval by the end of the 30-day time period a denial of the request for an extension.
(iii) The extension shall be for such
term, not to exceed 60 days, as the
Commissioner prescribes; however, the
Commissioner’s consideration of a partial payment of claim, or the Commissioner’s request that a mortgagee accept partial payment of a claim in accordance with § 207.258b, shall in no way
prejudice the mortgagee’s right to file
its application for full insurance benefits within either the 30-day period or
any extension prescribed by the Commissioner.
(iv) The requirements of paragraphs
(b)(2) through (b)(6) of this section
shall also be met by the mortgagee.
(2) Notice of assignment. On the date
the assignment of the mortgage is filed
for record, the mortgagee must notify
the Commissioner, in the manner prescribed in 24 CFR part 200, subpart B, of
such assignment, and must also notify

the FHA Comptroller by telegram of
such recordation.
(3) Warranty of mortgagee. The assignment shall be made without recourse
or warranty, except that the mortgagee shall warrant that:
(i) No act or omission of the mortgagee has impaired the validity and
priority of the mortgage.
(ii) The mortgage is prior to all mechanics’ and materialmen’s liens filed
on record subsequent to the recording
of the mortgage, regardless of whether
such liens attached prior to the recording date.
(iii) The mortgage is prior to all liens
and encumbrances which may have attached or defects which may have arisen subsequent to the recording of the
mortgage, except such liens or other
matters as may be approved by the
Commissioner.
(iv) The amount stated in the instrument of assignment is actually due
under the mortgage and there are no
offsets or counterclaims against such
amount.
(v) The mortgagee has a good right to
assign the mortgage.
(4) Chattel lien warranty. In assigning
its security interest in chattels, including materials, located on the premises
covered by the mortgage, or its security interest in building components
stored either on-site or off-site at the
time of the assignment, the mortgagee
shall warrant that:
(i) No act or omission of the mortgagee has impaired the validity or priority of the lien created by the chattel
security instruments; and
(ii) The mortgagee has a good right
to assign the security instruments; and
(iii) The chattel security instruments
are a first lien on the items covered by
the instruments except for such other
liens or encumbrances as may be approved by the Commissioner.
(5) Items delivered by mortgagee. The
mortgagee shall deliver to the Commissioner, within 45 days after the assignment is filed for record, the items enumerated below:
(i) An assignment of all claims of the
mortgagee against the mortgagor or
others arising out of the mortgage
transaction.

290

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00300

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

Office of Assistant Secretary for Housing, HUD
(ii) All policies of title or other insurance or surety bonds or other guaranties, and any and all claims thereunder, including evidence satisfactory
to the Commissioner that the effective
date of the original title coverage has
been extended to include the assignment of the mortgage to the Commissioner.
(iii) All records, ledger cards, documents, books, papers, and accounts relating to the mortgage transaction.
(iv) All property of the mortgagor
held by the mortgagee or to which it is
entitled (other than the cash items
which are to be retained by the mortgagee) pursuant to paragraph (b)(5) of
this section.
(v) Any additional information or
data which the Commissioner may require.
(6) Disposition of cash items. The following cash items shall either be retained by the mortgagee or delivered to
the Commissioner in accordance with
instructions to be issued by the Commissioner at the time the insurance
claim is filed:
(i) Any balance of the mortgage loan
not advanced to the mortgagor.
(ii) Any cash held by the mortgagee
or its agents or to which it is entitled,
including deposits made for the account of the mortgagor, and which
have not been applied in reduction of
the principal of the mortgage indebtedness.
(iii) All funds held by the mortgagee
for the account of the mortgagor received pursuant to any other agreement.
(iv) The amount of any undrawn balance under a letter of credit used in
lieu of a cash deposit.
(c) Conveyance of title to Commissioner.
If the mortgagee elects to acquire and
convey title to the Commissioner, the
following requirements shall be met:
(1) Alternative actions by mortgagee. At
any time within a period of 30 days
after the date of the notice of such
election, the mortgagee shall take one
of the alternative actions in paragraph
(c) (2) or (3) of this section.
(2) Foreclosure of mortgage. The mortgagee may elect to commence foreclosure proceedings. If the laws of the
State where the property is located do
not permit institution of foreclosure

