[Title 24 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2018 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 24
Housing and Urban Development
________________________
Parts 200 to 499
Revised as of April 1, 2018
Containing a codification of documents of general
applicability and future effect
As of April 1, 2018
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
U.S. GOVERNMENT OFFICIAL EDITION NOTICE
Legal Status and Use of Seals and Logos
The seal of the National Archives and Records Administration
(NARA) authenticates the Code of Federal Regulations (CFR) as
the official codification of Federal regulations established
under the Federal Register Act. Under the provisions of 44
U.S.C. 1507, the contents of the CFR, a special edition of the
Federal Register, shall be judicially noticed. The CFR is
prima facie evidence of the original documents published in
the Federal Register (44 U.S.C. 1510).
It is prohibited to use NARA's official seal and the stylized Code
of Federal Regulations logo on any republication of this
material without the express, written permission of the
Archivist of the United States or the Archivist's designee.
Any person using NARA's official seals and logos in a manner
inconsistent with the provisions of 36 CFR part 1200 is
subject to the penalties specified in 18 U.S.C. 506, 701, and
1017.
Use of ISBN Prefix
This is the Official U.S. Government edition of this publication
and is herein identified to certify its authenticity. Use of
the 0-16 ISBN prefix is for U.S. Government Publishing Office
Official Editions only. The Superintendent of Documents of the
U.S. Government Publishing Office requests that any reprinted
edition clearly be labeled as a copy of the authentic work
with a new ISBN.
U . S . G O V E R N M E N T P U B L I S H I N G O F F I C E
------------------------------------------------------------------
U.S. Superintendent of Documents Washington, DC
20402-0001
http://bookstore.gpo.gov
Phone: toll-free (866) 512-1800; DC area (202) 512-1800
[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 24:
SUBTITLE B--Regulations Relating to Housing and Urban
Development (Continued)
Chapter II--Office of Assistant Secretary for
Housing--Federal Housing Commissioner, Department of
Housing and Urban Development 5
Chapter III--Government National Mortgage
Association, Department of Housing and Urban
Development 625
Chapter IV--Office of Housing and Office of
Multifamily Housing Assistance Restructuring,
Department of Housing and Urban Development 643
Finding Aids:
Table of CFR Titles and Chapters........................ 677
Alphabetical List of Agencies Appearing in the CFR...... 697
List of CFR Sections Affected........................... 707
[[Page iv]]
----------------------------
Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 24 CFR 200.1 refers
to title 24, part 200,
section 1.
----------------------------
[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
issues of the Federal Register. These two publications must be used
together to determine the latest version of any given rule.
To determine whether a Code volume has been amended since its
revision date (in this case, April 1, 2018), consult the ``List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
Register since the last revision of that volume of the Code. Source
citations for the regulations are referred to by volume number and page
number of the Federal Register and date of publication. Publication
dates and effective dates are usually not the same and care must be
exercised by the user in determining the actual effective date. In
instances where the effective date is beyond the cut-off date for the
Code a note has been inserted to reflect the future effective date. In
those instances where a regulation published in the Federal Register
states a date certain for expiration, an appropriate note will be
inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
amendments to existing regulations in the CFR. These OMB numbers are
placed as close as possible to the applicable recordkeeping or reporting
requirements.
PAST PROVISIONS OF THE CODE
Provisions of the Code that are no longer in force and effect as of
the revision date stated on the cover of each volume are not carried.
Code users may find the text of provisions in effect on any given date
in the past by using the appropriate List of CFR Sections Affected
(LSA). For the convenience of the reader, a ``List of CFR Sections
Affected'' is published at the end of each CFR volume. For changes to
the Code prior to the LSA listings at the end of the volume, consult
previous annual editions of the LSA. For changes to the Code prior to
2001, consult the List of CFR Sections Affected compilations, published
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.
``[RESERVED]'' TERMINOLOGY
The term ``[Reserved]'' is used as a place holder within the Code of
Federal Regulations. An agency may add regulatory information at a
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used
editorially to indicate that a portion of the CFR was left vacant and
not accidentally dropped due to a printing or computer error.
INCORPORATION BY REFERENCE
What is incorporation by reference? Incorporation by reference was
established by statute and allows Federal agencies to meet the
requirement to publish regulations in the Federal Register by referring
to materials already published elsewhere. For an incorporation to be
valid, the Director of the Federal Register must approve it. The legal
effect of incorporation by reference is that the material is treated as
if it were published in full in the Federal Register (5 U.S.C. 552(a)).
This material, like any other properly issued regulation, has the force
of law.
What is a proper incorporation by reference? The Director of the
Federal Register will approve an incorporation by reference only when
the requirements of 1 CFR part 51 are met. Some of the elements on which
approval is based are:
(a) The incorporation will substantially reduce the volume of
material published in the Federal Register.
(b) The matter incorporated is in fact available to the extent
necessary to afford fairness and uniformity in the administrative
process.
(c) The incorporating document is drafted and submitted for
publication in accordance with 1 CFR part 51.
What if the material incorporated by reference cannot be found? If
you have any problem locating or obtaining a copy of material listed as
an approved incorporation by reference, please contact the agency that
issued the regulation containing that incorporation. If, after
contacting the agency, you find the material is not available, please
notify the Director of the Federal Register, National Archives and
Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001,
or call 202-741-6010.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Authorities
and Rules. A list of CFR titles, chapters, subchapters, and parts and an
alphabetical list of agencies publishing in the CFR are also included in
this volume.
[[Page vii]]
An index to the text of ``Title 3--The President'' is carried within
that volume.
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ``Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
There are no restrictions on the republication of material appearing
in the Code of Federal Regulations.
INQUIRIES
For a legal interpretation or explanation of any regulation in this
volume, contact the issuing agency. The issuing agency's name appears at
the top of odd-numbered pages.
For inquiries concerning CFR reference assistance, call 202-741-6000
or write to the Director, Office of the Federal Register, National
Archives and Records Administration, 8601 Adelphi Road, College Park, MD
20740-6001 or e-mail [email protected].
SALES
The Government Publishing Office (GPO) processes all sales and
distribution of the CFR. For payment by credit card, call toll-free,
866-512-1800, or DC area, 202-512-1800, M-F 8 a.m. to 4 p.m. e.s.t. or
fax your order to 202-512-2104, 24 hours a day. For payment by check,
write to: US Government Publishing Office - New Orders, P.O. Box 979050,
St. Louis, MO 63197-9000.
ELECTRONIC SERVICES
The full text of the Code of Federal Regulations, the LSA (List of
CFR Sections Affected), The United States Government Manual, the Federal
Register, Public Laws, Public Papers of the Presidents of the United
States, Compilation of Presidential Documents and the Privacy Act
Compilation are available in electronic format via www.ofr.gov. For more
information, contact the GPO Customer Contact Center, U.S. Government
Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-
mail, [email protected].
The Office of the Federal Register also offers a free service on the
National Archives and Records Administration's (NARA) World Wide Web
site for public law numbers, Federal Register finding aids, and related
information. Connect to NARA's web site at www.archives.gov/federal-
register.
The e-CFR is a regularly updated, unofficial editorial compilation
of CFR material and Federal Register amendments, produced by the Office
of the Federal Register and the Government Publishing Office. It is
available at www.ecfr.gov.
Oliver A. Potts,
Director,
Office of the Federal Register
April 1, 2018
[[Page ix]]
THIS TITLE
Title 24--Housing and Urban Development is composed of five volumes.
The first four volumes containing parts 0-199, parts 200-499, parts 500-
699, parts 700-1699, represent the regulations of the Department of
Housing and Urban Development. The fifth volume, containing part 1700 to
end, continues with regulations of the Department of Housing and Urban
Development and also includes regulations of the Board of Directors of
the Hope for Homeowners Program, and the Neighborhood Reinvestment
Corporation. The contents of these volumes represent all current
regulations codified under this title of the CFR as of April 1, 2018.
For this volume, Gabrielle E. Burns was Chief Editor. The Code of
Federal Regulations publication program is under the direction of John
Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 24--HOUSING AND URBAN DEVELOPMENT
(This book contains parts 200 to 499)
--------------------------------------------------------------------
SUBTITLE B--Regulations Relating to Housing and Urban Development
(Continued)
Part
chapter ii--Office of Assistant Secretary for Housing--
Federal Housing Commissioner, Department of Housing and
Urban Development......................................... 200
chapter iii--Government National Mortgage Association,
Department of Housing and Urban Development............... 300
chapter iv--Office of Housing and Office of Multifamily
Housing Assistance Restructuring, Department of Housing
and Urban Development..................................... 401
[[Page 3]]
Subtitle B--Regulations Relating to Housing and Urban Development
(Continued)
[[Page 5]]
CHAPTER II--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING
COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
--------------------------------------------------------------------
Editorial Note: Nomenclature changes to chapter II appear at 59 FR
14090, Mar. 25, 1994.
SUBCHAPTER A--GENERAL
Part Page
200 Introduction to FHA programs................ 7
SUBCHAPTER B--MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL
HOUSING ACT AND OTHER AUTHORITIES
201 Title I property improvement and
manufactured home loans................. 96
202 Approval of lending institutions and
mortgagees.............................. 129
203 Single family mortgage insurance............ 142
204 Coinsurance................................. 254
206 Home equity conversion mortgage insurance... 255
207 Multifamily housing mortgage insurance...... 306
208 Electronic transmission of required data for
certification and recertification and
subsidy billing procedures for
multifamily subsidized projects......... 320
213 Cooperative housing mortgage insurance...... 323
214 Housing counseling program.................. 330
219 Flexible subsidy program for troubled
projects................................ 343
220 Mortgage insurance and insured improvement
loans for urban renewal and concentrated
development areas....................... 343
221 Low cost and moderate income mortgage
insurance--Savings clause............... 352
231 Housing mortgage insurance for the elderly.. 362
232 Mortgage insurance for nursing homes,
intermediate care facilities, board and
care homes, and assisted living
facilities.............................. 362
234 Condominium ownership mortgage insurance.... 379
[[Page 6]]
236 Mortgage insurance and interest reduction
payment for rental projects............. 387
241 Supplementary financing for insured project
mortgages............................... 402
242 Mortgage insurance for hospitals............ 423
244 Mortgage insurance for group practice
facilities [Title XI]................... 452
245 Tenant participation in multifamily housing
projects................................ 452
246 Local rent control.......................... 464
247 Evictions from certain subsidized and HUD-
owned projects.......................... 469
248 Prepayment of low income housing mortgages.. 473
251 Coinsurance for the construction or
substantial rehabilitation of
multifamily housing projects............ 523
252 Coinsurance of mortgages covering nursing
homes, intermediate care facilities, and
board and care homes.................... 525
255 Coinsurance for the purchase or refinancing
of existing multifamily housing projects 526
266 Housing finance agency risk-sharing program
for insured affordable multifamily
project loans........................... 528
267 Credit risk retention....................... 553
SUBCHAPTER C--PLANNING ASSISTANCE TO HOUSING SPONSORS [RESERVED]
SUBCHAPTER D--PUBLICLY FINANCED HOUSING PROGRAMS [RESERVED]
SUBCHAPTERS E-H [RESERVED]
SUBCHAPTER I--HUD-OWNED PROPERTIES
290 Disposition of multifamily projects and sale
of HUD-held multifamily mortgages....... 595
291 Disposition of HUD-acquired and -owned
single family property.................. 605
292-299
[Reserved]
[[Page 7]]
SUBCHAPTER A_GENERAL
PART 200_INTRODUCTION TO FHA PROGRAMS--Table of Contents
Sec.
200.1 Purpose.
Subpart A_Requirements for Application, Commitment, and Endorsement
Generally Applicable to Multifamily and Health Care Facility Mortgage
Insurance Programs; and Continuing Eligibility Requirements for Existing
Projects
200.3 Definitions.
Eligible Mortgagor
200.5 Eligible mortgagor.
200.6 Employer identification and social security numbers.
Eligible Mortgagee
200.10 Lender requirements.
200.11 Audit requirements for State and local governments as mortgagees.
Eligible Mortgage
200.15 Maximum mortgage.
200.16 Project mortgage adjustments and reductions.
200.17 Mortgage coverage.
200.18 Minimum loan prohibition.
Miscellaneous Project Mortgage Insurance
200.20 Refinancing insured mortgages.
200.21 Reinsurance of Commissioner held mortgages.
200.22 Operating loss loans.
200.23 Projects in declining neighborhoods.
200.24 Existing projects.
200.25 Supplemental loans.
Miscellaneous Cross Cutting Regulations
200.30 Nondiscrimination and equal opportunity.
200.31 Debarment and suspension.
200.32 Participation and compliance requirements.
200.33 Labor standards.
200.34 Property and mortgage assessment.
200.35 Appraisal standards--nondiscrimination requirements.
200.36 Financial reporting requirements.
200.37 Preventing crime in federally assisted housing.
200.38 Protections for victims of domestic violence.
Fees and Charges
200.40 HUD fees.
200.41 Maximum mortgagee fees and charges.
Commitment Applications
200.45 Processing of applications.
200.46 Commitment issuance.
200.47 Firm commitments.
Requirements Incident to Insured Advances
200.50 Building loan agreement.
200.51 Mortgagee certificate.
200.52 Construction contract.
200.53 Initial operating funds.
200.54 Project completion funding.
200.55 Financing fees and charges.
200.56 Assurance of completion for on-site improvements.
General Requirements
200.60 Assurance of completion for offsite facilities.
200.61 Title.
200.62 Certifications.
200.63 Required deposits and letters of credit.
Property Requirements
200.70 Location and fee interest.
200.71 Liens.
200.72 Zoning, deed and building restrictions.
200.73 Property development.
200.74 Minimum property standards.
200.75 Environmental quality determinations and standards.
200.76 Smoke detectors.
200.77 Lead-based paint poisoning prevention.
200.78 Energy conservation.
Mortgage Provisions
200.80 Mortgage form.
200.81 Disbursement of mortgage proceeds.
200.82 Maturity.
200.83 Interest rate.
200.84 Payment requirements.
200.85 Covenant against liens.
200.86 Covenant for fire and other hazard insurance.
200.87 Mortgage prepayment.
200.88 Late charge.
Cost Certification
200.95 Certification of cost requirements.
200.96 Certificates of actual cost.
200.97 Adjustments resulting from cost certification.
Endorsement
200.100 Insurance endorsement.
[[Page 8]]
200.101 Mortgagor lien certificate.
Regulation of Mortgagors
200.105 Mortgagor supervision.
200.106 Projects with limited distribution mortgagors and program
assistance.
Subpart B_Electronic Submission of Required Data for Mortgage Defaults
and Mortgage Insurance Claims for Insured Multifamily Mortgages
200.120 Purpose and applicability.
200.121 Requirements and effectiveness.
Subparts C-D [Reserved]
Subpart E_Mortgage Insurance Procedures and Processing
Application for Insurance
200.145 Property and mortgage assessment.
Claims for Losses
200.153 Presentation of claim.
200.156 Settlement of claims.
200.157 Provisions and characteristics of debentures.
200.158 Applicability of Treasury regulations to debenture transactions.
200.159 Relief on account of lost, stolen, destroyed, mutilated or
defaced debentures.
200.160 Redemption of debentures prior to maturity.
200.161 Administration of debenture transactions.
200.162 Certificates of claim.
Subpart F_Placement and Removal Procedures for Participation in FHA
Programs
FHA Inspector Roster
200.170 FHA Inspector Roster; Mortgagee and inspector requirements.
200.171 Placement on the Inspector Roster.
200.172 Removal from the Inspector Roster.
Section 203(k) Rehabilitation Loan Consultants
200.190 HUD list of qualified 203(k) consultants.
200.191 Placement of 203(k) consultant.
200.192 Removal of 203(k) consultant.
200.193 Responsibilities of 203(k) consultants on the list.
Nonprofit Organizations
200.194 Placement of nonprofit organization on Nonprofit Organization
Roster.
200.195 Removal of nonprofit organization from Nonprofit Organization
Roster.
Subpart G_Appraiser Roster
200.200 What is the Appraiser Roster?
200.202 How do I apply for placement on the Appraiser Roster?
200.204 What actions may HUD take against unsatisfactory appraisers on
the Appraiser Roster?
200.206 What are my responsibilities as an appraiser listed on the
Appraiser Roster?
Subpart H_Participation and Compliance Requirements
Sec.
200.210 Policy.
200.212 Definitions.
200.214 Covered Projects.
200.216 Controlling Participants.
200.218 Triggering Events.
200.220 Previous Participation review.
200.222 Request for reconsideration.
Subpart I_Nondiscrimination and Fair Housing
200.300 Nondiscrimination and fair housing policy.
Subpart J_Equal Employment Opportunity
200.400 Purpose.
200.405 Notice to public.
200.410 Definition of term ``applicant''.
200.415 Agreement of applicant.
200.420 Equal opportunity clause to be included in contracts and
subcontracts.
200.425 Exemptions.
200.430 Sanctions.
Subparts K-L [Reserved]
Subpart M_Affirmative Fair Housing Marketing Regulations
200.600 Purpose.
200.605 Authority.
200.610 Policy.
200.615 Applicability.
200.620 Requirements.
200.625 Affirmative fair housing marketing plan.
200.630 Notice of housing opportunities.
200.635 Compliance.
200.640 Effect on other requirements.
Appendix to Subpart M of Part 200--Equal Housing Opportunity Insignia
Subpart N [Reserved]
Subpart O_Lead-Based Paint Poisoning Prevention
200.800 Lead-based paint.
200.805 Definitions.
200.810 Single family insurance and coinsurance.
[[Page 9]]
Subpart P_Physical Condition of Multifamily Properties
200.850 Purpose.
200.853 Applicability.
200.855 Physical condition standards and physical inspection
requirements.
200.857 Administrative process for scoring and ranking the physical
condition of multifamily housing properties.
Subpart R [Reserved]
Subpart S_Minimum Property Standards
200.925 Applicability of minimum property standards.
200.925a Multifamily and care-type minimum property standards.
200.925b Residential and institutional building code comparison items.
200.925c Model codes.
200.926 Minimum property standards for one and two family dwellings.
200.926a Residential building code comparison items.
200.926b Model codes.
200.926c Model code provisions for use in partially accepted code
jurisdictions.
200.926d Construction requirements.
200.926e Supplemental information for use with the CABO One and Two
Family Dwelling Code.
200.927 Incorporation by reference of minimum property standards.
200.929 Description and identification of minimum property standards.
200.929a Fair Housing Accessibility Guidelines.
200.931 Statement of availability.
200.933 Changes in minimum property standards.
200.934 User fee system for the technical suitability of products
program.
200.935 Administrator qualifications and procedures for HUD building
products certification programs.
200.936 Supplementary specific procedural requirements under HUD
building products certification program for solid fuel type
room heaters and fireplace stoves.
200.937 Supplementary specific procedural requirements under HUD
building product standards and certification program for
plastic bathtub units, plastic shower receptors and stalls,
plastic lavatories, plastic water closet bowls and tanks.
200.940 Supplementary specific requirements under the HUD building
product standards and certification program for sealed
insulating glass units.
200.942 Supplementary specific procedural requirements under HUD
building product standards and certification program for
carpet and carpet with attached cushion.
200.943 Supplementary specific requirements under the HUD building
product standards and certification program for the
grademarking of lumber.
200.944 Supplementary specific requirements under the HUD building
product standards and certification program for plywood and
other performance rated wood-based structural-use panels.
200.945 Supplementary specific requirements under the HUD building
product standards and certification program for carpet.
200.946 Building product standards and certification program for
exterior finish and insulation systems, use of Materials
Bulletin UM 101.
200.947 Building product standards and certification program for
polystyrene foam insulation board.
200.948 Building product standards and certification program for carpet
cushion.
200.949 Building product standards and certification program for
exterior insulated steel door systems.
200.950 Building product standards and certification program for solar
water heating system.
