Laws and Regulations

§ 200.97

24 CFR Ch. II (4–1–09 Edition)
initial endorsement of the credit instrument shall occur before any mortgage proceeds are insured and the time
of final endorsement shall be as set
forth in paragraph (b) of this section.
(a) Initial endorsement. The Commissioner shall indicate the insurance of
the mortgage by endorsing the original
credit instrument and identifying the
section of the Act and the regulations
under which the mortgage is insured
and the date of insurance.
(b) Final endorsement. When all advances of mortgage proceeds have been
made and all the terms and conditions
of the commitment have been met to
the Commissioner’s satisfaction the
Commissioner shall indicate on the
original credit instrument the total of
all advances approved for insurance
and again endorse such instrument.
(c) Contract rights and obligations. The
Commissioner and the mortgagee or
lender shall be bound from the date of
initial endorsement, whether the initial and final endorsement occur simultaneously or are split, by the provisions of the Contract Rights and Obligations set forth in the respective regulations for each section of the Act, as
follows: Section 207 of the Act (24 CFR
part 207); Section 213 of the Act (24 CFR
part 213); Section 220 of the Act (24 CFR
part 220); Section 221 of the Act (24 CFR
part 221); Section 231 of the Act (24 CFR
part 231); Section 232 of the Act (24 CFR
part 232); Section 234 of the Act (24 CFR
part 234); Section 241 of the Act (24 CFR
part 241); Section 242 of the Act (24 CFR
part 242); title XI of the Act (24 CFR
part 244).

partners or other entity member ownership, of construction and other costs,
as prescribed by the Commissioner.
(b) The Certificate of Actual Cost
shall be verified by an independent Certified Public Accountant or independent public accountant in a manner
acceptable to the Commissioner.
(c) Upon the Commissioner’s approval of the mortgagor’s certification
of actual cost such certification shall
be final and incontestable except for
fraud or material misrepresentation on
the part of the mortgagor.
§ 200.97 Adjustments
cost certification.

resulting

from

(a) Fee simple site. Upon receipt of the
mortgagor’s certification of actual cost
there shall be added to the total
amount thereof the Commissioner’s estimate of the fair market value of any
land included in the mortgage security
and owned by the mortgagor in fee,
such value being prior to the construction of the improvements.
(b) Leasehold site. In the event the
land is held under a leasehold or other
interest less than a fee, the cost, if
any, of acquiring the leasehold or other
interest is considered an allowable expense which may be added to actual
cost provided that in no event shall
such amount be in excess of the fair
market value of such leasehold or
other interest exclusive of proposed
improvements.
(c) Adjustment. If the amount calculated in accordance with paragraphs
(a) or (b) of this section exceeds the
statutory dollar amount limits or loan
ratio limits permitted by the section of
Act under which the mortgage is to be
insured, or program loan ratio limits
established by the Commissioner in the
absence of statutory limits, the
amount must be reduced to the applicable limits before final endorsement.

§ 200.101 Mortgagor lien certificate.
The mortgagor shall certify at the
final endorsement of the mortgage for
insurance as to each of the following:
(a) That the mortgage is the first lien
upon and covers the entire project, including any equipment financed with
mortgage proceeds.
(b) That the property upon which the
improvements have been made or constructed and the equipment financed
with mortgage proceeds are free and
clear of all liens other than the insured
mortgage and such other liens as may
be approved by the Commissioner.
(c) That the certificate sets forth all
unpaid obligations in connection with

ENDORSEMENT
§ 200.100

Insurance endorsement.

The credit instrument shall be initially and finally endorsed simultaneously for insurance pursuant to a
commitment to insure upon completion. Where the advances of construction funds are to be insured pursuant
to a commitment for insured advances,

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