§ 207.258

within such 30-day period, foreclosure
shall be commenced not less than 30
days after such action can be taken.
Under such proceedings, the mortgagee
shall take one of the following actions:
(i) Obtain possession of the mortgaged property and the income therefrom through the voluntary surrender
thereof by the mortgagor.
(ii) Institute and prosecute with reasonable diligence, proceedings for the
appointment of a receiver to manage
the mortgaged property and collect income therefrom.
(iii) Proceed to exercise such other
rights and remedies as may be available to it for the protection and preservation of the mortgaged property and
to obtain the income therefrom under
the mortgage and the law of the particular jurisdiction.
(iv) With the prior approval of the
Commissioner, exercise the power of
sale under a deed of trust.
(3) Acquisition of title and possession.
The mortgagee, with the approval of
the Commissioner, may elect to acquire possession of, and title to, the
mortgaged property by means other
than foreclosure. With the prior approval of the Commissioner, title may
be transferred directly to the Commissioner.
(4) Notice of foreclosure. The mortgagee shall given written notice to the
Commissioner within 30 days after the
institution of foreclosure proceedings
and shall exercise reasonable diligence
in prosecuting such proceedings to
completion. Any developments which
might delay the consummation of such
proceedings shall be promptly reported
to the Commissioner.
(5) Transfer by mortgagee. After acquiring title to and possession of the
property, the mortgagee shall (within
30 days of such acquisition) transfer
title and possession of the property to
the Commissioner. The transfer shall
be made in such manner as the Commissioner may require. On the date the
deed is filed for record, the mortgagee
shall notify the Commissioner on a
form prescribed by him of the filing of
such conveyance, and shall also notify
the FHA Assistant CommissionerComptroller by telegram of such recordation.

291

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00301

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

§ 207.258a

24 CFR Ch. II (4–1–16 Edition)

(6) Filing of deed and application. The
mortgagee shall file its application for
insurance benefits at the time of filing
for record of the deed conveying the
property to the Commissioner.
(7) Deed covenants and documents. The
deed conveying the property to the
Commissioner shall contain covenants
satisfactory to the Commissioner. The
original deed shall be forwarded to the
Commissioner as soon as received from
the recording authority. The following
documents shall be forwarded with the
deed:
(i) A bill of sale covering any personal property to which the mortgagee
is entitled by reason of the mortgage
transaction or by the acceptance of a
deed in lieu of foreclosure.
(ii) An assignment of all claims of
the mortgagee against the mortgagor
or others arising out of the mortgage
transaction and out of the foreclosure
proceedings or other means by which
the property was acquired.
(iii) An assignment of any claims on
account of title insurance and fire or
other hazard insurance, except claims
which have been released with the
prior approval of the Commissioner.
(8) Title evidence. Evidence of title,
satisfactory to the Commissioner and
meeting the requirements of § 207.258a
shall be furnished to the Commissioner
(without expense to him) within 45
days of the filing for record of the deed
conveying the property to him.
(9) Disposition of cash items. The provisions of paragraph (b)(4) of this section,
relating to the retention or delivery of
cash items, shall be applicable to cases
involving the conveyance of property
to the Commissioner.
(Information collection requirements in
paragraph (b) were approved by the Office of
Management and Budget under control number 2535–0061)

jstallworth on DSK7TPTVN1PROD with CFR

[36 FR 24537, Dec. 22, 1971, as amended at 44
FR 8195, Feb. 8, 1979; 50 FR 38786, Sept. 25,
1985; 51 FR 27838, Aug. 4, 1986; 64 FR 4770, Jan.
29, 1999; 76 FR 24371, May 2, 2011; 77 FR 55135,
Sept. 7, 2012]