200.952 Supplementary specific requirements under the HUD building
product standards and certification program for particleboard
interior stair treads.
200.954 Supplementary specific requirements under the HUD building
product standard and certification program for construction
adhesives for wood floor systems.
200.955 Supplementary specific requirements under the HUD building
product standard and certification program for fenestration
products (windows and doors).
Subpart T_Social Security Numbers and Employer Identification Numbers;
Assistance Applicants and Participants
200.1001 Cross-reference.
Subpart U_Social Security Numbers and Employer Identification Numbers;
Applicants in Unassisted Programs
200.1101 Cross-reference.
Subpart V_Income Information; Assistance Applicants and Participants
200.1201 Cross-reference.
Subpart W_Administrative Matters
200.1301 Expiring programs--Savings clause.
[[Page 10]]
200.1303 Annual income exclusions for the Rent Supplement Program.
Subpart Y_Multifamily Accelerated Processing (MAP): MAP Lender Quality
Assurance Enforcement
200.1500 Sanctions against a MAP lender.
200.1505 Warning letter.
200.1510 Probation.
200.1515 Suspension of MAP privileges.
200.1520 Termination of MAP privileges.
200.1525 Settlement agreements.
200.1530 Bases for sanctioning a MAP lender.
200.1535 MAP Lender Review Board.
200.1540 Imminent harm notice of action.
200.1545 Appeals of MAP Lender Review Board decisions.
Appendix A to Part 200--Standards Incorporated by Reference in the
Minimum Property Standards for Housing (HUD Handbook 4910.1)
Authority: 12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).
Source: 36 FR 24467, Dec. 22, 1971, unless otherwise noted.
Editorial Note: Nomenclature changes to part 200 appear at 69 FR
18803, Apr. 9, 2004.
Sec. 200.1 Purpose.
This part sets forth requirements that are applicable to several of
the programs of the Federal Housing Administration, an organizational
unit within the Department of Housing and Urban Development. Program
requirements applicable to FHA programs and other HUD programs also can
be found in 24 CFR part 5. The specific program regulations should be
consulted to determine which requirements in this part 200 or 24 CFR
part 5 are applicable.
[61 FR 14398, Apr. 1, 1996]
Subpart A_Requirements for Application, Commitment, and Endorsement
Generally Applicable to Multifamily and Health Care Facility Mortgage
Insurance Programs; and Continuing Eligibility Requirements for Existing
Projects
Source: 61 FR 14399, Apr. 1, 1996, unless otherwise noted.
Sec. 200.3 Definitions.
(a) The definitions ``department'', ``elderly person'', ``family'',
``HUD'', and ``Secretary'', as used in this subpart A, shall have the
meanings given these terms in 24 CFR part 5.
(b) The terms ``first mortgage'', ``hospital'', ``maturity date'',
``mortgage'', ``mortgagee'', and ``state'', as used in this subpart A
shall have the meaning given in the section of the National Housing Act
(12 U.S.C. 1701), as amended, under which the project mortgage is
insured.
(c) As used in this subpart A:
Act means the National Housing Act, (12 U.S.C. 1701) as amended.
Commissioner means the Federal Housing Commissioner.
FHA means the Federal Housing Administration.
Insured mortgage means a mortgage which has been insured by the
endorsement of the credit instrument by the Commissioner, or the
Commissioner's duly authorized representative.
Project means a property consisting of site, improvements and, where
permitted, equipment meeting the provisions of the applicable section of
the Act, other applicable statutes and regulations, and terms,
conditions and standards established by the Commissioner.
[61 FR 14399, Apr. 1, 1996, as amended at 77 FR 5675, Feb. 3, 2012]
Eligible Mortgagor
Sec. 200.5 Eligible mortgagor.
(a) Except as provided in paragraph (b) of this section, the
mortgagor:
(1) Shall be a single asset mortgagor entity acceptable to the
Commissioner, as limited by the applicable section of the Act, and shall
possess the powers necessary and incidental to operating the project,
except that the Commissioner may approve a non-single asset mortgagor
entity under such circumstances, terms and conditions determined and
specified as acceptable to the Commissioner; and
(2) Shall not be a natural person or tenant in common.
(b)(1) For multifamily project mortgages for which HUD issued a firm
commitment for mortgage insurance
[[Page 11]]
before September 1, 2011, and for multifamily project mortgages insured
under section 232 of the Act (12 U.S.C. 1715w), the mortgagor shall be a
natural person or entity acceptable to the Commissioner, as limited by
the applicable section of the Act, and shall possess the powers
necessary and incidental to operating the project.
(2) 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)(1) shall apply.
[76 FR 24369, May 2, 2011]
Sec. 200.6 Employer identification and social security numbers.
The requirements set forth in 24 CFR part 5, regarding the
disclosure and verification of social security numbers and employer
identification numbers by applicants and participants in assisted
mortgage and loan insurance and related programs, apply to these
programs.
Eligible Mortgagee
Sec. 200.10 Lender requirements.
The requirements set forth in part 202 of this chapter regarding
approval, recertification, withdrawal of approval, approval for
servicing, report requirements and conditions for supervised mortgagees,
nonsupervised mortgagees, investing mortgagees, and governmental and
similar institutions, apply to these programs.
[62 FR 20081, Apr. 24, 1997]
Sec. 200.11 Audit requirements for State and local governments as
mortgagees.
Requirements set forth in 2 CFR part 200, subpart F, apply to State
and local governments (as defined at 2 CFR 200.90 and 200.64,
respectively) that receive mortgage insurance as mortgagees.
[80 FR 75936, Dec. 7, 2015]
Eligible Mortgage
Sec. 200.15 Maximum mortgage.
Mortgages must not exceed either the statutory dollar amount or loan
ratio limitations established by the section of the Act under which the
mortgage is insured, except that the Commissioner may increase the
dollar amount limitations:
(a) By not to exceed 170 percent, in any geographical area, in which
the Commissioner finds that cost levels so require; and
(b) By not to exceed 170 percent, or 215 percent in high-cost areas,
where the Commissioner determines it necessary on a project-by-project
basis.
[73 FR 17239, Mar. 31, 2008]
Sec. 200.16 Project mortgage adjustments and reductions.
The principal amount computed in accordance with the applicable
section of the Act for the insured mortgage shall be subject to
additional adjustments and reductions in accordance with terms and
conditions established by the Commissioner.
Sec. 200.17 Mortgage coverage.
The mortgage shall cover the entire property included in the
project.
Sec. 200.18 Minimum loan prohibition.
A mortgagee may not require that the mortgage exceed a minimum
amount established by the mortgagee, as a condition of providing a loan
secured by a mortgage insured under this part.
Miscellaneous Project Mortgage Insurance
Sec. 200.20 Refinancing insured mortgages.
An existing mortgage insured under the Act, or an existing mortgage
held by the Secretary that is subject to a mortgage restructuring and
rental assistance sufficiency plan under the Multifamily Assisted
Housing Reform and Affordability Act, 42 U.S.C. 1437f
[[Page 12]]
note (MAHRA), may be refinanced pursuant to section 223(a)(7) of the Act
and such terms and conditions as may be established by the Commissioner.
The term of such refinancing in connection with the implementation of an
approved restructuring plan under section 401, subpart C of this title,
may be up to, but not more than, 30 years.
[72 FR 66037, Nov. 26, 2007]
Sec. 200.21 Reinsurance of Commissioner held mortgages.
Any mortgage assigned to the Commissioner in connection with payment
under a contract of mortgage insurance, or executed in connection with a
sale by the Commissioner of any property acquired under any section or
title of the Act, may be insured pursuant to provisions of section
223(c) of the Act and such terms and conditions established by the
Commissioner.
Sec. 200.22 Operating loss loans.
An insured loan to cover the operating losses of a project with an
existing Commissioner insured mortgage may be made in accordance with
provisions of section 223(d) of the Act and such terms and conditions
established by the Commissioner.
Sec. 200.23 Projects in declining neighborhoods.
A Mortgage financing the repair, rehabilitation or construction of a
project located in an older declining urban area shall be eligible for
insurance pursuant to provisions of section 223(e) of the Act and such
terms and conditions established by the Commissioner.
Sec. 200.24 Existing projects.
A mortgage financing the purchase or refinance of an existing rental
housing project or refinance of the existing debt of an existing
cooperative project under section 207 of the Act, or for refinancing the
existing debt of an existing nursing home, intermediate care facility,
assisted living facility, or board and care home, or any combination
thereof, under section 232 of the Act, may be insured pursuant to
provisions of section 223(f) of the Act and such terms and conditions
established by HUD.
[79 FR 42189, July 21, 2014]
Sec. 200.25 Supplemental loans.
A loan, advance of credit or purchase of an obligation representing
a loan or advance of credit made for the purpose of financing
improvements or additions to a project covered by a mortgage insured
under any section of the Act or Commissioner-held mortgage, or equipment
for a nursing home, intermediate care facility, board and care home,
assisted living facility, or group practices facility, may be insured
pursuant to the provisions of section 241 of the Act and such terms and
conditions established by HUD.
[72 FR 67545, Nov. 28, 2007]
Miscellaneous Cross Cutting Regulations
Sec. 200.30 Nondiscrimination and equal opportunity.
The requirements set forth in 24 CFR part 5, and subparts I, J, and
M of this part pertaining to nondiscrimination and equal opportunity,
apply to these programs.
Sec. 200.31 Debarment and suspension.
The requirements set forth in 2 CFR part 2424 apply to these
programs.
[72 FR 73494, Dec. 27, 2007]
Sec. 200.32 Participation and compliance requirements.
The requirements set forth in 24 CFR part 200, subpart H, apply to
these programs.
Sec. 200.33 Labor standards
(a) The requirements set forth in 29 CFR parts 1, 3 and 5 for
compliance with labor standards laws apply to projects under these
programs to the extent that labor standards apply as provided in section
212 of the Act, provided that:
(1) The labor standards provisions do not apply to projects insured
under sections 207 or 232 pursuant to section 223(f) of the Act; and
(2) Supplemental loans under section 241 of the Act are subject to
the provisions of section 212 applicable to the
[[Page 13]]
section or title pursuant to which the mortgage covering the project is
insured or pursuant to which the original mortgage was insured.
(b) The requirements set forth in 24 CFR part 70 apply to those
programs with respect to which there is a statutory provision allowing
HUD waiver of Davis-Bacon prevailing wage rates for volunteers.
(c) Project commitments, contracts and agreements, as determined by
the Commissioner, and construction contracts and subcontracts, shall
include terms, conditions and standards for compliance with applicable
requirements set forth in 29 CFR parts 1, 3 and 5 and section 212 of the
Act.
(d) No advance under a loan or mortgage that is subject to the
requirements of section 212 shall be eligible for insurance unless there
is filed with the application for the advance a certificate as required
by the Commissioner certifying that the laborers and mechanics employed
in construction of the project have been paid not less than the wage
rates required under section 212.
Sec. 200.34 Property and mortgage assessment.
The requirements set forth in 24 CFR part 200, subpart E, regarding
the mortgagor's responsibility for making those investigations, analysis
and inspections it deems necessary for protecting its interests in the
property apply to these programs.
Sec. 200.35 Appraisal standards--nondiscrimination requirements.
(a) Nondiscrimination in the selection of appraiser. In the
selection of an appraiser, there shall be no discrimination on the basis
of race, color, religion, national origin, sex, age, or disability.
(b) Nondiscrimination in appraisal determination. The certification
required by the Uniform Standards of Professional Appraisal Practice
must include a statement that the racial/ethnic composition of the
neighborhood surrounding the property in no way affected the appraisal
determination.
Sec. 200.36 Financial reporting requirements.
The mortgagor must comply with the financial reporting requirements
in 24 CFR part 5, subpart H.
[63 FR 46592, Sept. 1, 1998]
Sec. 200.37 Preventing crime in federally assisted housing.
See part 5, subparts I and J of this title, for provisions
concerning preventing crime in federally assisted housing, including
programs administered under section 236 and under sections 221(d)(3) and
221(d)(5) of the National Housing Act.
[66 FR 28797, May 24, 2001]
Sec. 200.38 Protections for victims of domestic violence.
(a) The requirements for protection for victims of domestic
violence, dating violence, sexual assault, or stalking in 24 CFR part 5,
subpart L (Protection for Victims of Domestic Violence, Dating Violence,
Sexual Assault, or Stalking) apply to programs administered under
section 236 and under sections 221(d)(3) and (d)(5) of the National
Housing Act, as follows:
(1) Multifamily rental housing under section 221(d)(3) of the
National Housing Act (12 U.S.C. 17151(d)) with a below-market interest
rate (BMIR) pursuant to section 221(d)(5), with implementing regulations
at 24 CFR part 221. The Section 221(d)(3) BMIR program insured and
subsidized mortgage loans to facilitate new construction or substantial
rehabilitation of multifamily rental cooperative housing for low- and
moderate-income families. The program is no longer active, but Section
221(d)(3) BMIR properties that remain in existence are covered by VAWA.
Coverage of section 221(d)(3) and (d)(5) BMIR housing does not include
section 221(d)(3) and (d)(5) BMIR projects that refinance under section
223(a)(7) or 223(f) of the National Housing Act where the interest rate
is no longer determined under section 221(d)(5).
(2) Multifamily rental housing under section 236 of the National
Housing Act (12 U.S.C. 1715z-1), with implementing
[[Page 14]]
regulations at 24 CFR part 236. Coverage of the section 236 program
includes not only those projects with FHA-insured project mortgages
under section 236(j), but also non-FHA-insured projects that receive
interest reduction payments (``IRP'') under section 236(b) and formerly
insured section 236 projects that continue to receive interest reduction
payments through a ``decoupled'' IRP contract under section 236(e)(2).
Coverage also includes projects that receive rental assistance payments
authorized under section 236(f)(2).
(b) For the programs administered under paragraph (a) of this
section, ``covered housing provider'' as such term is used in 24 CFR
part 5, subpart L, refers to the mortgagor, or owner, as applicable.
[81 FR 80805, Nov. 16, 2016]
Fees and Charges
Sec. 200.40 HUD fees.
The following fees apply to mortgages to be insured under this part.
(a) Application fee--SAMA letter (for new construction). An
application fee of $1 per thousand dollars of the requested mortgage
shall accompany the application for a SAMA letter. An additional fee of
$1 per thousand dollars of the requested mortgage amount shall be
charged for the review of plans and specifications.
(b) Application fee--feasibility letter (for substantial
rehabilitation). An application fee of $3 per thousand dollars of the
requested mortgage amount shall accompany the application for a
feasibility letter.
(c) Application fee--conditional commitment. For a mortgage being
insured under section 223(f) of the Act (12 U.S.C. 1715n), an
application-commitment fee of $3 per thousand dollars of the requested
mortgage amount shall accompany an application for conditional
commitment.
(d)(1) Application fee--firm commitment: General. An application for
firm commitment shall be accompanied by an application-commitment fee in
an amount determined by the Secretary, which when added to any prior
fees received in connection with the same application, shall not exceed
$5.00 per thousand dollars of the requested mortgage amount to be
insured. The payment of an application-commitment fee shall not be
required in connection with an insured mortgage involving the sale by
the government of housing or property acquired, held, or contracted
pursuant to the Atomic Energy Community Act of 1955 (42 U.S.C. 2301 et
seq.).
(2) Application fee--Section 232 Programs. For purposes of mortgages
insured under HUD's regulations in 24 CFR part 232, subpart C, an
application for firm commitment shall be accompanied by an application
fee in an amount determined by the Secretary, which shall not exceed
$5.00 per thousand dollars of the requested mortgage amount to be
insured.
(e) Inspection fee--(1) In general. The firm commitment may provide
for the payment of an inspection fee in an amount not to exceed $5 per
thousand dollars of the commitment. If an inspection fee is required, it
shall be paid as follows:
(i) If the case involves insurance of advances, at the time of
initial endorsement; or
(ii) If the case involves insurance upon completion, before the date
construction is begun.
(2) Existing projects. For a mortgage being insured under section
223(f) of the Act, if the application provides for the completion of
repairs, replacements and/or improvements (repairs), the Commissioner
will charge an inspection fee equal to one percent (1%) of the cost of
the repairs. However, where the Commissioner determines the cost of
repairs is minimal, the Commissioner may establish a minimum inspection
fee that exceeds one percent of the cost of repairs and can periodically
increase or decrease this minimum fee.
(f) Fees on increases--in general. This section applies to all
applications except applications involving hospitals, which are covered
in 24 CFR part 242.
(1) Increase in firm commitment before endorsement. An application,
filed before initial endorsement (or before endorsement in a case
involving insurance upon completion), for an increase in the amount of
an outstanding firm commitment, shall be accompanied by
[[Page 15]]
a combined additional application and commitment fee. This combined
additional fee shall be in an amount that will aggregate $5 per thousand
dollars of the amount of the requested increase. If an inspection fee
was required in the original commitment, an additional inspection fee
shall be paid in an amount computed at the same dollar rate per thousand
dollars of the amount of increase in commitment as was used for the
inspection fee required in the original commitment. When insurance of
advances is involved, the additional inspection fee shall be paid at the
time of initial endorsement. When insurance upon completion is involved,
the additional inspection fee shall be paid before the date construction
is begun; or, if construction has begun, it shall be paid with the
application for increase.
(2) Increase in mortgage between initial and final endorsement. Upon
the filing of an application between initial and final endorsement, for
an increase in the amount of the mortgage, either by amendment or by
substitution of a new mortgage, a combined additional application and
commitment fee shall accompany the application. This combined additional
fee shall be in an amount that will aggregate $5 per thousand dollars of
the amount of the increase requested. If an inspection fee was required
in the original commitment, an additional inspection fee shall accompany
the application in an amount not to exceed the $5 per thousand dollars
of the amount of the increase requested.
(3) Loan to cover operating losses. In connection with a loan to
cover operating losses (see Sec. 200.22), a combined application and
commitment fee of $5 per thousand dollars of the amount of the loan
applied for shall be submitted with the application for a firm
commitment. No inspection fee shall be required.
(g) Reopening of expired commitments. An expired commitment may be
reopened if a request for reopening is received by the Commissioner
within 90 days of the expiration of the commitment. The reopening
request shall be accompanied by a fee of 50 cents per thousand dollars
of the amount of the expired commitment. If the reopening request is not
received by the Commissioner within the required 90-day period, a new
application, accompanied by the required application and commitment fee,
must be submitted.
(h) Transfer fee. Upon application for the approval of a transfer of
physical assets or the substitution of mortgagors, a transfer fee of 50
cents per thousand dollars shall be paid on the original face amount of
the mortgage in all cases, except that a transfer fee shall not be paid
where both parties to the transfer transaction are nonprofit purchasers,
or when the transfer of physical assets or the substitution of
mortgagors occurs contemporaneously with the restructuring of a mortgage
pursuant to a restructuring plan under part 401, subpart C of this
title.
(i) Refund of fees. If the amount of the commitment issued or
increase in mortgage granted is less than the amount applied for, the
Commissioner shall refund the excess amount of the application and
commitment fees submitted by the applicant. If an application is
rejected before it is assigned for processing, or in such other
instances as the Commissioner may determine, the entire application and
commitment fee or any portion thereof may be returned to the applicant.
Commitment, inspection and reopening fees may be refunded, in whole or
in part, if it is determined by the Commissioner that there is a lack of
need for the housing or that the construction or financing of the
project has been prevented because of condemnation proceedings or other
legal action taken by a governmental body or public agency, or in such
other instances as the Commissioner may determine. A transfer fee may be
refunded only in such instances as the Commissioner may determine.
(j) Fees not required. (1) The payment of an application,
commitment, inspection, or reopening fee shall not be required in
connection with the insurance of a mortgage involving the sale by the
Secretary of any property acquired under any section or title of the
Act.
(2) The payment of an application or commitment fee shall not be
required in connection with the insurance of a
[[Page 16]]
mortgage used to facilitate a restructuring plan under part 401, subpart
C of this title.
[61 FR 14414, Apr. 1, 1996, as amended at 72 FR 66037, Nov. 26, 2007; 72
FR 67545, Nov. 28, 2007; 80 FR 48027, Aug. 11, 2015]
Sec. 200.41 Maximum mortgagee fees and charges.
(a) Mortgagee fees and charges included in the mortgage must be for
actual required services provided to the mortgagor by the mortgagee, and
shall not exceed common market rates for such services as determined by
the Commissioner.
(b) Mortgagee charges for prepayment of the mortgage and late
mortgage payments shall not exceed that determined appropriate by the
Commissioner.
Commitment Applications
Sec. 200.45 Processing of applications.
(a) Preapplication conference. Except for mortgages insured under
section 241(f) or 242 of the Act, the local HUD Office will determine
whether participation in such a conference is required as a condition to
submission of an initial application for either a site appraisal and
market analysis (SAMA) letter (for new construction), a feasibility
letter (for substantial rehabilitation), or for a firm commitment. The
project sponsor may elect (after the preapplication conference if
required) to submit an application for a SAMA or a feasibility letter
(as appropriate), or for a firm commitment for insurance depending upon
the completeness of the drawings, specifications and other required
exhibits. An application for a SAMA or feasibility letter may be
submitted by the project sponsor. An application for a firm commitment
for insurance must be submitted by both the project sponsor and an
approved mortgagee. Applications shall be submitted to the local HUD
Office on HUD-approved forms. No application will be considered unless
accompanied by all exhibits required by the form and program handbooks.
At the option of the local HUD Office, the SAMA/Feasibility letter stage
of processing can be combined with the firm commitment stage of
processing.
(b) Firm commitment requirement. An application for a firm
commitment must be made by an approved mortgagee for any project for
which a mortgagor seeks mortgage insurance under the Act.
(c) Staged applications. Staged applications leading to an
application for firm commitment shall be made as determined appropriate
by the Commissioner, and in accordance with such terms and conditions
established by the Commissioner. The intermediate stages to firm
commitment may include a site appraisal and market analysis (SAMA)
letter stage or a feasibility letter stage and a conditional commitment.
The conditional commitment stage applies only to mortgages to be insured
pursuant to section 223(f) of the Act.
(d) Effect of SAMA letter, feasibility letter, and firm commitment--
(1) SAMA letter. (i) The issuance of a SAMA letter indicates completion
of the site appraisal and market analysis stage to determine initial
acceptability of the site and recognition of a specific market need. The
SAMA letter is not a commitment to insure a mortgage for the proposed
project and does not bind the Commissioner to issue a firm commitment to
insure. The SAMA letter precedes the later submission of acceptable
plans and specifications for the proposed project and is limited to
advising the applicant as to the following determinations of the
Commissioner, which shall not be changed to the detriment of an
applicant, if the application for a firm commitment is received before
expiration of the SAMA letter:
(A) The land value fully improved (with off-site improvements
installed);
(B) The acceptability of the proposed project site, the proposed
composition, number and size of the units and the market for the number
of proposed units. Where the application is not acceptable as submitted,
but can be made acceptable by a change in the number, size, or
composition of the units, the SAMA letter may establish the specific
lesser number of units which would be acceptable and any acceptable
alternative plan for the composition and size of units; and
[[Page 17]]
(C) The acceptability of the unit rents proposed. Where rent levels
are unacceptable, the SAMA letter may establish specific rents which are
acceptable.
(ii) After receiving a SAMA letter, the sponsor shall submit design
drawings and specifications in a timeframe prescribed by the
Commissioner. The Commissioner will review and comment on design
development and the drawings and specifications. The comments will be
provided to the sponsor for use in preparing a firm commitment
application.
(2) Feasibility letter. The issuance of a feasibility letter
indicates approval of the preliminary work write-up and outline
specifications and completion of technical processing involving the
estimated rehabilitation cost of the project, the ``as is'' value of the
site, the detailed estimates of operating expenses and taxes, the
specific unit rents, the vacancy allowance, and the estimated mortgage
amount. The issuance of a feasibility letter is not a commitment to
insure a mortgage for the proposed project and does not bind the
Commissioner to issue a firm commitment to insure. Determinations found
in a feasibility letter are not to be binding upon the Department and
may be changed in whole or in part at any later point in time. The
letter may even be unilaterally terminated by the Commissioner if found
necessary.
(3) Conditional commitment. The issuance of a Section 223(f)
conditional commitment indicates completion of technical processing
involving the estimated value of the property, the detailed estimates of
rents, operating expenses and taxes and an estimated mortgage amount.
(e) Term of SAMA letter, feasibility letter, and conditional
commitment. A SAMA letter, a feasibility letter, and a conditional
commitment shall be effective for whatever term is specified in the
respective letter or commitment.
(f) Rejection of an application. A significant deviation in an
application from the Commissioner's terms or conditions in an earlier
stage application commitment or agreement shall be grounds for
rejection. The fees paid to such date shall be considered as having been
earned notwithstanding such rejection.
(Approved by the Office of Management and Budget under control number
2502-0029)
[61 FR 14415, Apr. 1, 1996]
Sec. 200.46 Commitment issuance.
Upon approval of an application for insurance, a commitment shall be
issued by the Commissioner setting forth the terms and conditions upon
which the mortgage will be insured. The commitment term and any
extension or reopening of an expired commitment shall be in accordance
with standards established by the Commissioner.
Sec. 200.47 Firm commitments.
A valid firm commitment must be in effect at the time the mortgage
instrument is endorsed.
(a) Insurance upon completion. The commitment shall provide the
terms and conditions for the insurance of the mortgage:
(1) After completion of construction or substantial rehabilitation
of the project; or
(2) Upon completion of required work, except as deferred by the
Commissioner in accordance with terms, conditions and standards
established by the Commissioner, for an existing project without
substantial rehabilitation.
(b) Insured advances. The commitment shall provide for insurance of
the mortgage as provided in paragraph (a) of this section, and for the
insurance of mortgage money advanced in accordance with terms and
conditions established by the Commissioner during: construction;
substantial rehabilitation; or other work acceptable to the
Commissioner.
Requirements Incident to Insured Advances
Sec. 200.50 Building loan agreement.
The mortgagor and mortgagee must execute a building loan agreement
approved by the Commissioner, that sets forth the terms and conditions
under
[[Page 18]]
which progress payments may be advanced during construction, before
initial endorsement of the mortgage for insurance.
Sec. 200.51 Mortgagee certificate.
The mortgagee shall certify to the Commissioner that it will conform
with terms and conditions established by the Commissioner for the
mortgagee's control of project funds, and other incidental requirements
established by the Commissioner.
Sec. 200.52 Construction contract.
The form of contract between the mortgagor and builder shall be as
prescribed by the Commissioner in accordance with terms and conditions
established by the Commissioner.
Sec. 200.53 Initial operating funds.
The mortgagor shall deposit cash with the mortgagee, or in a
depository satisfactory to the mortgagee and under control of the
mortgagee, in accordance with terms, conditions and standards
established by the Commissioner for:
(a) Accruals for taxes, ground rates, mortgage insurance premiums,
and property insurance premiums, during the course of construction;
(b) Meeting the cost of equipping and renting the project subsequent
to its completion in whole or part; and
(c) Allocation by the mortgagee for assessments required by the
terms of the mortgage in an amount acceptable to the Commissioner.
Sec. 200.54 Project completion funding.
(a) Except as provided in paragraph (d) of this section, the
mortgagor shall deposit with the mortgagee cash deemed by the
Commissioner to be sufficient, when added to the proceeds of the insured
mortgage, to assure completion of the project and to pay the initial
service charge, carrying charges, and legal and organizational expenses
incident to the construction of the project. The Commissioner may accept
a lesser cash deposit or an alternative to a cash deposit in accordance
with terms and conditions established by the Commissioner, where the
required funding is to be provided by a grant or loan from a Federal,
State, or local government agency or instrumentality.
(b) An agreement acceptable to the Commissioner shall require that
funds provided by the mortgagor under requirements of this section must
be disbursed in full for project work, material, and incidental charges
and expenses before disbursement of any mortgage proceeds, except:
(c) Low-income housing tax credit syndication proceeds, historic
tax-credit syndication proceeds, New Markets Tax Credits proceeds, or
funds provided by a grant or loan from a Federal, State, or local
governmental agency or instrumentality under requirements of this
section need not be fully disbursed before the disbursement of mortgage
proceeds, where approved by the Commissioner in accordance with terms,
conditions, and standards established by the Commissioner;
(d) In the case of a mortgage insured under any provision of this
title executed in connection with the purchase, construction,
rehabilitation, or refinancing of a multifamily tax credit project, the
Commissioner may not require:
(1) The escrowing of equity provided by Low-Income Housing Tax
Credits for the project pursuant to Title 26, section 42 of the Internal
Revenue Code of 1986;
(2) The escrowing of equity provided by historic rehabilitation tax
credits, New Markets Tax Credits, or any other form of security, such as
a letter of credit.
[75 FR 51915, Aug. 23, 2010]
Sec. 200.55 Financing fees and charges.
Fees and charges approved by the Commissioner in excess of the
initial service charge shall be deposited with the mortgagee in cash
before initial endorsement, except as otherwise preapproved by the
Commissioner.
Sec. 200.56 Assurance of completion for on-site improvements.
The mortgagor shall furnish assurance of completion of the project
in the form and amount provided by terms, conditions and standards
established by the Commissioner.
[[Page 19]]
General Requirements
Sec. 200.60 Assurance of completion for offsite facilities.
An assurance of completion for offsite utilities, streets, and other
facilities required for a buildable site shall be provided in an amount
and form acceptable to the Commissioner, except where a municipality or
other public body has, in a manner acceptable to the Commissioner,
agreed to install such improvements without cost to the mortgagor.
Sec. 200.61 Title.
(a) Marketable title to the project must be vested in the mortgagor
as of the date the mortgage is filed for record.
(b) Title evidence for the Commissioner's examination shall include
a lender's title insurance policy, which title policy provides survey
coverage based on a survey acceptable to the title company and the
Commissioner; or as the Commissioner may otherwise require, in
accordance with terms, conditions and standards established by the
Commissioner.
(c) Endorsement of the credit instrument for insurance shall
evidence the acceptability of title evidence.
Sec. 200.62 Certifications.
Any agreement, undertaking, statement or certification required by
the Commissioner shall specifically state that it has been made,
presented, and delivered for the purpose of influencing an official
action of the FHA, and of the Commissioner, and may be relied upon by
the Commissioner as a true statement of the facts contained therein.
Sec. 200.63 Required deposits and letters of credit.
(a) Deposits. Where the Commissioner requires the mortgagor to make
a deposit of cash or securities, such deposit shall be with the
mortgagee or a depository acceptable to the mortgagee. The deposit shall
be held by the mortgagee in a special account or by the depository under
an appropriate agreement approved by the Commissioner.
(b) Letter of credit. Where the use of a letter of credit is
acceptable to the Commissioner in lieu of a deposit of cash or
securities, the letter of credit shall be issued to the mortgagee by a
banking institution and shall be unconditional and irrevocable:
(1) The mortgagee of record may not be the issuer of any letter of
credit without the prior written consent of the Commissioner.
(2) The mortgagee shall be responsible to the Commissioner for
collection under the letter of credit. In the event a demand for payment
thereunder is not immediately met, the mortgagee shall immediately
provide a cash deposit equivalent to the undrawn balance of the letter
of credit.
Property Requirements
Sec. 200.70 Location and fee interest.
The property must be held by an eligible mortgagor, and must conform
with requirements pertaining to property location and fee or lease
interests of the section of the Act under which the mortgage is insured.
Sec. 200.71 Liens.
The project must be free and clear of all liens other than the
insured mortgage, except that the property may be subject to an inferior
lien as provided by terms and conditions established by the Commissioner
for an inferior lien:
(a) Made or held by a Federal, State or local government
instrumentality;
(b) Required in connection with: an operating loss loan insured
pursuant to a section 223(d) of the Act; a supplemental loan insured
pursuant to section 241 of the Act; or a mortgage to purchase or
refinance an existing project pursuant to section 223(f) of the Act; or
(c) As otherwise provided by the Commissioner.
Sec. 200.72 Zoning, deed and building restrictions.
The project when completed shall not violate any material zoning or
deed restrictions applicable to the project site, and shall comply with
all applicable building and other governmental codes, ordinances,
regulations and requirements.
[[Page 20]]
Sec. 200.73 Property development.
(a) The property shall be suitable and principally designed for the
intended use, as provided by the applicable section of the Act under
which the mortgage is insured, and have long-term marketability. Design,
construction, substantial rehabilitation and repairs shall be in
accordance with standards established by the Commissioner.
(b) A project may include such commercial and community facilities
as the Commissioner deems acceptable.
(c) The improvements shall constitute a single project. Not less
than five rental dwelling units or personal care units, 20 medical care
beds, or 50 manufactured home pads, shall be on one site, except that
such limitations do not apply to group practice facilities.
Sec. 200.74 Minimum property standards.
The requirements set forth in subpart S of this part apply to these
programs, except for hospitals insured under section 242 of the Act and
group practice facilities insured under title XI of the Act.
Sec. 200.75 Environmental quality determinations and standards.
Requirements set forth in 24 CFR part 50, Protection and Enhancement
of Environmental Quality, 24 CFR part 51, Environmental Criteria and
Standards, 24 CFR part 55, Implementation of Executive Order 11988,
Flood Plain Management, and as otherwise required by the Commissioner
apply to these programs.
Sec. 200.76 Smoke detectors.
Smoke detectors and alarm devices must be installed in accordance
with standards and criteria acceptable to the Commissioner for the
protection of occupants in any dwelling or facility bedroom or other
primary sleeping area.
Sec. 200.77 Lead-based paint poisoning prevention.
Requirements set forth in 24 CFR part 35 apply to these programs.
Sec. 200.78 Energy conservation.
Construction, mechanical equipment, and energy and metering
selections shall provide cost effective energy conservation in
accordance with standards established by the Commissioner.
Mortgage Provisions
Sec. 200.80 Mortgage form.
The mortgage shall be:
(a) Executed on a form approved by the Commissioner for use in the
jurisdiction in which the property securing the mortgage is situated,
which form shall not be changed without the prior written approval of
the Commissioner.
(b) Executed by an eligible mortgagor.
(c) A first lien on the property securing the mortgage, which
property conforms with the property standards prescribed by the
Commissioner.
Sec. 200.81 Disbursement of mortgage proceeds.
The mortgagee shall be obligated, as a part of the mortgage
transaction, to disburse the principal amount of the mortgage to the:
(a) Mortgagor or mortgagor's account;
(b) Mortgagor's creditors for the mortgagor's account, subject to
the mortgagor's consent.
Sec. 200.82 Maturity.
The mortgage shall have a maturity satisfactory to the Commissioner,
and shall contain complete amortization or sinking-fund provisions
satisfactory to the Commissioner.
(a) The maximum mortgage term may not exceed the lesser of:
(1) Any limits included under the applicable section of the Act.
(2) Thirty-five years for existing projects, except that the
mortgage term may be up to 40 years under terms and conditions
established by the Commissioner, and 40 years for proposed construction
and substantial rehabilitation projects.
(3) Seventy-five percent of the estimated remaining economic life of
the physical improvements.
(b) The minimum mortgage term shall not be less than 10 years.
[[Page 21]]
Sec. 200.83 Interest rate.
(a) The mortgage shall bear interest at the rate agreed upon by the
mortgagee and the mortgagor.
(b) Interest shall be payable in monthly installments on the
principal amount of the mortgage outstanding on the due date of each
installment.
(c) The amount of any increase approved by the Commissioner in the
mortgage amount between initial and final endorsement in excess of the
amount that the Commissioner had committed to insure at initial
endorsement shall bear interest at the rate agreed upon by the mortgagee
and the mortgagor.
Sec. 200.84 Payment requirements.
The mortgage shall provide for:
(a) A single aggregate payment each month for all payments to be
made by the mortgagor to the mortgagee.
(b) The mortgagor to pay to the mortgagee:
(1) Interest and principal on the first day of each month in
accordance with an amortization plan agreed upon by the mortgagor, the
mortgagee and the Commissioner.
(i) Date of first payment to interest shall be the endorsement date
or, where there are insured advances, the initial endorsement date.
(ii) Date of first payment to principal. The Commissioner shall
estimate the time necessary to complete the project and shall establish
the date of the first payment to principal so that the lapse of time
between completion of the project and commencement of amortization will
not be longer than necessary to obtain sustaining occupancy.
(2) An amount on each interest payment date sufficient to accumulate
in the hands of the mortgagee one payment period prior to its due date,
the next annual mortgage insurance premium payable by the mortgagee to
the Commissioner. Such payments shall continue only so long as the
contract of insurance shall remain in effect.
(3) Equal monthly payments as will amortize the ground rents, if
any, and the estimated amount of all taxes, water charges, special
assessments, and fire and other hazard insurance premiums, within a
period ending one month prior to the dates on which the same become
delinquent.
(4) The mortgage shall further provide:
(i) That such payments shall be held by the mortgagee, for the
purpose of paying such items before they become delinquent.
(ii) For adjustments in case such estimated amounts shall prove to
be more, or less, than the actual amounts so paid therefor by the
mortgagor.
(c) The mortgagee to apply each mortgagor payment received to the
following items in the order set forth:
(1) Premium charges under the contract of mortgage insurance.
(2) Ground rents, taxes, special assessments, and fire and other
hazard insurance premiums.
(3) Interest on the mortgage.
(4) Amortization of the principal of the mortgage.
Sec. 200.85 Covenant against liens.
(a) The mortgage shall contain a covenant against the creation by
the mortgagor of liens against the property superior or inferior to the
lien of the mortgage except for such inferior lien as may be approved by
the Commissioner in accordance with provisions of Sec. 200.71; and
(b) A covenant against repayment of a Commissioner approved inferior
lien from mortgage proceeds other than surplus cash or residual
receipts, except in the case of an inferior lien created by an operating
loss loan insured pursuant to section 223(d) of the Act, or a
supplemental loan insured pursuant to section 241 of the Act.
Sec. 200.86 Covenant for fire and other hazard insurance.
The mortgage shall contain a covenant binding the mortgagor to
maintain fire and extended coverage insurance on the property in
accordance with terms and conditions established by the Commissioner.
Sec. 200.87 Mortgage prepayment.
(a) Prepayment privilege. Except as provided in paragraph (c) of
this section or otherwise established by the Commissioner, the mortgage
shall contain a provision permitting the mortgagor to prepay the
mortgage in whole
[[Page 22]]
or in part upon any interest payment date, after giving the mortgagee 30
days' notice in writing in advance of its intention to so prepay.
(b) Prepayment charge. The mortgage may contain a provision for such
charge, in the event of prepayment of principal, as may be agreed upon
between the mortgagor and the mortgagee, subject to the following:
(1) The mortgagor shall be permitted to prepay up to 15 percent of
the original principal amount of the mortgage in any one calendar year
without any such charge.
(2) Any reduction in the original principal amount of the mortgage
resulting from the certification of cost which the Commissioner may
require shall not be construed as a prepayment of the mortgage.
(c) Prepayment of bond-financed or GNMA securitized mortgages. Where
the mortgage is given to secure GNMA mortgage-backed securities or a
loan made by a lender that has obtained the funds for the loan by the
issuance and sale of bonds or bond anticipation notes, or both, the
mortgage may contain a prepayment restriction and prepayment penalty
charge acceptable to the Commissioner as to term, amount, and
conditions.
(d) HUD override of prepayment restrictions. In the event of a
default, the Commissioner may override any lockout, prepayment penalty
or combination thereof in order to facilitate a partial or full
refinancing of the mortgaged property and avoid a claim.
Sec. 200.88 Late charge.