§ 207.258a Title requirements.
(a) Form of title evidence. The title
evidence submitted with a conveyance
of the property to the Commissioner
shall be in the form of an owner’s policy of title insurance, except that, if an

abstract and attorney’s opinion were
accepted by the Commissioner at the
time of insurance, the title evidence
may be in such form. The title evidence
shall be effective on or after the date of
the recording of the conveyance to the
Commissioner.
(b) Content of title evidence. To be satisfactory to the Commissioner, the
title evidence covering the property
conveyed to him shall show the same
title vested in the Commissioner as
was vested in the mortgagor as of the
date of the mortgage was filed for
record, with the exception of such liens
or other matters affecting the title as
may be approved by the Commissioner.
§ 207.258b Partial payment of claim.
(a) Whenever the Commissioner receives notice under § 207.258 of a mortgagee’s intention to file an insurance
claim and to assign the mortgage to
the Commissioner, the Commissioner
may request the mortgagee, in lieu of
assignment, to accept partial payment
of the claim under the mortgage insurance contract and to recast the mortgage, under such terms and conditions
as the Commissioner may determine.
(b) The Commissioner may request
the mortgagee to participate in a partial payment of claim in lieu of assignment only after a determination that
partial payment would be less costy to
the Federal government than other
reasonable alternatives for maintaining the low- and moderate-income
character of the project. This determination shall be based upon the findings listed below and such other findings as the Commissioner deems appropriate:
(1) The mortgagee is entitled, under
§ 207.255, to assign the mortgage in exchange for the payment of insurance
benefits;
(2) The relief resulting from partial
payment, when considered with other
resources available to the project,
would be sufficient to restore the financial viability of the project;
(3) The project is, or can at reasonable cost be made, structurally sound;
(4) The management of the project is
satisfactory to the Commissioner; and
(5) The default under the insured
mortgage was beyond the control of
the mortgagor.

292

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00302

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

Office of Assistant Secretary for Housing, HUD
(c) Partial payment of a claim under
this section shall be made only when:
(1) The project is, or potentially
could serve as, a low- and moderate-income housing resource;
(2) The property covered by the mortgage is free and clear of all liens other
than the insured first mortgage and
such other liens as the Commissioner
may have approved;
(3) The mortgagee has voluntarily
agreed to accept partial payment of the
insurance claim under the mortgage insurance contract and to recast the remaining mortgage amount under terms
and conditions prescribed by the Commissioner; and
(4) The mortgagor has agreed to
repay to the Commissioner an amount
equal to the partial payment, with the
obligation secured by a second mortgage on the project containing terms
and conditions prescribed by the Commissioner. The terms of the second
mortgage will be determined on a caseby-case basis to assure that the estimated project income will be sufficient
to cover estimated operating expenses
and debt service on the recast insured
mortgage. The Commissioner may provide for postponed amortization of the
second mortgage.
(d) Payment of insurance benefits
under this section shall be in cash. The
Commissioner shall waive the deduction of one percent of the mortgage
funds advanced to the mortgagor, provided for in § 207.259(b)(2)(iv), with respect to a partial payment of a claim
under this section. The items referred
to in § 207.258(b)(4) shall either be retained by the mortgagee or delivered to
the Commissioner in accordance with
instructions to be issued by the Commissioner with respect to a partial payment of claim under this section.
(e) Lenders receiving a partial payment of claim following the Commissioner’s endorsement of the Mortgage
for full insurance under parts 251, 252,
or 255 of this chapter, will pay HUD a
fee in an amount set forth through
FEDERAL REGISTER notice. HUD, in its
discretion, may collect this fee or deduct the fee from any payment it
makes in the claim process.
[50 FR 38786, Sept. 25, 1985, as amended at 61
FR 49037, Sept. 17, 1996]

§ 207.259

§ 207.259
Insurance benefits.

(a) Method of payment. (1) Upon either
an assignment of the mortgage to the
Commissioner or a conveyance of the
property to the Commissioner in accordance with requirements in § 207.258,
payment of an insurance claim shall be
made in cash, in debentures, or in a
combination of both, as determined by
the Commissioner either at, or prior
to, the time of payment.
(2) An insurance claim paid on a
mortgage insured under section 223(e)
of the National Housing Act shall be
paid in cash from the Special Risk Insurance Fund.
(b) Amount of payment; assignment of
mortgage. If the mortgage is assigned to
the Commissioner, the insurance benefits shall be paid in an amount determined as follows:
(1) By adding to the unpaid principal
amount of the mortgage, computed as
of the date of default, the following
items:
(i) The amount of all payments made
by the mortgagee for taxes, special assessments and water rates which are
liens prior to the mortgage; for insurance on the property; and for any
mortgage insurance premiums paid
after default.
(ii) An allowance for reasonable payments made by the mortgagee, with
the approval of the Commissioner, for
the completion and preservation of the
property.
(iii) An amount equivalent to the debenture interest which would have
been earned on the portion of the insurance benefits paid in cash, as of the
date such cash payment is made, except that when the mortgagee fails to
meet any one of the applicable requirements of §§ 207.256 and 207.258 within
the specified time and in a manner satisfactory to the Commissioner (or
within such further time as the Commissioner may approve in writing), the
interest allowance in such cash payment shall be computed only to the
date on which the particular required
action should have been taken or to
which it was extended.
(2) By deducting from the total of the
items computed under paragraph (b)(1)
of this section, the following items:

293

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00303

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

§ 207.259

24 CFR Ch. II (4–1–16 Edition)

(i) Any amount received by the mortgagee on account of the mortgage after
the date of default.
(ii) Any net income received by the
mortgagee from the property covered
by the mortgage after the date of default.
(iii) The sum of the cash items retained by the mortgagee pursuant to
§ 207.258(b)(6), except the balance of the
mortgage loan not advanced to the
mortgagor.
(iv) An amount equivalent to 1 percent of the mortgage funds advanced to
the mortgagor and not repaid as of the
date of default, except that all or part
of the 1 percent may be waived by the
Commissioner if, at his request and in
lieu of foreclosure, the mortgage is assigned to the Secretary.
(v) In the case of a lender receiving
insurance benefits for the full Mortgage amount upon the Commissioner’s
endorsement of the Mortgage for full
insurance pursuant to 24 CFR parts 251,
252, or 255, the amount of the fee set
forth through FEDERAL REGISTER notice. HUD may, in its discretion, collect this fee rather than deducting the
fee from the total of the items computed under paragraph (b)(1) of this
section.
(vi) Except for multifamily project
mortgages for which HUD issued a firm
commitment for mortgage insurance
before September 1, 2011, and for multifamily project mortgages insured under
section 232 of the Act (12 U.S.C. 1715w)
and under section 242 of the Act (12
U.S.C. 1715z–7), when there is a covenant
default
as
defined
in
§ 207.255(a)(1)(ii) and a mortgagee refuses to comply promptly with the
Commissioner’s request to accelerate
payment pursuant to § 207.257, an
amount equal to the difference between
the project’s market value as of the
date of the Commissioner’s request and
the project’s market value as of the
date the mortgagee makes an election
to assign the mortgage, or convey title
to the project, as determined by appraisal procedures established by the
Commissioner.
(vii) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance
on or after September 1, 2011, the regulations of paragraph (b)(2)(vi) of this

section shall apply, unless the mortgagor demonstrates to the satisfaction
of the Commissioner that financial
hardship to the mortgagor would result
from application of the regulations in
paragraph (b)(2)(vi) of this section due
to the reasonable expectations of the
mortgagor that the transaction would
close under the regulations in effect
prior to September 1, 2011, in which
case, the regulations of paragraph
(b)(2)(vi) shall not apply.
(c) Amount of payment; conveyance of
property. If the property is conveyed to
the Commissioner, the insurance benefits shall be paid in an amount determined in accordance with paragraph (b)
of this section, except that the item set
forth in paragraph (b)(2)(iv) of this section shall not be deducted.
(d) Issuance of certificate of claim. In
addition to the insurance benefits paid
under paragraph (b) or (c) of this section, a certificate of claim shall be
issued to the mortgagee.
(1) In the case of an assignment of
the mortgage, the certificate shall be
for an amount which the Commissioner
determines to be sufficient, when added
to the amount of the insurance benefits
to equal the amount the mortgagee
would have received if, on the date of
assignment to the Commissioner, the
mortgagor had paid in full all obligations under the mortgage. Where a conveyance is involved, there shall also be
included in the certificate an allowance in a reasonable amount for any
necessary expenses incurred by the
mortgagee in connection with the foreclosure proceedings or the acquisition
of the mortgaged property otherwise
and in connection with the conveyance
of the property to the Commissioner.
(2) The certificate of claim shall provide for an uncompounded annual interest increment of 3 percent to begin
as of the date of either assignment or
conveyance.
(e) Issuance of debentures. Where debentures are issued, they shall meet
the following requirements:
(1) Be issued as of the date of default.
(2) Be registered as to principal and
interest.
(3) At the option of the Commissioner
and with the approval of the Secretary
of the Treasury, be redeemable at par