(a) The mortgage may provide for the collection by the mortgagee of
a late charge in accordance with terms, conditions, and standards of the
Commissioner for each dollar of each payment to interest or principal:
(1) More than 10 days in arrears to cover the expense involved in
handling delinquent payments;
(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), more than 15 days in arrears to cover the expense
involved in handling delinquent payments.
(b) Late charges shall be separately charged to and collected from
the mortgagor and shall not be deducted from any aggregate monthly
payment.
[76 FR 24369, May 2, 2011]
Cost Certification
Sec. 200.95 Certification of cost requirements.
(a) Before initial endorsement of the mortgage for insurance, the
mortgagor, the mortgagee, and the Commissioner shall enter into an
agreement in form and content satisfactory to the Commissioner for the
purpose of precluding any excess of mortgage proceeds over statutory
limitations. Under this agreement, the mortgagor shall disclose its
relationship with the builder, including any collateral agreement, and
shall agree:
(1) To enter into a construction contract, the terms of which shall
depend on whether or not there exists an identity of interest between
the mortgagor and the builder.
(2) To execute a Certificate of Actual Costs, upon completion of all
physical improvements on the mortgaged property.
(3) To apply in reduction of the outstanding balance of the
principal of the mortgage any excess of mortgage proceeds over statutory
limitations based on actual cost.
(b) The provisions of paragraph (a) of this section relating to
disclosure and the requirement for a construction contract shall not
apply where the mortgagor is the general contractor.
Sec. 200.96 Certificates of actual cost.
(a) The mortgagor's certificate of actual cost, in a form prescribed
by the Commissioner, shall be submitted upon completion of the physical
improvements to the satisfaction of the Commissioner and before final
endorsement, except that in the case of an existing project that does
not require substantial rehabilitation and where the commitment provides
for completion of specified repairs after endorsement, a supplemental
certificate of actual cost will be submitted covering
[[Page 23]]
the completed costs of any such repairs. The certificate shall show the
actual cost to the mortgagor, after deduction of any kickbacks, rebates,
trade discounts, or other similar payments to the mortgagor, or to any
of its officers, directors, stockholders, 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.
Sec. 200.97 Adjustments resulting from cost certification.
(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.
Endorsement
Sec. 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, 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).
Sec. 200.101 Mortgagor lien certificate.
The mortgagor shall certify at the final endorsement of the mortgage
for insurance as to each of the following:
[[Page 24]]
(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 the mortgage transaction, the purchase of the mortgaged
property, the construction or rehabilitation of the project or the
purchase of the equipment financed with mortgage proceeds.
Regulation of Mortgagors
Sec. 200.105 Mortgagor supervision.
(a) As long as the Commissioner is the insurer or holder of the
mortgage, the Commissioner shall regulate the mortgagor by means of a
regulatory agreement providing terms, conditions and standards
established by the Commissioner, or by such other means as the
Commissioner may prescribe.
(b) The Commissioner may delegate to the mortgagee or other party
the Commissioner's authority, in whole or in part, in accordance with
the terms, conditions and standards established by the Commissioner in
any executed Regulatory Agreement or other instrument granting the
Commissioner supervision of the mortgagor.
[61 FR 14399, Apr. 1, 1996, as amended at 65 FR 61074, Oct. 13, 2000]
Sec. 200.106 Projects with limited distribution mortgagors and program
assistance.
(a) Regulation as limited distribution mortgagors. In addition to
regulation under Sec. 200.105, limited distribution mortgagors for
projects receiving ``assistance within the jurisdiction of the
Department'' (as defined in Sec. 4.3 of this title) may be regulated by
the Commissioner as to additional matters, by regulation or otherwise,
including as to the amount of the permissible distribution to the
mortgagor.
(b) Increased distributions. The Commissioner may permit increased
distributions of surplus cash, in excess of the amounts the Commissioner
otherwise permits for limited distribution mortgagors, to a limited
distribution mortgagor who participates in a HUD-approved initiative or
program to preserve housing stock with below-market rents as affordable
housing. The increased distribution will be limited to a maximum amount
based on market rents and calculated according to HUD instructions.
Funds that the mortgagor is authorized to retain under section 236(g)(2)
of the National Housing Act are not considered distributions to the
mortgagor.
(c) Pre-emption. Any State or local law or regulation that restricts
distributions to an amount lower than permitted by the Commissioner
under authority of this section is preempted to the extent provided in
section 524(f) of the Multifamily Assisted Housing Reform and
Affordability Act of 1997.
[65 FR 61074, Oct. 13, 2000]
Subpart B_Electronic Submission of Required Data for Mortgage Defaults
and Mortgage Insurance Claims for Insured Multifamily Mortgages
Source: 64 FR 4769, Jan. 29, 1999, unless otherwise noted.
Sec. 200.120 Purpose and applicability.
(a) Purpose. The purpose of this subpart B is to require mortgagees
of all multifamily projects whose mortgages are insured or coinsured by
HUD to submit electronically information regarding mortgage
delinquencies, defaults, reinstatements, elections to assign, and
withdrawals of assignment elections, and related information, as that
information is required by 24 CFR part 207 and Form HUD-92426 (which is
available at the Department of Housing and Urban Development, HUD
Customer Service Center, 451 7th Street, SW, Room B-100, Washington, DC
20410; telephone (800) 767-7468).
(b) Applicability. This subpart applies to all HUD multifamily
mortgage insurance and coinsurance programs.
[[Page 25]]
Sec. 200.121 Requirements and effectiveness.
(a) Multifamily mortgagees, which are required by 24 CFR part 207 to
report mortgage delinquencies, defaults, reinstatements, assignment
elections, withdrawals of assignment elections, and related information,
must submit this information electronically, over the Internet, in
accordance with the following schedule of effectiveness:
(1) Mortgagees having 70 or more insured mortgage loans must comply
with this section by no later than March 1, 1999;
(2) Mortgagees having from 26 to 69 insured mortgage loans must
comply with this section by no later than January 1, 2000;
(3) Mortgagees having from 11 to 25 insured mortgage loans must
comply with this section by no later than January 1, 2001;
(4) Mortgagees having 10 or fewer insured mortgage loans must comply
with this section by no later than January 1, 2002.
(b) Exception. On or after January 1, 2002, mortgagees that hold or
service fewer than 10 multifamily mortgages may continue to report
mortgage delinquencies, defaults, reinstatements, assignment elections,
withdrawals of assignment elections, and related information in writing
on Form HUD-92426 only with specific HUD approval. HUD will grant such
approval, upon application by the mortgagee, for reasons of hardship due
to insufficient financial resources to purchase the required hardware
and Internet access.
(c) HUD will not accept reports of information regarding defaults,
reinstatements, assignment elections, and related information in a
manner that is not in accordance with this section. Failure on the part
of mortgagees to report this information as required by 24 CFR part 207
and this section may result in HUD's application of the sanctions and
surcharges specified in 24 CFR part 207.
Subparts C-D [Reserved]
Subpart E_Mortgage Insurance Procedures and Processing
Application for Insurance
Sec. 200.145 Property and mortgage assessment.
(a) The mortgagor is responsible for making those investigations,
analyses and inspections it deems necessary for protecting its interests
in the property.
(b) Any appraisals, inspections, environmental assessments, and
technical or financial evaluations conducted by or for the Commissioner
are performed to determine the maximum insurable mortgage, and to
protect the Commissioner and the FHA insurance funds. Such appraisals,
inspections, assessments and evaluations neither create nor imply a duty
or obligation from HUD to the mortgagor, or to any other party, and are
not to be regarded as a warranty by HUD to the mortgagor, or any other
party, of the value or condition of the property.
[61 FR 14404, Apr. 1, 1996]
Claims for Losses
Sec. 200.153 Presentation of claim.
In the event the insured lender is entitled under the contract of
mortgage insurance to receive a claim settlement, the mortgagee presents
a claim for insurance benefits in accordance with the Secretary's
instructions.
[61 FR 14404, Apr. 1, 1996]
Sec. 200.156 Settlement of claims.
Upon the Secretary's approval of a claim, the claim will be settled
by issuance of cash, debentures or both, and, in certain cases, by
issuance of a certificate of claim. However, in the event a final claim
is in a negative amount, the claim will be settled by the mortgagee's
payment of cash or surrender of debentures at par plus accrued interest
to the Secretary.
[61 FR 14404, Apr. 1, 1996]
Sec. 200.157 Provisions and characteristics of debentures.
(a) Series and fund. Debentures are issued in appropriate series and
are the obligation of and issued in the name of
[[Page 26]]
the particular mortgage insurance fund under which the mortgage is
insured.
(b) Registration and denominations. Debentures in certificated form
are issued in denominations of $50, $100, $500, $1,000 and $10,000 with
the name of the owner inscribed on the face of the certificate.
Debentures in book entry form are issued in a minimum amount of one
dollar and in increments of one cent with the name of the owner recorded
in an account master record on the books of the Treasury.
(c) Rate of interest and interchangeability. Debentures carry a rate
of interest prescribed by the Commissioner but not in excess of an
annual rate determined by the Secretary of the Treasury in accordance
with prescribed statutory formula involving yields or prices of
outstanding marketable obligations of the United States. Debentures in
certificated form of the same series bearing the same interest rate and
having the same maturity date shall be freely interchangeable between
the various authorized denominations and may be exchanged for similar
debentures in book entry form. Debentures in book entry form cannot be
exchanged for debentures in certificated form.
(d) Negotiability and Redemption. Debentures in certificated form
are negotiable and, if in book entry form, are transferable in the
manner described in applicable Treasury regulations. Debentures are
fully guaranteed as to principal and interest by the United States.
Debentures are redeemable on call issued by the Commissioner.
(e) Payment of principal and interest. Principal and interest on
debentures shall be payable when due at the Department of the Treasury,
Washington, DC, or any Government agency or agencies in the United
States which the Secretary of the Treasury may from time to time
designate for that purpose. The principal and interest shall be payable
to the owner whose name shall be inscribed on the debenture in
certificated form, to the owner designated as assignee as shown by
executed assignments for maturing or called certificated debentures, or
to the owner whose name shall be recorded in the account master record
of the book entry debentures.
(f) Transfer and use--(1) In general. Debentures in certificated
form are negotiable and, if in book entry form, are transferable in the
manner described in applicable Treasury regulations. They may be used by
approved mortgagees in lieu of cash for payment of FHA mortgage
insurance premiums.
(2) Mutual Mortgage Insurance Fund debentures. Debentures of the
Mutual Mortgage Insurance Fund may be used to pay mortgage insurance
premiums on mortgages insured under sections 203(b), 203(h), and 203(i),
of the National Housing Act.
(3) Cooperative Management Housing Insurance Fund debentures.
Debentures which are the obligation of the Cooperative Management
Housing Insurance Fund may be used to pay premiums on mortgages and
loans which are insured under that Fund. Where the insurance of a
mortgage or loan is transferred from the General Insurance Fund to the
Cooperative Management Housing Insurance Fund, or where a mortgage or
loan is endorsed for insurance pursuant to a commitment transferred to
the Cooperative Management Housing Insurance Fund, debentures issued in
connection with such mortgage or loan may be used to pay insurance
premiums of either the Cooperative Management Housing Insurance Fund or
the General Insurance Fund.
(4) General Insurance Fund and debentures of other funds. Debentures
of the General Insurance Fund and those debentures issued as obligations
of mortgage insurance funds and accounts in existence prior to the
enactment of the Housing and Urban Development Act of 1965 (other than
the Mutual Mortgage Insurance Fund) which are transferred by the 1965
Act to the General Insurance Fund may be used to pay mortgage insurance
premiums only on the following mortgages and loans:
(i) Those which are the obligation of the General Insurance Fund.
(ii) Those transferred from the General Insurance Fund to the
Cooperative Management Housing Insurance Fund.
(iii) Those endorsed for insurance pursuant to commitments
transferred to the Cooperative Management Housing Insurance Fund.
[36 FR 24467, Dec. 22, 1971, as amended at 59 FR 49815, Sept. 30, 1994]
[[Page 27]]
Sec. 200.158 Applicability of Treasury regulations to debenture transactions.
The Department of the Treasury acts as fiscal agent for the
Commissioner in connection with transactions and operations relating to
debentures. Treasury's General Regulations Governing U.S. Securities (31
CFR part 306) and its Supplemental Regulations Governing Federal Housing
Administration Debentures (31 CFR part 337) have been and are adopted as
revised and amended, to the extent applicable, as the regulations of the
Commissioner governing the issuance of, transactions in and redemption
of debentures, including the payment of interest thereon with the
following exceptions:
(a) Payment of final interest on maturing or called debentures. If
the notice of maturity or call for redemption shall so provide, the
final installment of interest payable on any debentures at maturity or
earlier redemption date may be paid with the principal in accordance
with the assignments on the debentures instead of by separate check
drawn to the order of the registered payee and forwarded to him at his
address of record.
(b) Closing of transfer books. If the call for redemption shall so
provide, the books maintained by the Treasury Department may be closed
against transfers and denominational exchanges in debentures for three
full months preceding any interest payment date with respect to any
debentures called for redemption on such interest payment date.
[36 FR 24467, Dec. 22, 1971, as amended at 59 FR 49815, Sept. 30, 1994]
Sec. 200.159 Relief on account of lost, stolen, destroyed, mutilated
or defaced debentures.
The statutes of the United States and the regulations of the
Treasury Department governing relief on account of the loss, theft,
destruction, mutilation or defacement of United States securities, so
far as applicable and as necessarily modified to relate to debentures,
are adopted as the regulations of the Commissioner for the issuance of
substitute debentures or the payment of lost, stolen, destroyed,
mutilated or defaced debentures.
Sec. 200.160 Redemption of debentures prior to maturity.
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 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.
Sec. 200.161 Administration of debenture transactions.
The Secretary of the Treasury or the Acting Secretary of the
Treasury is authorized and empowered, on behalf of the Commissioner, to
administer the regulations governing any transactions and operations in
debentures, to do all things necessary to conduct such transactions and
operations, and to delegate such authority at his discretion to other
officers, employees, and agents of the U.S. Treasury Department. At his
discretion the Secretary, the Under Secretary, or any Assistant
Secretary of the Treasury acting by direction of the Secretary, is
authorized to waive any such regulation on behalf of the Commissioner in
any particular case where a similar regulation of the Treasury
Department with respect to United States bonds or interest thereon would
be waived.
Sec. 200.162 Certificates of claim.
The certificate of claim issued to the mortgagee at the time
debentures are issued constitutes an agreement by the FHA that after the
FHA has recovered its investment in a particular property any excess
over and above such investment is available for payment on the
certificate of claim. Certificates of
[[Page 28]]
claim bear interest at the rate of 3 percent per annum.
Subpart F_Placement and Removal Procedures for Participation in FHA
Programs
FHA Inspector Roster
Source: 69 FR 11496, Mar. 10, 2004, unless otherwise noted.
Sec. 200.170 FHA Inspector Roster; Mortgagee and inspector requirements.
(a) General. The FHA Inspector Roster (Roster) is a list of the
inspectors selected by FHA as eligible to determine if the construction
quality of a one- to four-unit property is acceptable as security for an
FHA insured loan.
(b) Mortgagee requirement. Only an inspector included on the Roster
may be selected by a mortgagee to determine if the construction quality
of a property is acceptable as security for an FHA insured loan, as
follows:
(1) For new construction, the FHA requires three inspections by
Roster inspectors; and
(2) For existing construction, the FHA requires an inspection by a
Roster inspector where structural repairs have been made requiring an
inspection and this inspection is not performed by a licensed, bonded,
and registered engineer; a licensed home inspector; or other person
specifically registered or licensed to conduct such inspections.
(3) The requirements of paragraph (b)(1) of this section do not
apply if:
(i) The local jurisdiction where the newly constructed one- to four-
unit property is located performs the inspections and issues a building
permit prior to construction and a certificate of occupancy or
equivalent document; or
(ii) When the new construction is 100 percent complete, an appraiser
who is on FHA's Appraiser Roster appraises the property and an FHA
Roster inspector has already performed two inspections.
(c) Inspector requirement. To be eligible to conduct inspections as
required by paragraph (b) of this section, an inspector must be listed
on the Roster, except that any inspector already otherwise listed by HUD
as eligible to conduct inspections as of April 9, 2004, may conduct
inspections until October 12, 2004, without being listed on the Roster.
(d) Effect of placement on the Roster. Placement of an inspector on
the Roster only qualifies an inspector to be selected by a mortgagee to
determine if the construction quality of a property is acceptable as
security for an FHA-insured loan. Placement on the Roster does not
guarantee that any mortgagee will select an inspector. Use of an
inspector placed on the Roster also does not create or imply any
warranty or endorsement concerning the inspected property by HUD to a
prospective homebuyer or any other party.
Sec. 200.171 Placement on the Inspector Roster.
(a) Application. To be considered for placement on the Roster, an
inspector must apply to HUD using an application (or materials) in a
form prescribed by HUD.
(b) Eligibility. To be eligible for placement on the Roster, an
inspector must demonstrate the following to HUD:
(1) A minimum of three years experience in one or more construction-
related fields;
(2) Possession of an inspector's state or local license or
certification, if licensing or certification is required by the state or
local jurisdiction in which the inspector will operate;
(3) Certification that the applicant inspector has read and fully
understands the inspection requirements, including any update to those
requirements, of:
(i) HUD Handbook 4905.1 REV-1 (Requirements for Existing Housing,
One to Four Family Units);
(ii) HUD Handbook 4910.1 (Minimum Property Standards for Housing);
(iii) HUD Handbook 4145.1 REV-2 (Architectural Processing and
Inspections for Home Mortgage Insurance);
(iv) HUD Handbooks 4150.1 and 4150.2 (Valuation Analysis for Home
Mortgage Insurance);
(v) HUD Handbook 4930.3G (Permanent Foundations Guide for
Manufactured Housing);
(vi) The applicable local, state, or Council of American Building
Officials (CABO) code; and
[[Page 29]]
(vii) The HUD requirements at 24 CFR 200.926; and
(4) Verification that the inspector has taken and passed HUD's
comprehensive examination for inspectors, after such an examination
becomes available. Inspectors who are included on the Roster on the date
when the requirement for the examination becomes effective have until
six months following that date to pass the comprehensive exam. Failure
to pass the examination by the deadline date constitutes cause for
removal under Sec. 200.172.
Sec. 200.172 Removal from the Inspector Roster.
(a) Cause for removal. HUD may remove an inspector from the Roster
for any cause that HUD determines to be detrimental to HUD or its
programs. Cause for removal includes, but is not limited to:
(1) Poor performance on a HUD quality control field review;
(2) Failure to comply with applicable regulations or other written
instructions or standards issued by HUD;
(3) Failure to comply with applicable civil rights requirements;
(4) Being debarred, suspended, or subject to a limited denial of
participation;
(5) Misrepresentation or fraudulent statements;
(6) Failure to retain standing as a state or local government
licensed or certified inspector, where such a license or certificate is
required;
(7) Failure to respond within a reasonable time to HUD inquiries or
requests for documentation; or
(8) Being listed on HUD's Credit Alert Interactive Voice Response
System (CAIVRS).
(b) Procedure for removal. An inspector that is debarred, suspended,
or subject to a limited denial of participation will be automatically
removed from the Roster. In all other cases, the following procedure for
removal will be followed:
(1) HUD will give the inspector written notice of the proposed
removal. The notice will state the reasons for and the duration of the
proposed removal.
(2) The inspector will have 20 days after the date of the notice (or
longer, if provided in the notice) to submit a written response
appealing the proposed removal and requesting a conference. A request
for a conference must be in writing and must be submitted with the
written response.
(3) A HUD official will review the appeal and send a response either
affirming, modifying, or canceling the removal. The HUD official will
not be someone who was involved in HUD's initial removal decision. HUD
will respond with a decision within 30 days after receiving the appeal
or, if the inspector has requested a conference, within 30 days after
the completion of the conference. HUD may extend the 30-day period by
providing written notice to the inspector.