294

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00304

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

jstallworth on DSK7TPTVN1PROD with CFR

Office of Assistant Secretary for Housing, HUD
plus accrued interest on any semiannual interest payment date on 3
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
payment 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.
(4) Mature 20 years from the date
thereof.
(5) Be issued in such forms and
amounts; and be subject to such terms
and conditions; and 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.
(6) 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 of initial insurance endorsement of the mortgage,
whichever rate is higher. The applicable rates of interest will be published
twice each year as a notice in the FEDERAL REGISTER.
(7) Debentures representing the portion of the claim applicable to an operating loss loan shall bear interest at
the rate in effect as of the date the
commitment to insure such loan was
issued, or as of the date of endorsement
for insurance of such loan, whichever
rate is the higher, although debentures
representing the portion of the claim
applicable to the original mortgage
may bear interest at a different rate.
(f) Mortgagee Time Limits for Supplemental Claims for Additional Insurance
Benefits. A mortgagee may not file for
any additional payments of its mortgage insurance claim more than six
months after the date of final settle-

§ 207.261

ment of the insurance claim by the
Commissioner. For the purpose of this
section, the term final settlement shall
mean the payment of the insurance
claim (in cash or debentures) or billing
for any overpayment of a partial claim
that is made by the Commissioner.
Final settlement is based upon the submission by the mortgagee of all required documents and information pursuant to part 207 of this chapter.
[36 FR 24537, Dec. 22, 1971, as amended at 41
FR 45829, Oct. 18, 1976; 47 FR 26125, June 17,
1982; 49 FR 24654, June 14, 1984; 51 FR 13142,
Apr. 17, 1986; 51 FR 27838, Aug. 4, 1986; 57 FR
55112, Nov. 24, 1992; 59 FR 49816, Sept. 30, 1994;
61 FR 49038, Sept. 17, 1996; 71 FR 18153, Apr.
10, 2006; 76 FR 24371, May 2, 2011; 80 FR 51468,
Aug. 25, 2015]

§ 207.259a Waiver of title objection;
mortgages formerly Commissionerheld.
If the Commissioner sells a mortgage
and such mortgage is later reassigned
to him in exchange for debentures or
the property covered by such mortgage
is later conveyed to him in exchange
for debentures, the Commissioner will
not object to title by reason of any lien
or other adverse interest that was senior to the mortgage on the date of the
original sale of such mortgage by the
Commissioner.
§ 207.260 Maintenance and inspection
of property.
As long as the mortgage is insured or
held by the Commissioner, the mortgagor must maintain the insured
project in accordance with the physical
condition requirements in 24 CFR part
5, subpart G; and the mortgagee must
inspect the project in accordance with
the physical inspection requirements
in 24 CFR part 5, subpart G.
[63 FR 46578, Sept. 1, 1998]

§ 207.261 Capturing excess bond proceeds.
(a) A mortgagee that finances multifamily housing or healthcare facilities
insured under Title II of the National
Housing Act through the issuance and
sale of bonds or bond anticipation
notes and uses a project-specific trust
indenture agreement, that clearly outlines the project and identifies by
project the trust funds established by