(4) If the inspector does not submit a timely written response, the
removal will be effective 20 days after the date of HUD's initial
removal notice (or after a longer period provided in the notice). 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.
(c) Placement on the list after removal. An inspector who has been
removed from the Roster may apply for placement on the Roster (in
accordance with Sec. 200.171) after the period of the inspector's
removal from the Roster has expired. An application will be rejected if
the period for the inspector's removal from the list has not expired.
(d) Other action. Nothing in this section prohibits HUD from taking
such other action against an inspector, as provided in 2 CFR part 2424,
or from seeking any other remedy against an inspector, available to HUD
by statute or otherwise.
[69 FR 11496, Mar. 10, 2004, as amended at 72 FR 73494, Dec. 27, 2007]
Section 203(k) Rehabilitation Loan Consultants
Sec. 200.190 HUD list of qualified 203(k) consultants.
(a) Qualified consultant list. HUD maintains a list of qualified
consultants for use in the rehabilitation loan
[[Page 30]]
insurance program authorized by section 203(k) of the National Housing
Act (12 U.S.C. 1709(k)) (referred to as the ``203(k) Program'').
(b) Consultant functions. Only a consultant included on the list may
be selected by the lender to conduct any consultant function under the
203(k) Program (see Sec. 203.50(l) of this title).
(c) Disclaimer. The inclusion of a consultant on the list means only
that the consultant has met the qualifications and conditions prescribed
by the Secretary for placement on the list of consultants qualified for
the 203(k) Program. The inclusion of a consultant on the list does not
create or imply a warranty or endorsement by HUD of the consultant, nor
does it represent a warranty of any work performed by the consultant.
[67 FR 52380, Aug. 9, 2002]
Sec. 200.191 Placement of 203(k) consultant.
(a) Application. To be considered for placement on the list, a
consultant must apply to HUD using an application (or materials) in a
form prescribed by HUD.
(b) Eligibility. To be eligible for placement on the list:
(1) The consultant must demonstrate to HUD that it either:
(i) Has at least three years' experience as a remodeling contractor,
general contractor or home inspector; or
(ii) Is a state-licensed architect or state-licensed engineer;
(2) If located in a state that requires the licensing of home
inspectors, the consultant must submit proof of such licensing;
(3) The consultant must submit a narrative description of the
consultant's ability to perform home inspections, prepare architectural
drawings, use proper methods of cost estimating and complete draw
inspections.
(4) The consultant must certify that it has read and fully
understands the requirements of the HUD handbook on the 203(k) Program
(4240.4) and all HUD Mortgagee Letters and other instructions relating
to the 203(k) Program.
(5) The consultant must not be listed on:
(i) The General Services Administration's Suspension and Debarment
List;
(ii) HUD's Limited Denial of Participation List; or
(iii) HUD's Credit Alert Interactive Voice Response System.
(6) The consultant must have passed a comprehensive examination on
the 203(k) Program, if HUD has developed such an exam.
(c) Delayed effective date of examination requirement for
consultants currently on the list. Consultants who are included on the
list on the date when the requirement for the examination described in
paragraph (b)(6) of this section becomes effective have until 6 months
following this date to pass the comprehensive exam. Failure to pass the
examination by the deadline date constitutes cause for removal under
Sec. 200.192.
[67 FR 52380, Aug. 9, 2002]
Sec. 200.192 Removal of 203(k) consultant.
(a) Cause for removal. HUD may remove a consultant from the list for
any cause that HUD determines to be detrimental to HUD or its programs.
Cause for removal includes, but is not limited to:
(1) Poor performance on a HUD quality control field review;
(2) Failure to comply with applicable regulations or other written
instructions or standards issued by HUD;
(3) Failure to comply with applicable Civil Rights requirements;
(4) Being debarred or suspended, or subject to a limited denial of
participation;
(5) Misrepresentation or fraudulent statements;
(6) Failure to retain standing as a state licensed architect or
state-licensed engineer (unless the consultant can demonstrate the
required three years experience as a home inspector or remodeling
contractor);
(7) Failure to retain standing as a state licensed home inspector,
if the consultant is located in a sate that requires such licensing; or
(8) Failure to respond within a reasonable time to HUD inquiries or
requests for documentation.
(b) Procedure for removal. A consultant that is debarred or
suspended, or subject to a limited denial of participation will be
automatically removed from
[[Page 31]]
the list. In all other cases, the following procedure for removal will
be followed:
(1) HUD will give the consultant written notice of the proposed
removal. The notice will state the reasons for, and the duration of, the
proposed removal.
(2) The consultant will have 20 days from the date of the notice (or
longer, if provided in the notice) to submit a written response
appealing the proposed removal and to request a conference. A request
for a conference must be in writing and must be submitted along with the
written response.
(3) A HUD official will review the appeal and send a response either
affirming, modifying, or canceling the removal. The HUD official will
not be someone who was involved in HUD's initial removal decision. HUD
will respond with a decision within 30 days of receiving the appeal or,
if the consultant has requested a conference, within 30 days after the
completion of the conference. HUD may extend the 30-day period by
providing written notice to the consultant.
(4) If the consultant does not submit a timely written response, the
removal will be effective 20 days after the date of HUD's initial
removal notice (or after a longer period provided in the notice). 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.
(c) Placement on the list after removal. A consultant that has been
removed from the list may apply for placement on the list (in accordance
with Sec. 200.191) after the period of the consultant's removal from
the list has expired. An application will be rejected if the period for
the consultant's removal from the list has not expired.
(d) Other action. Nothing in this section prohibits HUD from taking
such other action against a consultant, as provided in 2 CFR part 2424,
or from seeking any other remedy against a consultant, available to HUD
by statute or otherwise.
[67 FR 52380, Aug. 9, 2002, as amended at 72 FR 73494, Dec. 27, 2007]
Sec. 200.193 Responsibilities of 203(k) consultants on the list.
All consultants included on the list are responsible for:
(a) Obtaining and reading the HUD handbook on the 203(k) Program
(4240.4) and any updates to the handbook.
(b) Complying with the HUD handbook on the 203(k) Program (4240.4),
and any updates to the handbook, when performing any consultant function
under the 203(k) Program.
(c) Obtaining and reading all Mortgagee Letters and other
instructions issued by HUD relating to the 203(k) Program.
(d) Complying with all Mortgagee Letters and other instructions
issued by HUD relating to the 203(k) Program, when undertaking any
consultant function under the 203(k) Program.
(e) Complying with HUD's request for documentation relating to any
203(k) project on which the consultant has worked.
(f) Complying with HUD's monitoring requirements relating to the
203(k) Program.
[67 FR 52381, Aug. 9, 2002]
Nonprofit Organization
Sec. 200.194 Placement of nonprofit organization on Nonprofit
Organization Roster.
(a) Nonprofit Organization Roster. HUD maintains a roster of
nonprofit organizations that are qualified to participate in certain
specified FHA activities. In order to be recognized as a nonprofit
organization for purposes of single family regulations in this chapter,
an organization must:
(1) Be included in the Roster; and
(2) Comply with any requirements stated in a specific applicable
provision of the single family regulations in this chapter.
(b) Application. To be included in the Roster, a nonprofit
organization must apply to HUD using an application (or materials) in a
form prescribed by HUD (which may require an affordable housing program
narrative for the activities the nonprofit organization proposes to
carry out). The nonprofit organization must specify in its application
[[Page 32]]
the FHA activities it proposes to carry out.
(c) HUD response to application. HUD's review of the application
will result in one of the following:
(1) Approval of the nonprofit organization to participate in all, or
some, of the FHA activities specified in its application and the
addition of the nonprofit organization to the Roster.
(2) Rejection due to deficiencies in the application. HUD will
provide the nonprofit organization with a period to correct these
deficiencies.
(3) Rejection due to the nonprofit organization's failure to submit
a program that complies with applicable single family regulations in
this chapter, Mortgagee Letters, or other standards or instructions
issued by HUD.
(d) Reapplication after two years. The placement of a nonprofit
organization on the Roster expires after two years. The nonprofit
organization must reapply for placement on the Roster, in accordance
with paragraph (b) of this section, before expiration of the two-year
period.
[67 FR 39239, June 6, 2002]
Sec. 200.195 Removal of nonprofit organization from Nonprofit
Organization Roster.
(a) Cause for removal. HUD may remove a nonprofit organization from
the FHA Nonprofit Organization Roster established under Sec. 200.194.
Removal may be for any cause that HUD determines to be detrimental to
FHA or any of its programs, including but not limited to:
(1) Failure to comply with applicable single family regulations in
this chapter, Mortgagee Letters or other written instructions or
standards issued by HUD;
(2) Failure to comply with applicable Civil Rights requirements;
(3) Holding a significant number of FHA-insured mortgages that are
in default, foreclosure, or claim status (in determining the number
considered ``significant,'' HUD may compare the number of insured
mortgages held by the nonprofit organization against the similar
holdings of other nonprofit organizations);
(4) Being debarred or suspended, subject to a limited denial of
participation, or otherwise sanctioned by HUD;
(5) Failure to further all objectives described in the affordable
housing program narrative;
(6) Misrepresentation or fraudulent statements; or
(7) Failure to respond within a reasonable time to HUD inquiries,
including recertification requests or other requests for further
documentation.
(b) Procedure for removal. A nonprofit organization that is debarred
or suspended or subject to a limited denial of participation will be
automatically removed from the FHA Nonprofit Organization Roster. In all
other cases, the following procedure for removal applies:
(1) HUD will give the nonprofit organization written notice of the
proposed removal. The notice will include the reasons for the proposed
removal and the duration of the proposed removal.
(2) The nonprofit organization will have 20 days from the date of
the notice (or longer, if provided in the notice) to submit a written
response appealing the proposed removal and to request a conference. A
request for a conference must be in writing and must be submitted along
with the written response.
(3) A HUD official will review the appeal and provide an informal
conference if requested. The HUD official will send a response either
affirming, modifying, or canceling the removal. The HUD official will
not be someone who was involved in HUD's initial removal decision. HUD
will respond with a decision within 30 days of receiving the response,
or, if the nonprofit organization has requested a conference, within 30
days after the completion of the conference. HUD may extend the 30-day
period by providing written notice to the nonprofit organization.
(4) If the nonprofit organization does not submit a timely written
response, the removal will be effective 20 days after the date of HUD's
initial removal notice (or after a longer period provided in the
notice). If a written response is submitted, and the initial 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.
(c) Placement on the Roster after removal. A nonprofit organization
that
[[Page 33]]
has been removed from the FHA Nonprofit Organization Roster may apply
for placement on the Roster (in accordance with Sec. 200.194) after the
nonprofit organization's removal from the Roster has expired. An
application will be rejected if the period for the nonprofit
organization's removal from the Roster has not expired.
(d) Other action. Nothing in this section prohibits HUD from taking
such other action against a nonprofit organization, as provided in 2 CFR
part 2424, or from seeking any other remedy against a nonprofit
organization, available to HUD by statute or otherwise.
[67 FR 39239, June 6, 2002, as amended at 72 FR 73494, Dec. 27, 2007]
Subpart G_Appraiser Roster
Source: 64 FR 72869, Dec. 28, 1999, unless otherwise noted.
Sec. 200.200 What is the Appraiser Roster?
(a) Appraiser Roster. HUD maintains a list of appraisers. A
mortgagee must select only an appraiser from this list for the appraisal
of a property that is to be the security for an FHA-insured single
family mortgage.
(b) Disclaimer. Since an appraisal is performed to determine the
maximum insurable mortgage and to also protect the FHA insurance funds,
the inclusion of an appraiser on the Appraiser Roster does not create or
imply a warranty or endorsement to a prospective homebuyer or to any
other organization or individual by HUD of the listed appraiser nor does
it represent a warranty of any appraisal performed by the listed
appraiser. The inclusion of an appraiser on the Appraiser Roster means
only that a listed appraiser has met the qualifications and conditions,
prescribed by the Secretary, for inclusion on the Appraiser Roster.
Sec. 200.202 How do I apply for placement on the Appraiser Roster?
(a) Application. To apply for placement on the Appraiser Roster, you
must submit an application to HUD.
(b) Eligibility. To be eligible for placement on the Appraiser
Roster:
(1) You must be a state-certified appraiser with credentials that
complied with the applicable certification criteria established by the
Appraiser Qualification Board (AQB) of the Appraisal Foundation and in
effect at the time the certification was awarded by the issuing
jurisdiction; and
(2) You must not be listed on:
(i) The General Services Administration's Suspension and Debarment
List;
(ii) HUD's Limited Denial of Participation List; or
(iii) HUD's Credit Alert Verification Reporting System.
[73 FR 1432, Jan. 8, 2008, as amended at 76 FR 72308, Nov. 23, 2011]
Sec. 200.204 What actions may HUD take against unsatisfactory appraisers
on the Appraiser Roster?
An unsatisfactory appraiser may be subject to removal, education
requirements, or other actions, as follows:
(a) Removal from the Appraiser Roster. HUD officials, as designated
by the Secretary, may at any time remove a listed appraiser from the
Appraiser Roster for cause, in accordance with paragraphs (a)(1) through
(a)(3) of this section. The provisions of paragraphs (a)(1) through
(a)(3) of this section do not apply to removal actions taken under any
section in 2 CFR part 2424 or to any other remedy against an appraiser,
available to HUD by statute or otherwise.
(1) Cause for removal. Cause for removal includes, but is not
limited to:
(i) Significant deficiencies in appraisals, including non-compliance
with Civil Rights requirements regarding appraisals;
(ii) Losing standing as a state-certified appraiser due to
disciplinary action in any state in which the appraiser is certified;
(iii) Prosecution for committing, attempting to commit, or
conspiring to commit fraud, misrepresentation, or any other offense that
may reflect on the appraiser's character or integrity;
(iv) Failure to perform appraisal functions in accordance with
instructions and standards issued by HUD;
(v) Failure to comply with any agreement made between the appraiser
and HUD or with any certification made by the appraiser;
[[Page 34]]
(vi) Being issued a final debarment, suspension, or limited denial
of participation;
(vii) Failure to maintain eligibility requirements for placement on
the Appraiser Roster as set forth under this subpart or any other
instructions or standards issued by HUD; or,
(viii) Failure to comply with HUD-imposed education requirements
under paragraph (d) of this section within the specified period for
complying with such education requirements.
(2) Procedure for removal. If you are a listed appraiser and HUD
decides to remove you for cause from the Appraiser Roster, the following
procedure applies to you unless you have been issued a final debarment,
suspension, or limited denial of participation, in which case you are
subject to paragraph (a)(3) of this section:
(i) You will be given written notice of your proposed removal. The
notice will include the reasons for your proposed removal and the
duration of your proposed removal.
(ii) You will have 20 days from the date of your notice of proposed
removal to submit a written response appealing the proposed removal and
to request a conference. A request for a conference must be in writing
and must be submitted along with a written response.
(iii) Within 30 days of receiving your written response, or if you
have requested a conference, within 30 days after the completion of your
conference, a HUD official, designated by the Secretary, will review
your appeal and will send you a final decision either affirming,
modifying, or canceling your removal from the Appraiser Roster. HUD may
extend this time upon giving you notice. The HUD official designated by
the Secretary to review your appeal will not be someone involved in
HUD's initial removal decision nor will it be someone who reports to a
person involved in that initial decision.
(iv) If you do not submit a written response, your removal will be
effective 20 days after the date of HUD's initial removal notice. If you
submit a written response, and the removal decision is affirmed or
modified, your removal or modification will be effective on the date of
HUD's notice affirming or modifying the initial removal decision.
(3) Automatic removal for issuance of final debarment, suspension,
or limited denial of participation. If you are a listed appraiser and
you have been issued a final debarment, a suspension, or a limited
denial of participation, the provisions of paragraph (a)(2) of this
section do not apply to you, and you will be automatically removed from
the Appraiser Roster.
(b) Reinstatement. If an appraiser who has been removed from the
Roster wants to be reinstated on the Roster, the appraiser must follow
the procedures and requirements contained in this subpart for placement
on the Roster. Before an appraiser is eligible to reapply for placement
on the Roster, the appraiser shall comply with the terms of any
applicable remedial training education requirements, and the time period
for the appraiser's removal from the Roster shall have expired.
(c) Automatic suspension from Appraiser Roster--(1) Appraisers
subject to state disciplinary action. An appraiser whose state
certification in any state has been revoked, suspended, or surrendered
as a result of a state disciplinary action is automatically suspended
from the Appraiser Roster and prohibited from conducting FHA appraisals
in any state until HUD receives evidence demonstrating that the state-
imposed sanction has been lifted.
(2) Expirations not due to state disciplinary action. An appraiser
whose certification in a state has expired is automatically suspended
from the Appraiser Roster in that state and may not conduct FHA
appraisals in that state until HUD receives evidence that demonstrates
renewal, but may continue to perform FHA appraisals in other states in
which the appraiser is certified.
(d) Education requirements. Where there is evidence that an
appraiser is deficient in FHA appraisal requirements, HUD may require an
appraiser to undergo professional training.
(e) Other action. Nothing in this section prohibits HUD from taking
any other action against an appraiser, as provided under 2 CFR part
2424, or from seeking any other remedy against an
[[Page 35]]
appraiser, available to HUD by statute or otherwise.
[65 FR 17977, Apr. 5, 2000, as amended at 68 FR 26950, May 16, 2003; 72
FR 73494, Dec. 27, 2007; 73 FR 1432, Jan. 8, 2008; 76 FR 72308, Nov. 23,
2011]
Sec. 200.206 What are my responsibilities as an appraiser listed
on the Appraiser Roster?
All appraisers listed on the Appraiser Roster are responsible for:
(a) Obtaining and reading the HUD Appraiser Handbook (4150.2) and
any updates to the Handbook;
(b) Complying with the HUD Appraiser Handbook (4150.2), and any
updates to the Handbook, when performing all appraisals of properties
for HUD single family mortgage insurance purposes; and
(c) Complying with all other instructions and standards issued by
HUD when performing all appraisals of properties for HUD single family
mortgage insurance purposes.
Subpart H_Participation and Compliance Requirements
Source: 81 FR 71263, Oct. 14, 2016, unless otherwise noted.
Sec. 200.210 Policy.
(a) Regulations. It is HUD's policy that, in accordance with the
intent of the National Housing Act (12 U.S.C. 1701 et seq.), and with
other applicable federal statutes, participants in HUD's housing and
healthcare programs be responsible individuals and organizations who
will honor their legal, financial and contractual obligations.
Accordingly, as provided in this subpart, HUD will review the prior
participation of Controlling Participants, as defined in Sec. 200.212
and Sec. 200.216, as a prerequisite to participation in HUD's
multifamily housing and healthcare programs listed in Sec. 200.214.
(b) Processing Guide. The regulations in this subpart are
supplemented by the Processing Guide for Previous Participation Reviews
of Prospective Multifamily Housing and Healthcare Programs' Participants
(Guide), which is found on HUD's Web site at www.hud.gov. This Guide
elaborates on the basic procedures involved in the previous
participation review process. For any significant changes made to this
Guide, HUD will provide advance notice and the opportunity to comment,
providing a comment period of no less than 30 days.
Sec. 200.212 Definitions.
As used in this subpart:
Commissioner means the Assistant Secretary for Housing-Federal
Housing Commissioner, or the Commissioner's delegates and designees.
Controlling Participant means an individual or entity serving in a
capacity for a Covered Project that makes the individual or entity
subject to Previous Participation review under this subpart, as further
described in Sec. 200.216.
Covered Project means a project in which the participation of a
Controlling Participant is conditioned on Previous Participation review
under this subpart, as further described in Sec. 200.214.
Previous Participation means a Controlling Participant's previous
participation in Covered Projects, and, if applicable, other federal,
state and local housing programs, in accordance with the definition of
Risk.