295

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00305

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083

§ 207.263

24 CFR Ch. II (4–1–16 Edition)

and administered in accordance with
the terms of the trust indenture, shall:
(1) Include the following clause in the
trust indenture: In the event of an assignment or conveyance of the mortgage to the Commissioner, subsequent
to the issuance of the bonds, all money
remaining in all funds and accounts
other than the rebate fund, and any
other funds remaining under the trust
indenture after payment or provision
for payment of debt service on the
bonds and the fees and expenses of the
credit enhancer, issuer, trustee, and
other such parties unrelated to the
mortgagor (other than funds originally
deposited by the mortgagor or related
parties on or before the date of
issuance of the bonds) shall be returned
to the mortgagee.
(2) Upon the Commissioner’s payment of an FHA mortgage insurance
claim under § 207.259, the mortgagee
shall take all legally-entitled actions
to enforce the clause required by paragraph (a)(1) of this section and pay the
Commissioner any trust funds remaining after discharge by the trustee of all
obligations of the trust indenture, no
later than 6 months after the date of
the Commissioner’s final settlement of
the FHA mortgage insurance claim.
(b) For purposes of paragraph (a) of
this section, the term ‘‘rebate fund’’
means a separate fund established
under a contract or agreement for taxexempt bonds in which amounts (excess
interest earnings from the tax-exempt
bonds) must be deposited to make rebate payments to the federal government under the Internal Revenue Code.
[79 FR 43933, July 29, 2014]

RIGHTS IN HOUSING FUND
§ 207.263 Responsibility for servicing.
After January 10, 1994, servicing of
insured mortgages must be performed
by a mortgagee which is approved by
HUD to service insured mortgages.
[57 FR 58350, Dec. 9, 1992]

jstallworth on DSK7TPTVN1PROD with CFR

AMENDMENTS
§ 207.499 Effect of amendments.
The regulations in this subpart may
be amended by the Commissioner at
any time and from time to time, in
whole or in part, but such amendment

shall not adversely affect the interests
of a mortgagee or lender under the contract of insurance on any mortgage or
loan already insured and shall not adversely affect the interests of a mortgagee or lender on any mortgage or
loan to be insured on which the Commissioner has made a commitment to
insure.

PART 208—ELECTRONIC TRANSMISSION OF REQUIRED DATA
FOR CERTIFICATION AND RECERTIFICATION AND SUBSIDY BILLING PROCEDURES FOR MULTIFAMILY SUBSIDIZED PROJECTS
Sec.
208.101
208.104
208.108
208.112

Purpose.
Applicability.
Requirements.
Cost.

AUTHORITY: 12 U.S.C. 1701s, 1715l, 1715z–1; 42
U.S.C. 1437f and 3535(d).
SOURCE: 58 FR 61022, Nov. 19, 1993, unless
otherwise noted.

§ 208.101 Purpose.
The purpose of this part is to require
owners
of
subsidized
multifamily
projects to electronically submit certain data to HUD for the programs listed in § 208.104. This electronically submitted data is required by HUD Forms,
Owner’s Certification of Compliance
with Tenant’s Eligibility and Rent Procedure, Worksheets to Compute Tenant
Payment/Rent (Form HUD–50059 and
50059 Worksheets), and the Monthly
Subsidy Billing Forms, Housing Owner’s Certification and Application for
Housing Assistance Payments (HUD–
52670), Schedule of Tenant Assistance
Payments Due (HUD–52670A, Part 1),
Schedule of section 8 Special Claims
(HUD–52670A, Part 2), and Special
Claims
Worksheets,
HUD–52671
A
through D), as applicable.
§ 208.104 Applicability.
(a) This part applies to HUD administered subsidized multifamily projects,
either insured or non-insured, under:
(1) The section 236 Interest Reduction
and Rental Assistance Payments program;
(2) The section 8 Housing Assistance
Payments Programs, including, but not

296

VerDate Sep<11>2014

14:55 Jun 03, 2016

Jkt 238083

PO 00000

Frm 00306

Fmt 8010

Sfmt 8010

Y:\SGML\238083.XXX

238083