Risk. In order to determine whether a Controlling Participant's
participation in a project would constitute an unacceptable risk, the
Commissioner must determine whether the Controlling Participant could be
expected to participate in the Covered Project in a manner consistent
with furthering the Department's purposes. The Commissioner's review of
Previous Participation shall consider compliance with applicable
statutes, regulations and program requirements. The Commissioner must
consider the Controlling Participant's previous financial and
operational performance in Covered Projects that may indicate a
financial or operating risk in approving the Controlling Participant's
participation in the subject Triggering Event. At the Commissioner's
discretion, as necessary to determine financial or operating risk and to
the extent the Commissioner determines such information to be reliably
available, the Commissioner may consider the Controlling Participant's
participation and performance in any federal, state or local
[[Page 36]]
government program. The Commissioner may exclude any Previous
Participation the Commissioner determines to be of limited value,
unreliable or irrelevant in evaluating risk and/or any Previous
Participation in which the Controlling Participant did not exercise,
actually or constructively, control. Any information collection in
connection with review of Previous Participation must follow all
applicable requirements for information collection.
Triggering Event means an occurrence in connection with a Covered
Project that subjects a Controlling Participant to Previous
Participation review under this subpart, as further described in Sec.
200.218.
Sec. 200.214 Covered Projects.
The following types of multifamily and healthcare projects are
Covered Projects subject to the requirements of this subpart, provided
however that single family projects are excluded from the definition of
Covered Projects:
(a) FHA insured projects. A project financed or which is proposed to
be financed with a mortgage insured under the National Housing Act, a
project subject to a mortgage held by the Secretary under the National
Housing Act, or a project acquired by the Secretary under the National
Housing Act.
(b) Housing for the elderly or persons with disabilities. Housing
for the elderly financed or to be financed with direct loans or capital
advances under section 202 of the Housing Act of 1959, as amended; and
housing for persons with disabilities under section 811 of the Cranston-
Gonzalez National Affordable Housing Act.
(c) Risk Share projects. A project that is insured under section
542(b) or 542(c) of the Housing and Community Development Act of 1992(12
U.S.C. 17107 note).
(d) Projects subject to continuing HUD requirements. A project that
is subject to a use agreement or any other affordability restrictions
pursuant to a program administered by HUD's Office of Housing.
(e) Subsidized Projects. Any project in which 20 percent or more of
the units now receive or will receive a subsidy in the form of:
(1) Interest reduction payments under section 236 of the National
Housing Act (12 U.S.C. 1715z-1);
(2) Rental Assistance Payments under section 236 of the National
Housing Act (12 U.S.C. 1715z-1);
(3) Rent Supplement payments under section 101 of the Housing and
Urban Development Act of 1965 (12 U.S.C. 1701s); or
(4) Project-based housing assistance payment contracts under section
8 of the United States Housing Act of 1937 (42 U.S.C. 1437f)
administered by HUD's Office of Housing.
Sec. 200.216 Controlling Participants.
(a) Definition. Controlling Participants are those entities and
individuals (i) serving as a Specified Capacity with respect to a
Covered Project and (ii) the entities and individuals in control of the
Specified Capacities. Each of the following capacities for a Covered
Project is a ``Specified Capacity:''
(1) An owner of a Covered Project;
(2) A borrower of a loan financing a Covered Project;
(3) A management agent;
(4) An operator (in connection with healthcare projects insured
under the following section of the National Housing Act: Section 232 (12
U.S.C. 1715w) and section 242 (12 U.S.C. 1715z-7));
(5) A master tenant (in connection with any multifamily housing
project insured under the National Housing Act (12 U.S.C. 1701 et seq.)
and in connection with certain healthcare projects insured under
sections 232 or section 242 of the National Housing Act);
(6) A general contractor; and
(7) In connection with a hospital project insured under section 242
of the National Housing Act (12 U.S.C. 1715z-7), a construction manager;
(b) Control of entities. To the extent any Specified Capacity listed
in paragraph (a) of this section is an entity, any individual(s) or
entities determined by HUD to control the financial or operational
decisions of such Specified Capacity shall also be considered
Controlling Participants. Without limiting the foregoing and unless
otherwise determined by HUD, the following
[[Page 37]]
individuals or entities shall be considered Controlling Participants:
(1) Individuals or entities with the ability to direct the day-to-
day operations of a Specified Capacity or a Covered Project;
(2) Individuals or entities that own at least 25 percent of an
entity that is a Specified Capacity;
(3) Individuals or entities with the ability to direct the entity to
enter into agreements relating to the Triggering Event that necessitates
review of Previous Participation, including without limitation
individuals or entities that own at least 25 percent of entities
determined to control an entity that is a Specified Capacity; and
(4) In connection with a hospital project insured under section 242
of the National Housing Act (12 U.S.C. 1715z-7), members of a hospital
Board of Directors (or similar body) and executive management (such as
the Chief Executive Officer and Chief Financial Officer) that HUD
determines to have control over the finances or operation of a Covered
Project.
(c) Exclusions from definition. The following individuals or
entities are not Controlling Participants for purposes of this subpart:
(1) Passive investors and investor entities with limited liability
in Covered Projects benefiting from tax credits, including but not
limited to low-income housing tax credits pursuant to section 42 of
title 26 of the United States Code, whether such investors are
syndicators, direct investors or investors in such syndicators and/or
investors;
(2) Individuals or entities that do not exercise financial or
operational control over the Covered Project, a Specified Capacity or
another Controlling Participant;
(3) Unless determined by HUD to exercise day-to-day control over the
operations or finances of a Specified Capacity or Covered Project, board
members of a non-profit corporation who are not officers or otherwise
part of the executive management teams of the non-profit;
(4) Mortgagees acting in their capacity as such; and
(5) Public housing agencies (PHAs).
Sec. 200.218 Triggering Events.
(a) Each of the following is a Triggering Event that may subject a
Controlling Participant to Previous Participation review under Sec.
200.220:
(1) An application for FHA mortgage insurance;
(2) An application for funds provided by HUD pursuant to a program
administered by HUD's Office of Housing, such as but not limited to
supplemental loans;
(3) A request to change any Controlling Participant for which HUD
consent is required with respect to a Covered Project; or
(4) A request for consent to an assignment of a housing assistance
payment contract under section 8 of the United States Housing Act of
1937 or of another contract pursuant to which a Controlling Participant
will receive funds in connection with a Covered Project.
(b) The Commissioner may also require a review of a potential
owner's Previous Participation in connection with a loan sale or other
form of property disposition, including foreclosure sale.
Notwithstanding anything contained in the regulations in this subpart to
the contrary, any such review shall be in accordance with the terms,
conditions, provisions and other requirements set forth by the
Commissioner in connection with such loan sale or property disposition
which may differ, in whole or in part, from the regulations in this
subpart.
Sec. 200.220 Previous Participation review.
(a) Scope of review. (1) Upon the occurrence of a Triggering Event,
as provided in Sec. 200.218, the Commissioner shall review the Previous
Participation of the relevant Controlling Participants in considering
whether to approve the participation of the Controlling Participants in
connection with the Triggering Event in accordance with the definition
of Risk in Sec. 200.212.
(2) The Commissioner will not review Previous Participation for
interests acquired by inheritance or by court decree.
(3) In connection with the submittal of an application for any
Triggering Event, applicants shall identify the
[[Page 38]]
Controlling Participants and, to the extent requested by HUD, make
available to HUD the Controlling Participant's Previous Participation in
Covered Projects.
(b) Results of review. (1) Based upon the review under paragraph (a)
of this section, the Commissioner will approve, disapprove, limit, or
otherwise condition the continued participation of the Controlling
Participant in the Triggering Event, in accordance with paragraphs (c)
and (d) of this section.
(2) The Commissioner shall provide notice of the determination to
the Controlling Participant including the reasons for disapproval or
limitation. The Commissioner may provide notice of the determination to
other parties as well, such the FHA-approved lender in the transaction.
(c) Basis for disapproval. (1) The Commissioner must disapprove a
Controlling Participant if the Commissioner determines that the
Controlling Participant is suspended, debarred or subject to other
restriction pursuant to 2 CFR part 180 or 2 CFR part 2424;
(2) The Commissioner may disapprove a Controlling Participant if the
Commissioner determines:
(i) The Controlling Participant is materially restricted, including
voluntarily, from doing business with HUD (other than the restrictions
listed in paragraph (c)(1) of this section) or any other governmental
department or agency if the Commissioner determines that such
restriction demonstrates a significant risk to proceeding with the
Triggering Event; or
(ii) The Controlling Participant's record of Previous Participation
reveals significant risk to proceeding with the Triggering Event.
(d) Alternatives to disapproval. In lieu of disapproval, the
Commissioner may:
(1) Condition or limit the Controlling Participant's participation;
(2) Temporarily withhold issuing a determination in order to gather
more necessary information; or
(3) Require the Controlling Participant to remedy or mitigate
outstanding violations of HUD requirements to the Commissioner's
satisfaction in order to participate in the Triggering Event.
Sec. 200.222 Request for reconsideration.
(a) Where participation in a Triggering Event has been disapproved,
otherwise limited or conditioned because of Previous Participation
review, the Controlling Participant may request reconsideration of such
determination by a review committee or reviewing officer as established
by the Commissioner. Reconsideration decisions shall not be rendered by
the same individual who rendered the initial review.
(b) The Controlling Participant shall submit requests for such
reconsideration in writing within 30 days of receipt of the
Commissioner's notice of the determination under Sec. 200.220.
(c) The review committee or reviewing officer shall schedule a
review of such requests for reconsideration. The Controlling Participant
shall be provided written notification of such a review; such notice
shall provide at least 7 business days advanced notice of the
reconsideration. The Controlling Participant shall be provided the
opportunity to submit such supporting materials as the Controlling
Participant desires or as the review committee or reviewing officer
requests.
(d) Before making its decision, the review committee or reviewing
officer will analyze the reasons for the decision(s) for which
reconsideration is being requested, as well as the documents and
arguments presented by the Controlling Participant. The review committee
or reviewing officer may affirm, modify, or reverse the initial
decision. Upon making its decision, the review committee or reviewing
officer will provide written notice of its determination to the
Controlling Participant setting forth the reasons for the
determination(s).
Subpart I_Nondiscrimination and Fair Housing
Sec. 200.300 Nondiscrimination and fair housing policy.
Federal Housing Administration programs shall be administered in
accordance with:
(a) The nondiscrimination and fair housing requirements set forth in
24 CFR part 5, including the prohibition
[[Page 39]]
on inquiries regarding sexual orientation or gender identity set forth
in 24 CFR 5.105(a)(2); and
(b) The affirmative fair housing marketing requirements in 24 CFR
part 200, subpart M and 24 CFR part 108.
[77 FR 5675, Feb. 3, 2012]
Subpart J_Equal Employment Opportunity
Sec. 200.400 Purpose.
The purpose of this subpart is to assist in achieving the aims of
part III of Executive Order 11246 and the relevant regulations of the
Secretary of Labor and the Secretary of Housing and Urban Development.
Sec. 200.405 Notice to public.
Participants in insurance programs under the National Housing Act
shall be informed, as early as possible upon indicating their interest
in any such program, of the established policy of nondiscrimination in
employment in construction, repair or rehabilitation work financed with
assistance under the Act.
Sec. 200.410 Definition of term ``applicant''.
(a) In any mortgage or loan insurance transaction under this chapter
where the Commissioner will control the mortgagor either through the
ownership of corporate stock or under the provisions of a regulatory
agreement, the term applicant as used in Sec. 200.415 shall mean the
mortgagor.
(b) In any transaction other than one specified in paragraph (a) of
this section, the term applicant as used in Sec. 200.415 shall mean the
developer, or the builder, dealer or contractor performing the
construction, repair or rehabilitation work for the property owner.
Sec. 200.415 Agreement of applicant.
An applicant, prior to the Commissioner's issuance of any commitment
or other loan approval, shall agree (in a form prescribed by the
Commissioner) that there shall be no discrimination against anyone who
is employed in carrying out work receiving assistance pursuant to this
chapter, or against an applicant for such employment, because of race,
color, religion, sex, handicap, age, or national origin.
[58 FR 41000, July 30, 1993]
Sec. 200.420 Equal opportunity clause to be included in contracts
and subcontracts.
(a) The equal opportunity clause prescribed by the Commissioner
pursuant to the regulations of the Secretary of Labor (41 CFR chapter
60) shall be included in each nonexempt contract and subcontract for
work receiving FHA assistance.
(b) Subcontracts less than $50,000 may incorporate by reference the
equal opportunity clause.
(c) The equal opportunity clause shall be deemed to be a part of
each nonexempt contract or subcontract whether or not it is physically
incorporated in such contract.
Sec. 200.425 Exemptions.
(a) Transactions of $10,000 or under. Contracts and subcontracts not
exceeding $10,000 are exempt from the requirements of the equal
opportunity clause. No contractor or subcontractor shall procure
supplies or services in less than usual quantities to avoid
applicability of the equal opportunity clause.
(b) Contracts and subcontracts for indefinite quantities. Contracts
and subcontracts for indefinite quantities are exempt from the
requirements of the equal opportunity clause if the amount to be ordered
in a single year under any such contract will not exceed $10,000.
(c) Work outside the United States. Contracts and subcontracts with
regard to work performed outside the United States by employees who were
not recruited within the United States are exempt from the requirements
of the equal opportunity clause.
(d) Others. Other exemptions set forth in the regulations of the
Secretary of Labor at 41 CFR 60-1.5 apply to transactions under this
subpart.
Sec. 200.430 Sanctions.
Failure or refusal to comply and give satisfactory assurances of
future compliance with the requirements of this subpart shall be proper
basis for applying sanctions. The sanctions shall be
[[Page 40]]
applied in accordance with the provisions of Executive Order 11246 and
the relevant regulations of the Secretary of Labor.
Subparts K-L [Reserved]
Subpart M_Affirmative Fair Housing Marketing Regulations
Source: 37 FR 75, Jan. 5, 1972, unless otherwise noted.
Sec. 200.600 Purpose.
The purpose of this subpart is to set forth the Department's equal
opportunity regulations for affirmative fair housing marketing under FHA
subsidized and unsubsidized housing programs.
Sec. 200.605 Authority.
The regulations in this subpart are issued pursuant to the authority
to issue regulations granted to the Secretary by section 7(d) of the
Department of Housing and Urban Development Act of 1965, 42 U.S.C.
3535(d), and implement the functions, powers, and duties imposed on the
Secretary by Executive Order 11063, 27 FR 11527, and title VIII of the
Civil Rights Act of 1968, as amended, 42 U.S.C. 3608.
[40 FR 20080, May 8, 1975]
Sec. 200.610 Policy.
It is the policy of the Department to administer its FHA housing
programs affirmatively, as to achieve a condition in which individuals
of similar income levels in the same housing market area have a like
range of housing choices available to them regardless of their race,
color, religion, sex, handicap, familial status or national origin. Each
applicant for participation in FHA subsidized and unsubsidized housing
programs shall pursue affirmative fair housing marketing policies in
soliciting buyers and tenants, in determining their eligibility, and in
concluding sales and rental transactions.
[40 FR 20080, May 8, 1975, as amended at 58 FR 41337, Aug. 3, 1993]
Sec. 200.615 Applicability.
The affirmative fair housing marketing requirements, as set forth in
paragraphs (a) through (f) of Sec. 200.620, shall apply to all
applicants for participation in FHA subsidized and unsubsidized housing
programs whose application is hereafter approved for development or
rehabilitation of:
(a) Multifamily projects and manufactured home parks of five or more
lots, units or spaces, and initial submissions by a lender for an
application for mortgage insurance on a single family property, where
the property is located in a subdivision and the builder or developer
intends to sell five or more properties in the subdivision; or
(b) Dwelling units, when the applicant's participation in FHA
housing programs had exceeded or would thereby exceed development of
five or more such dwelling units during the year preceding the
application, except that there shall not be included in a determination
of the number of dwelling units developed by an applicant those in which
a single family dwelling is constructed or rehabilitated for occupancy
by a mortgagor on property owned by the mortgagor and in which the
applicant had no interest prior to entering into the contract for
construction or rehabilitation.
[37 FR 75, Jan. 5, 1972, as amended at 50 FR 9268, Mar. 7, 1985; 58 FR
41337, Aug. 3, 1993]
Sec. 200.620 Requirements.
With respect to all FHA subsidized or unsubsidized programs in which
the applicant hereafter participates (except for housing for which a
conditional commitment has been issued prior to the effective date of
these regulations), the applicant shall meet the following requirements
or, if he contracts marketing responsibility to another party, be
responsible for that party's carrying out the requirements:
(a) Carry out an affirmative program to attract buyers or tenants,
regardless of sex, handicap or familial status, of all minority and
majority groups to the housing for initial sale or rental. An
affirmative marketing program shall be in effect for each multifamily
project throughout the life of the mortgage. Such a program shall
typically
[[Page 41]]
involve publicizing to minority persons the availability of housing
opportunities regardless of race, color, religion, sex, handicap or
familial status or national origin, through the type of media
customarily utilized by the applicant, including minority publications
or other minority outlets which are available in the housing market
area. All advertising shall include either the Department-approved Equal
Housing Opportunity logo or slogan or statement and all advertising
depicting persons shall depict persons of majority and minority groups,
including both sexes.
(b) Maintain a nondiscriminatory hiring policy in recruiting from
both minority and majority groups, including both sexes and the
handicapped, for staff engaged in the sale or rental of properties.
(c) Instruct all employees and agents in writing and orally in the
policy of nondiscrimination and fair housing.
(d) Specifically solicit eligible buyers or tenants reported to the
applicant by the Area or Insuring Office.
(e) Prominently display in all offices in which sale or rental
activity pertaining to the project or subdivision takes place the
Department-approved Fair Housing Poster and include in any printed
material used in connection with sales or rentals, the Department-
approved Equal Housing Opportunity logo or slogan or statement.
(f) Post in a conspicuous position on all FHA project sites a sign
displaying prominently either the Department-approved Equal Housing
Opportunity logo or slogan or statement.
[37 FR 75, Jan. 5, 1972, as amended at 40 FR 20080, May 8, 1975; 40 FR
53008, Nov. 14, 1975; 58 FR 41337, Aug. 3, 1993]
Sec. 200.625 Affirmative fair housing marketing plan.
Each applicant for participation in FHA housing programs to which
these regulations apply shall provide on a form to be supplied by the
Department information indicating his affirmative fair housing marketing
plan to comply with the requirements set forth in Sec. 200.620. This
form, once approved by HUD, will be available for public inspection at
the sales or rental offices of the applicant.
Sec. 200.630 Notice of housing opportunities.
The Director of each Field Office shall prepare monthly a list of
all projects covered by this subpart, and of all initial submissions by
lenders for single family mortgage insurance where the property is
located in a subdivision and the builder or developer intends to sell
five or more properties in the subdivision, on which commitments have
been issued during the preceding 30 days. The Director shall maintain a
roster of interested organizations and individuals (including public
agencies responsible for providing relocation assistance and local
housing authorities) who have expressed a wish to receive the monthly
list, and shall provide the list to these organizations and individuals.
[58 FR 41337, Aug. 3, 1993]
Sec. 200.635 Compliance.
Applicants failing to comply with the requirements of this subpart
will make themselves liable to sanctions authorized by regulations,
rules or policies governing the program pursuant to which the
application was made, including but not limited to denial of further
participation in departmental programs and referral to the Department of
Justice for suit by the United States for injunctive or other
appropriate relief. The Department will enforce compliance through the
procedures outlined in 24 CFR part 108.
[37 FR 75, Jan. 5, 1972, as amended at 58 FR 41337, Aug. 3, 1993]
Sec. 200.640 Effect on other requirements.
The requirement for compliance with this part is in addition to, and
not in substitution for, any other requirements imposed by or under
Executive Order 11063 or the Fair Housing Act.
[58 FR 41337, Aug. 3, 1993]
Sec. Appendix to Subpart M of Part 200--Equal Housing Opportunity
Insignia
The Equal Housing Opportunity insignia are as follows:
Equal Housing Opportunity logo:
[[Page 42]]
[GRAPHIC] [TIFF OMITTED] TC05OC91.037
Equal Housing Opportunity statement: ``We are pledged to the letter
and spirit of U.S. policy for the achievement of equal housing
opportunity throughout the Nation. We encourage and support an
affirmative advertising and marketing program in which there are no
barriers to obtaining housing because of race, color, religion, sex, or
national origin.''
Equal Housing Opportunity slogan: ``Equal Housing Opportunity.''
[37 FR 75, Jan. 5, 1972, as amended at 40 FR 20080, May 8, 1975]
Subpart N [Reserved]
Subpart O_Lead-Based Paint Poisoning Prevention
Source: 64 FR 50224, Sept. 15, 1999, unless otherwise noted.
Sec. 200.800 Lead-based paint.
The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846),
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C.
4851-4856), and implementing regulations at part 35, subparts A, B, F,
G, I, and R of this title, apply to activities under these programs,
except for single family mortgage insurance and guarantee programs.
Sections 200.805 and 200.810 apply to single family mortgage insurance
and guarantee programs administered by HUD.
Sec. 200.805 Definitions.
Applicable surface. All intact and nonintact interior and exterior
painted surfaces of a residential structure.
Defective paint surface. Paint on applicable surfaces that is
cracking, scaling, chipping, peeling or loose.
Lead-based paint surface. A paint surface, whether or not defective,
identified as having a lead content greater than or equal to 1 mg/cm\2\.
Sec. 200.810 Single family insurance and coinsurance.
(a) General. (1) The requirements of this section apply to any one-
to four-family dwelling which was constructed before 1978 and is the
subject of an application for mortgage insurance under section 203(b) or
other sections of the National Housing Act relating to the insurance or
coinsurance of mortgages on one-to-four-family dwellings. Such other
sections include:
(i) Section 244 (coinsurance);
(ii) Section 213 (cooperative housing insurance);
(iii) Section 220 (rehabilitation and neighborhood conservation
housing insurance);
(iv) Section 221 (housing for moderate income and displaced
families);
(v) Section 222 (mortgagor insurance for servicemen);
(vi) Section 809 (armed services housing for civilian employees);
(vii) Section 810 (armed services housing in impacted areas);
(viii) Section 234 (mortgage insurance for condominiums);
(ix) Section 235 (mortgage assistance payments for home ownership
and project rehabilitation);
(x) Section 237 (special mortgage insurance for low and moderate
income families); and
(xi) Section 240 (mortgage insurance on loans for purchase of fee
simple title from lessors).
(2) [Reserved]
(3) Applications for insurance in connection with a refinancing
transaction where an appraisal is not required under the applicable
procedures established by the Commissioner are excluded from the
coverage of this section. Any housing assisted under the programs set
out in this section for
[[Page 43]]
which no new activity is applied for or required is not covered by this
section.
(b) Appraisal. The appraiser shall, when appraising a dwelling
constructed prior to 1978, inspect the dwelling for defective paint
surfaces.
(c) Treatment of defective paint surfaces. For defective paint
surfaces, treatment shall be provided to defective areas. Treatment of
hazards shall consist of covering or removing defective paint surfaces.
Covering may be accomplished by such means as adding a layer of
wallboard to the wall surface. Depending on the wall condition,
wallcoverings which are permanently attached may be used. Covering or
replacing trim surfaces is also permitted. Paint removal may be
accomplished by such methods as scraping, heat treatment (infra-red or
coil type heat guns) or chemicals. Machine sanding and use of propane or
gasoline torches (open-flame methods) are not permitted. Washing and
repainting without thorough removal or covering does not constitute
adequate treatment. In the case of defective paint spots, scraping and
repainting the defective area is considered adequate treatment.
Treatment of a defective paint surface is not required if such a surface
is found to not be a lead-based paint surface by a lead-based paint
inspector certified pursuant to procedures of the U.S. Environmental
Protection Agency at 40 CFR part 745.
(d) Home equity conversion mortgage insurance. The requirements of
this section, as modified by the following sentence, apply to a dwelling
which is the subject of an application for mortgage insurance under
section 255 of the National Housing Act (home equity conversion
insurance) unless the mortgagor provides the certification described in
Sec. 206.45(d) of this title. The defective paint surface may be
treated after the mortgage is endorsed for insurance, provided that the
defective paint surface is treated as expeditiously as possible in
accordance with the repair work provisions contained in Sec. 206.47 of
this title.
[64 FR 50224, Sept. 15, 1999, as amended at 69 FR 34275, June 21, 2004]
Subpart P_Physical Condition of Multifamily Properties
Source: 65 FR 77240, Dec. 8, 2000, unless otherwise noted.
Sec. 200.850 Purpose.
The purpose of this subpart is to establish the physical conditions
standards and physical inspection requirements that are applicable to
certain multifamily housing properties.
Sec. 200.853 Applicability.
This subpart applies to:
(a) Housing assisted by HUD under the following programs:
(1) All Section 8 project-based assistance. ``Project-based
assistance'' means Section 8 assistance that is attached to the
structure (see 24 CFR 982.1(b)(1) regarding the distinction between
``project-based'' and ``tenant-based'' assistance);
(2) Section 202 Program of Supportive Housing for the Elderly
(Capital Advances);
(3) Section 811 Program of Supportive Housing for Persons with
Disabilities (Capital Advances); and
(4) Section 202 loan program for projects for the elderly and
handicapped (including 202/8 projects and 202/162 projects).
(b) Housing with mortgages insured or held by HUD, or housing that
is receiving insurance from HUD, under the following authorities:
(1) Section 207 of the National Housing Act (NHA) (12 U.S.C. 1701 et
seq.) (Rental Housing Insurance);
(2) Section 213 of the NHA (Cooperative Housing Insurance);
(3) Section 220 of the NHA (Rehabilitation and Neighborhood
Conservation Housing Insurance);
(4) Section 221(d)(3) of the NHA (Market Interest Rate (MIR)
Program);
(5) Section 221(d)(3) and (5) of the NHA (Below Market Interest Rate
(BMIR) Program);
(6) Section 221(d)(4) of the NHA (Housing for Moderate Income and
Displaced Families);
(7) Section 231 of the NHA (Housing for Elderly Persons);
[[Page 44]]
(8) Section 232 of the NHA (Mortgage Insurance for Nursing Homes,
Intermediate Care Facilities, Assisted Living Facilities, Board and Care
Homes);
(9) Section 234(d) of the NHA (Rental) (Mortgage Insurance for
Condominiums);
(10) Section 236 of the NHA (Rental and Cooperative Housing for
Lower Income Families);
(11) Section 241 of the NHA (Supplemental Loans for Multifamily
Projects). (Where, however, the primary mortgage of a Section 241
property is insured or assisted by HUD under a program covered in this
part, the coverage by two HUD programs does not trigger two
inspections); and
(12) Section 542(c) of the Housing and Community Development Act of
1992 (12 U.S.C. 1707 note) (Housing Finance Agency Risk Sharing
Program).
Sec. 200.855 Physical condition standards and physical inspection
requirements.
(a) Applicable standards and requirements. The physical condition
standards and physical inspection requirements in 24 CFR part 5, subpart
G, are applicable to the properties assisted or insured that are listed
in Sec. 200.853.
(b) Entity responsible for inspection of property. The regulations
that govern the programs listed in Sec. 200.853, or regulatory
agreements or contracts, identify the entity responsible for conducting
the physical inspection of the property which is HUD, the lender or the
owner. For properties with more than one HUD insured loan, only the
first mortgage lender is required to conduct the physical inspection.
The second mortgage lender will be provided a copy of the physical
inspection report by the first mortgage lender.
(c) Timing of inspections. (1) For a property subject to an annual
inspection under this subpart, the inspection shall be conducted no
earlier than 9 months and no later than 15 months from the date of the
last required inspection. In no event, however, shall the physical
inspection be conducted after the end of the calendar year following the
one year anniversary date of the last required inspection.
(2) For a property subject to an inspection every two years under
this subpart, the inspection shall be conducted no earlier than 21
months and no later than 27 months from the date of the last required
inspection. In no event, however, shall the physical inspection be
conducted after the end of the calendar year following the two year
anniversary date of the last required inspection.
(3) For a property subject to an inspection every three years under
this subpart, the inspection shall be conducted no earlier than 33
months and no later than 39 months from the date of the last required
inspection. In no event, however, shall the physical inspection be
conducted after the end of the calendar year following the three year
anniversary date of the last required inspection.
(4) For a newly endorsed multifamily property, the first inspection
required under this subpart will be conducted no earlier than 21 months
but not later than 27 months from the date of final endorsement. In no
event, however, shall the inspection be conducted after the end of the
calendar year following the two year anniversary date of final
endorsement.
(5)(i) For assisted-living facilities, board and care facilities,
and intermediate care facilities, the initial inspection required under
this subpart will be conducted within the same time restrictions set
forth in paragraph (c)(4) of this section, and any further inspections
will be conducted at a frequency determined consistent with Sec.
200.857, except that HUD may exempt such facilities from physical
inspections under this part if HUD determines that the State or local
government has a reliable and adequate inspection system in place, with
the results of the inspection being readily and timely available to HUD;
and
(ii) For any other Section 232 facilities, the inspection will be
conducted only when and if HUD determines, on the basis of information
received, such as through a complaint, site inspection, or referral by a
State agency, on a case-by-case basis, that inspection of a particular
facility is needed to assure protection of the residents or the adequate
preservation of the project.
[65 FR 77240, Dec. 8, 2000, as amended at 77 FR 55135, Sept. 7, 2012]
[[Page 45]]
Sec. 200.857 Administrative process for scoring and ranking the physical
condition of multifamily housing properties.
(a) Scoring and ranking of the physical condition of multifamily
housing properties. (1) HUD's Real Estate Assessment Center (REAC) will
score and rank the physical condition of certain multifamily housing
insured properties listed in Sec. 200.853 in accordance with the
procedures described in this section. The physical condition inspection
of the property, upon which REAC bases its score and ranking, is
conducted by the responsible entity in accordance with Sec. 200.855.
(2) Depending upon the results of its physical condition inspection,
a multifamily housing property will be assigned one of three
designations--standard 1 performing, standard 2 performing and standard
3 performing--in accordance with the ranking process described in
paragraph (b) of this section.
(b) Methodology for Ranking. (1) Multifamily housing properties will
be ranked in accordance with the methodology provided in this paragraph
(b). Multifamily housing properties are scored on the basis of a 100
point scale. Because scores may include fractions, a score that includes
a fraction below one half point will be rounded to the next lower full
point and a score that includes a fraction of one half point or higher
will be rounded to the next higher full point (e.g., 89.4 will be
rounded to 89, 89.5 will be rounded to 90).
(i) Standard 1 Performing Property. If a property receives a score
of 90 points or higher on its physical condition inspection, the
property will be designated a standard 1 performing property. Properties
designated as standard 1 performing properties will be required to
undergo a physical inspection once every three (3) years.
(ii) Standard 2 Performing Property. If a property receives a score
of 80 points or higher but less than 90 on its physical condition
inspection, the property will be designated a standard 2 performing
property. Properties designated as standard 2 performing properties will
be required to undergo a physical inspection once every two (2) years.
(iii) Standard 3 Performing Property. If a property receives a score
of less than 80 points, the property will be designated a standard 3
performing property. Properties designated as standard 3 performing
properties will continue to undergo an annual physical inspection as
currently required under covered HUD programs.
(2) Owners of multifamily housing properties scoring in a standard 1
or standard 2 range which have been cited by the REAC as having a
Exigent Health and Safety (EHS) deficiency(s) must resolve the
deficiency(s), as required by paragraph (c)(2) of this section, to be
classified as standard 1 and standard 2 properties.
(3) Regardless of the performance designation assigned to an owner's
property, an owner is obligated to maintain its property in accordance
with HUD's uniform physical condition standards as required by 24 CFR
part 5, subpart G, the Regulatory Agreement and/or the Housing
Assistance Payment (HAP) Contract. Good management principles require an
owner to conduct routine inspections of its projects, develop
improvement plans, and again, maintain its property to meet the standard
of decent, safe, sanitary and in good repair.
(c) Owner's review of physical inspection report and identification
of objectively verifiable and material error. (1) Upon completion of a
physical inspection of a multifamily housing property, the REAC will
provide the owner or owner's representative, on the date of the physical
inspection, notice of any items classified as EHS deficiencies. REAC
also will provide the owner with the entire physical inspection report
(electronically through the internet or by mail approximately 10 working
days from the date of the report), which provides the physical
inspection results and other information relevant to the inspection,
including any items classified as EHS deficiencies and already provided
to the owner, on the date of the inspection (EHS deficiencies are
relayed by the inspector on the date of the inspection).
[[Page 46]]
(2) The owner must carefully review the physical inspection report,
particularly those items classified as EHS. The owner is also
responsible for conducting its own survey of the total project based on
the REAC's physical inspection findings. The owner must mitigate all EHS
items immediately, and the owner must file a written report with the
applicable Multifamily Hub Director within 3 business days of the date
of the inspection, which is the date the owner was provided with the EHS
notice. The report filed by the owner must provide a certification and
reasonable evidence that the EHS items have been resolved.
(3) If, following review of the physical inspection results and
score, the owner reasonably believes that an objectively verifiable and
material error (or errors) occurred in the inspection, which, if
corrected, will result in a significant improvement in the property's
overall score (``significant improvement'' is defined in paragraph
(d)(4) of this section), the owner may submit a written request for a
technical review. The technical review request must be received in
writing no later than 30 calendar days (as established by the postmark,
if applicable) from the date the physical inspection results are
transmitted to the owner by REAC, whether the results and score are
transmitted to the owner via the Internet or by hard copy via certified
mail.
(d) Technical review of physical inspection results. A request for a
technical review of physical inspection results must be submitted in
writing to REAC and must be received by REAC no later than the 30th
calendar day, as applicable under paragraph (c)(3) of this section,
following submission of the physical inspection report to the owner, as
provided in paragraph (c)(1) of this section.
(1) Request for technical review. The request must be accompanied by
the owner's reasonable evidence that an objectively verifiable and
material error (or errors) occurred which if corrected will result in a
significant improvement in the overall score of the owner's property. A
technical review of physical inspection results will not be conducted
based on conditions that were corrected subsequent to the inspection.
Upon receipt of this request from the owner, the REAC will review the
physical inspection and the owner's evidence. If the REAC's review
determines that an objectively verifiable and material error (or errors)
has been documented and that it is likely to result in a significant
improvement in the property's overall score, the REAC will take one or a
combination of the following actions: undertake a new inspection;
correct the original inspection; or issue a new physical condition
score.
(2) Burden of proof that error occurred rests with owner. The burden
of proof rests with the owner to demonstrate that an objectively
verifiable and material error (or errors) occurred in the REAC's
inspection through submission of evidence, which if corrected will
result in a significant improvement in the property's overall score. To
support its request for a technical review of the physical inspection
results, the owner may submit photographic evidence, written material
from an objective source such as a local fire marshal or building code
official, or other similar evidence.
(3) Material errors. An objectively verifiable material error must
be present to allow for a technical review of physical inspection
results. Material errors are those that exhibit specific characteristics
and meet specific thresholds. The three types of material errors are as
follows.
(i) Building data error. A building data error occurs if the
inspection includes the wrong building or a building that was not owned
by the property, including common or site areas that were not a part of
the property. Incorrect building data that does not affect the score,
such as the address, building name, year built, etc., would not be
considered material, but is of great interest to HUD and will be
corrected upon notice to the REAC.
(ii) Unit count error. A unit count error occurs if the total number
of units considered in scoring is incorrect. Since scoring uses total
units, the REAC will examine instances where the participant can provide
evidence that the total units used is incorrect.
(iii) A non-existent deficiency error. A non-existent deficiency
error occurs if
[[Page 47]]
the inspection cites a deficiency that does not exist.
(4) Significant improvement. Significant improvement refers to the
correction of a material error, asserted by the owner, which causes the
score for the owner's property to cross an administratively significant
threshold (for example, the property would be redesignated from standard
3 performing to standard 2 performing or from standard 2 performing to
standard 1 performing), or to result in an increase of 10 points or
more.
(5) Determining whether material error occurred and what action is
warranted. Upon receipt of the owner's request for technical review of a
property's physical inspection results, the REAC will evaluate the
owner's property file and the evidence provided by the owner that an
objectively verifiable and material error occurred which, if corrected,
would result in a significant improvement in the property's overall
score. If the REAC's evaluation determines that an objectively
verifiable and material error (or errors) has been reasonably documented
by the owner and if corrected would result in a significant improvement
in the property's overall score, then the REAC shall take one or a
combination of the following actions:
(i) Undertake a new inspection;
(ii) Correct the inspection report; or
(iii) Issue a new physical condition score.
(6) Responsibility for the cost of a new inspection. If a new
inspection is undertaken by the REAC and the new inspection score
results in a significant improvement in the property's overall score,
then HUD shall bear the expense of the new inspection. If no significant
improvement occurs, then the owner must bear the expense of the new
inspection. The inspection cost of a new inspection, if paid by the
owner, is not a valid project operating expense. The new inspection
score will be considered the final score.
(e) Adjustment of physical condition score based on considerations
other than technical review and reinspection. (1) Under certain
circumstances, HUD may find it appropriate to review the results of a
physical inspection which are anomalous or have an incorrect result due
to facts and circumstances affecting the inspected property which are
not reflected in the inspection or reflected inappropriately in the
inspection. These circumstances include, but are not necessarily limited
to, inconsistencies between local code requirements and the HUD physical
inspection protocol; conditions which are permitted by variance or
license or which are preexisting physical features non-conformities and
are inconsistent with the HUD physical condition protocol; or cases
where the owner has been scored for elements (e.g., roads, sidewalks,
mail boxes, resident owned appliances, etc.) that it does not own and is
not responsible for maintaining.
(2) To seek a score adjustment on the basis of these circumstances
as provided in paragraph (e) of this section, the owner must submit a
request for an adjustment to REAC with appropriate proof of the
circumstances that resulted in the incorrect physical conditions
results. This process may result in a reinspection and/or rescoring of
the inspection after review and approval of the owner's submission of
appropriate proof of the anomalous or inappropriate application.
(3) An owner may submit the request for this adjustment to REAC
either prior to or after the physical inspection has been concluded. If
the owner submits a request for adjustment after the physical inspection
has been concluded, the owner must submit its request to REAC within 45
days following the submission of the physical inspection report, as
provided in paragraph (c)(1) of this section. HUD may, but is not
required to review a request made after this period has expired.
(4) This adjustment process, provided in this paragraph (g), may
result in a reinspection and/or rescoring of the inspection after review
and approval of the owner's submission of appropriate proof of the
anomalous or inappropriate application.
(f) Issuance of final score and publication of score. (1) The
physical condition score of the property is the final score if the owner
files no request for technical review, as provided in paragraph (c) of
this section, or for other adjustment of the physical condition score,
[[Page 48]]
as provided in paragraph (e) of this section. If the owner files a
request for technical review or score adjustments in accordance with
paragraphs (c) and (e) of this section, the final physical condition
score is the score issued by HUD after any adjustments are determined
necessary and made by HUD at the conclusion of these processes.
(2) HUD will make public the final scores of the owners through
posting on HUD's internet site, or through Federal Register publication
or other appropriate means.
(g) Owner's responsibility to notify residents of inspection; and
availability of documents to residents--(1) Notification to residents.
An owner must notify its residents of any planned physical inspections
of their units or the housing development generally.
(2) Availability of documents for review. Once the technical review
and database adjustment periods have expired, as provided in paragraphs
(d) and (e) of this section, respectively, the owner must make its
physical inspection report and all related documents available to its
residents during regular business hours upon reasonable request for
review and copying. Related documents include the owner's survey plan,
plan of correction, certification and related correspondence.
(i) Once the owner's final physical condition score is issued and
published, the owner must make any additional information, such as the
results of any reinspection, appeal requests, available for review and
copying by its residents upon reasonable request during regular business
hours.
(ii) The owner must maintain the documents related to the physical
inspection of the property, as described in this paragraph (g)(2),
available for review by residents for a period of 60 days from the date
of submission to the owner of the physical condition score for the
property in which the residents reside.
(3) The owner must post a notice to the residents in the owner's
management office and on any bulletin boards in all common areas that
advises residents of the availability of the materials described in
paragraphs (g)(2) of this section. The notice should include the name,
address and telephone number of the HUD Project Manager.
(4) Residents are encouraged to comment on this information provided
by the owners and submit any comments directly to the applicable Field
Office. Should residents discover the owner provided HUD with a false
certification during the review they are encouraged to notify the Hub or
Program Center where appropriate inquiry and action will be taken.
(h) Administrative review of properties. The file of a multifamily
property that receives a score of 30 points or less on its physical
condition inspection will be referred to HUD's Departmental Enforcement
Center (DEC) for evaluation. The files of any of the multifamily housing
properties may be submitted to the DEC or to the appropriate HUD
Multifamily Hub Director (MFD) for evaluation, or both, at the
discretion of the Office of Housing.
(1) Notification to owner of submission of property file to the MFD
and DEC. The Department will provide for notification to the owner that
the file on the owner's property is being submitted to the MFD and/or
the DEC for evaluation. The notification will be provided at the time
the REAC issues the physical inspection report to the owner or at such
other time as a referral occurs.
(2) 30-Day period for owner to provide the DEC with supporting and
relevant information and documentation. The owner has 30 calendar days,
from the date of the REAC notification to the owner, to provide
comments, proposals, or any other information to the DEC which will
assist the MFD and DEC in conducting a comprehensive evaluation of the
property. A proposal provided by an owner may include the owner's plan
to correct deficiencies (corrective action plan). During the 30-day
response time available to the owner, the DEC may encourage the owner to
submit a corrective action plan. The corrective action plan, if timely
submitted during the 30-day period (whether on the owner's initiative or
at the request of the DEC), may serve as additional information for the
DEC to consider in determining appropriate action to take at the
conclusion of the evaluation period. If not submitted during the 30-day
response time, a corrective action plan
[[Page 49]]
may be required of the owner at the conclusion of the DEC's evaluation
of the property.
(3) Evaluation of the property. During the evaluation period, the
DEC will perform an analysis of the multifamily housing property, which
may include input from tenants, HUD multifamily officials, elected
officials, and others as may be appropriate. Although the MFD will
assist with the evaluation, for insured mortgages, the DEC will have
primary responsibility for the conclusion of the evaluation of the
property after taking into consideration the input of interested parties
as described in this paragraph (h)(2). The DEC's evaluation may include
a site visit to the owner's property.
(4) Continuing responsibilities of HUD Multifamily Program Offices
and Mortgagee. During the period of DEC evaluation, HUD's multifamily
program offices continue to be responsible for routine asset management
tasks on properties and all servicing actions (e.g., rent increase
decisions, releases from reserve account approvals). In addition, during
this period of evaluation, the mortgagee shall continue to carry out its
duties and responsibilities with respect to the mortgage.
(i) Enforcement action. If, at the conclusion of the evaluation
period, the DEC determines that enforcement action is appropriate, the
DEC will provide notification to the owner of the DEC's decision to
formally accept the property for enforcement purposes.
(1) DEC Owner Compliance Plan. (i) After notification to the owner
of the DEC's decision, the DEC will produce a proposed action plan (DEC
Compliance Plan), the purpose of which is to improve the physical
condition of the owner's property, and correct any other known
violations by the owner of its legal obligations. The DEC Compliance
Plan will describe:
(A) The actions that will be required of the owner to correct,
mitigate or eliminate identified property deficiencies, problems,
hazards, and/or correct any other known violations by the owner;
(B) The period of time within which these actions must be completed;
and
(C) The compliance responsibilities of the owner.
(ii) The DEC Compliance Plan will be submitted to the MFD for review
and concurrence. If the MFD does not concur, the DEC Compliance Plan
will be submitted to the Deputy Assistant Secretary for Housing and the
Deputy Director of the DEC for review and concurrence. If the DEC
Compliance Plan remains unapproved, a final decision on the plan will be
made by HUD's Deputy Secretary in consultation with the General Counsel,
the Assistant Secretary for Housing, and the Director of the DEC.
(iii) Following submission of the DEC Compliance Plan to the owner,
the owner will be provided a period of 30 calendar days to review and
accept the DEC Compliance Plan. If the owner agrees to comply with the
DEC Compliance Plan, the plan will be forwarded to the appropriate
Multifamily Office for implementation and monitoring of completion of
the plan's requirements.
(2) Counter compliance plan proposal by owner. The owner may submit
an acceptable counter proposal to the DEC Compliance Plan. An owner's
counter proposal to a DEC Compliance Plan must be submitted no later
than the 30th day following submission of the DEC Compliance Plan to the
owner. The DEC, in coordination with the MFD, may enter into discussions
with the owner to achieve agreement to a revised DEC Compliance Plan. If
the owner and the DEC agree on a revised DEC Compliance Plan, the
revised plan will be forwarded to the appropriate Multifamily Office for
implementation and monitoring of completion of the plan's requirements.
(3) Non-cooperation and Non-compliance by owner. If at the
conclusion of the 30th calendar day following submission of the DEC
Compliance Plan to the owner, the DEC receives no response from the
owner, or the owner refuses to accept the DEC Compliance Plan, or to
present a counter compliance plan proposal, or if the owner accepts the
DEC Compliance Plan or revised DEC Compliance Plan, but refuses to take
the actions required of the owner in the plan, the DEC may take
appropriate enforcement action.
(4) No limitation on existing enforcement authority. The
administrative process provided in this section does
[[Page 50]]
not prohibit the Office of Housing, the DEC, or HUD generally, to take
whatever action may be necessary when necessary (notwithstanding the
commencement of this process), as authorized under existing statutes,
regulations, contracts or other documents, to protect HUD's financial
interests in multifamily properties and to protect the residents of
these properties.
(j) Limitations on material alteration of physical inspection
software. HUD will not materially alter the physical inspection
requirements in a manner which would materially increase the cost of
performing the inspection.
[65 FR 77240, Dec. 8, 2000, as amended at 72 FR 54517, Sept. 25, 2007]
Subpart R [Reserved]
Subpart S_Minimum Property Standards
Sec. 200.925 Applicability of minimum property standards.
All housing constructed under HUD mortgage insurance and low-rent
public housing programs shall meet or exceed HUD Minimum Property
Standards, except that this requirement shall be applicable to
manufactured homes eligible for insurance pursuant to Sec. 203.43f of
this chapter only to the extent provided therein. The Minimum Property
Standards may be waived to the same extent as the other regulatory
requirements for eligibility for insurance under the specific mortgage
insurance program involved.
[58 FR 60248, Nov. 15, 1993]
Sec. 200.925a Multifamily and care-type minimum property standards.
(a) Construction standards. Multifamily or care-type properties
shall comply with the minimum property standards contained in the
handbook identified in Sec. 200.929(b)(2). In addition, each such
property shall, for the Department's purposes, comply with:
(1) The applicable State of local building code, if the property is
located within a jurisdiction which has a building code accepted by the
Secretary under Sec. 200.925a(d); or
(2)(i) The applicable State or local building code, and
(ii) Those portions of the codes identified in Sec. 200.295c which
are designated by the HUD Field Office serving the jurisdiction in which
the property is to be located, if the property is located in a
jurisdiction which has a building code partially accepted by the
Secretary; or
(3) The appropriate codes, as identified in Sec. 200.925c(c), if
the property is not located within a jurisdiction which has a building
code accepted by the Secretary.
(b) Conflicting standards. The minimum property standards contained
in the handbook identified in Sec. 200.929(b)(2) do not preempt state
or local standards, nor do they alter or affect a builder's obligation
to comply with any state or local requirements. However, a property
shall be eligible for benefits only if it complies with all applicable
minimum property standards, including referenced standards.
(c) Standard for evaluating local building codes. The Secretary
shall compare the portions of a local or State building code applicable
to residential or institutional occupancy, as appropriate, submitted
under Sec. 200.925a(d) to the list of construction related areas
contained in Sec. 200.925b.
(1) A State or local code will be accepted if it regulates each area
on the list.
(2) A State or local building code will be partially accepted if it
regulates most of the areas on the list. However, no code may be
partially accepted if it fails to regulate the subarea for seismic
design (see Sec. 200.925b(c)(5)), or if it fails to regulate subareas
in more than one of the following major areas listed in Sec. 200.925b:
fire safety, light and ventilation, structural loads and seismic design,
foundation systems, materials standards, construction components, glass,
mechanical, plumbing, electrical, and elevators.
(3) For purposes of this paragraph, a state or local code regulates
an area if it establishes a standard concerning that area. However, for
earthquake loads (see Sec. 200.925b(c)(5)), ASCE 7-88 is mandatory.
(d) Review process and acceptance--(1) Jurisdictions without
previously accepted building codes. The following submission
requirements apply to developers
[[Page 51]]
and other interested parties in jurisdictions without building codes,
jurisdictions with building codes which have never been submitted for
acceptance, and jurisdictions with building codes which have been
submitted for acceptance and neither accepted nor partially accepted by
the Secretary.
(i) Developers or other interested parties must comply with one of
the following by the time of application for insurance or other
benefits:
(A) The developer or other interested party may choose to comply
with the appropriate codes as identified in Sec. 200.925c. If the
developer or other interested party so chooses, then the multifamily or
care-type property shall be constructed in accordance with one of the
model codes designated in paragraph (c)(1), (2) or (3) of Sec. 200.925c
and with any other code or codes identified in the same paragraph. In
such instances, the developer or other interested party shall notify the
Department of the code or group of codes with which it intends to comply
by the time of application for insurance or other benefits; or
(B) The developer or other interested party may choose to comply
with the State or local building code, if such code is acceptable to the
Secretary. To obtain the Secretary's acceptance, the developer or other
interested party shall submit the material specified in paragraph
(d)(1)(ii) of this section to the HUD Field Office serving the
jurisdiction in which the property is to be constructed. Such material
may be submitted at any time; provided, however, that it must be
submitted no later than the time of application for mortgage insurance
or other benefits.
(ii) If, under paragraph (d)(1)(i)(B) of this section, the developer
or other interested party chooses to comply with the State or local
building code as prescribed in paragraph (a)(1) of this section, it
shall submit the following material to the HUD field Office serving the
jurisdiction in which the property is to be constructed:
(A) A copy of the jurisdiction's building code, including all
applicable service codes, appendices and referenced standards; and
(B) A copy of the statute, ordinance, regulation, or order
establishing the code, if such statute, ordinance, regulation or order
is not contained in the building code itself.
However, the developer or other interested party need not submit any
document already on file in the Field Office.
(2) Jurisdictions with previously accepted or partially accepted
building codes. The following submission requirements apply to
developers and other interested parties in any jurisdiction with a
building code which has been accepted or partially accepted by the
Secretary:
(i) At the time of application for mortgage insurance or other
benefits, the developer or other interested party shall submit to the
HUD Field Office serving the jurisdiction in which the property is to be
constructed.
(A) A certificate stating that, since its acceptance by the
Secretary, the jurisdiction's building code has not been changed; or
(B)(1) A copy of all changes to the jurisdiction's building code,
including all applicable service codes and appendices, which have been
made since the date of the code's acceptance by the Secretary. However,
the developer or other interested party need not submit any part already
in the possession of the Field Office; and
(2) A copy of the statute, ordinance regulation, or order making
such changes in the code.
(3) Notification of decision. The Secretary shall review the
material submitted under paragraphs (d) (1)(ii) and (2)(i). Following
that review, the Secretary shall issue a written notice (except in the
case of a previously accepted code which hasn't been changed) to the
submitting party stating whether the State or local building code has
been accepted, partially accepted, or whether the Secretary's previous
acceptance or partial acceptance has been continued; the basis for the
Secretary's decision; and a notification of the submitting party's right
to present its views concerning the denial of acceptance if the code is
neither accepted nor partially accepted. The Secretary may, in his
discretion, permit either an oral or written presentation of views.
(i) If a developer or other interested party is notified that a
State or local building code has not been accepted,
[[Page 52]]
then the multifamily or care-type properties eligible for HUD benefits
in that jurisdiction shall be constructed in accordance with the
appropriate codes indicated in Sec. 200.925c(c). In such instances, the
developer or other interested party shall notify the HUD Field Office of
the code or codes with which it chooses to comply, in accordance with
Sec. 200.925a(d)(1)(i)(A).
(ii) If a developer or other interested party is notified that a
State or local building code has been partially accepted, then the
multifamily or care-type properties eligible for HUD benefits in that
jurisdiction shall be constructed in accordance with the applicable
State or local building code, plus those additional requirements
identified in the written notice issued by the Secretary under Sec.
200.925a(d)(3). The written notice shall identify, in accordance with
appendix J of the Handbook identified in Sec. 200.929(b)(2), those
portions of the codes listed at Sec. 200.925c(a) with which the
property must comply.
(iii) Each Regional Office will maintain a current list of
jurisdictions with accepted building codes and a current list of
jurisdictions with partially accepted building codes. The lists will
state the most recent date of each code's acceptance or partial
acceptance and will be available to any interested party upon request.
In addition, the list of jurisdictions whose codes have been partially
accepted shall identify those portions of the codes listed at Sec.
200.925c(a) with which the property must comply.
(Approved by the Office of Management and Budget under control number
2502-0321)
[49 FR 18695, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58
FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]
Sec. 200.925b Residential and institutional building code comparison
items.
HUD will review each local code submitted under this chapter to
determine whether it regulates all of the following areas and subareas:
(a) Fire safety. (1) Construction types permitted;
(2) Allowable height and area;
(3) Fire separations;
(4) Fire resistance requirements;
(5) Means of egress (number and distance);
(6) Individual unit smoke detectors;
(7) Building alarm systems;
(8) Highrise criteria;
(b) Light and ventilation. (1) Habitable rooms;
(2) Bath and toilet rooms.
(c) Structural loads and seismic design. (1) Design live loads;
(2) Design dead loads;
(3) Snow loads;
(4) Wind loads.
(5) Earthquake loads (in localities identified by ASCE 7-88
(formerly ANSI A58.1-82) as being in seismic zones 1, 2, 3, or 4, and
Guam).
(6) Special loads, i.e., soil pressure, railings, interior walls
etc.
(d) Foundation systems. (1) Soil tests;
(2) Foundation depths;
(3) Footings;
(4) Foundation materials criteria;
(5) Piles, i.e., materials, allowable stresses, design;
(6) Excavation;
(e) Materials standards.
(f) Construction components. (1) Steel;
(2) Masonry;
(3) Concrete;
(4) Gypsum;
(5) Lumber;
(6) Roof construction and covering;
(7) Chimneys and fireplaces.
(g) Glass. (1) Thickness/area requirements;
(2) Safety glazing.
(h) Mechanical. (1) Heating, cooling and ventilation systems;
(2) Boilers and pressure vessels;
(3) Gas, liquid and solid fuel piping and equipment;
(4) Chimneys and vents;
(5) Ventilation (air changes).
(i) Plumbing. (1) Materials standards;
(2) Sizing and installing drainage systems;
(3) Vents and venting;
(4) Traps;
(5) Cleanouts;
(6) Plumbing fixtures;
(7) Water supply and distribution;
(8) Storm drain systems.
(j) Electrical. (1) Wiring design and protection;
(2) Wiring methods and materials;
(3) Equipment for general use;
(4) Special equipment;
(5) Special conditions;
[[Page 53]]
(6) Communication systems.
(k) Elevators. (1) Reference ASME/ANSI Standard A 17.1-1987; and the
ASME/ANSI A17.1b-1989 Addenda.
(2) Acceptance tests and periodic tests.
[49 FR 18696, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58
FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]
Sec. 200.925c Model codes.
(a) Incorporation by reference. The following publications are
incorporated by reference under 5 U.S.C. 552(a) and 1 CFR part 51. The
incorporation by reference of these publications has been approved by
the Director of the Federal Register. The locations where copies of
these publications are available are set forth below.
(1) Model Building Codes--(i) The BOCA National Building Code, 1993
Edition, The BOCA National Plumbing Code, 1993 Edition, and the BOCA
National Mechanical Code, 1993 Edition, excluding Chapter I,
Administration, for the Building, Plumbing and Mechanical Codes and the
references to fire retardant treated wood and a distance of 4 feet (1219
mm) from the wall in exception number 1 of paragraph 705.6 and 707.5.2
number 2 (Chapter 7) of the Building Code, but including the Appendices
of the Code. Available from Building Officials and Code Administrators
International, Inc., 4051 West Flossmoor Road, Country Club Hills,
Illinois 60478.
(ii) Standard Building Code, 1991 Edition, including 1992/1993
revisions. Standard Plumbing Code, 1991 Edition, Standard Mechanical
Code, 1991 Edition, including 1992 revisions, and Standard Gas Code,
1991 Edition, including the 1992 revisions, but excluding Chapter I--
Administration from each standard code and the phrase ``or fire
retardant treated wood'' in reference note (a) of table 600 (Chapter 6)
of the Standard Building Code, but including Appendices A, C, E, J, K,
M, and R. Available from the Southern Building Code Congress
International, Inc., 900 Montclair Road, Birmingham, Alabama 35213.
(iii) Uniform Building Code, 1991 Edition, including the 1993
Accumulative Supplement, but excluding Part I--Administrative, and the
reference to fire retardant treated plywood in section 2504(c)3 and to
fire retardant treated wood in 1-HR type III and V construction
referenced in paragraph 4203.2., but including the Appendix of the Code.
Uniform Plumbing Code, 1991 Edition, including the 1992 Code Changes but
excluding Part I--Administration, but including the Appendices of the
Code. Uniform Mechanical Code, 1991 Edition, including the 1993
Accumulative Supplement but excluding Part I--Administrative, but
including the Appendices of the Code. All available from the
International Conference of Building Officials, 5360 South Workman Mill
Road, Whittier, California 90601.
(2) National Electrical Code, NFPA 70, 1993 Edition, including
appendices. Available from the National Fire Protection Association,
Batterymarch Park, Quincy, Massachusetts 02269.
(3) National Standard Plumbing Code, 1993 Edition. Available from
the National Association of Plumbing-Heating-Cooling Contractors, P.O.
Box 6808, Falls Church, Virginia 22046.
(b) Model Code Compliance Requirements. (1) When a multifamily or
care-type property is to comply with one of the model building codes set
forth in paragraph (a)(1) of this section, the following requirements of
those model codes shall not apply to those properties:
(i) Those provisions of the model codes that do not pertain to
residential or institutional buildings;
(ii) Those provisions of the model codes that establish energy
requirements for multifamily or care-type structures; and
(iii) Those provisions of the model codes that require or allow the
issuance of permits of any sort.
(2) Where the model codes set forth in paragraph (a)(1) of this
section designate a building, fire, mechanical, plumbing or other
official, the Secretary's designee in the HUD Field Office serving the
jurisdiction in which the property is to be constructed shall act as
such official.
(c) Designation of Model Codes. When a multifamily or care-type
property is to comply with a model code, it shall comply with one of the
model codes designated in paragraphs (c)(1), (2), or (3) of this
section, and with any other code or codes identified in the same
[[Page 54]]
paragraph. However, seismic design is a mandatory requirement. In
addition, the property shall comply with all of the standards that are
incorporated into the code or codes by reference. By the time of
application for insurance or other benefits, the developer or other
interested party shall notify the Department of the code or group of
codes to which the developer intends to comply.
(1) The BOCA National Building Code, The BOCA National Plumbing and
The BOCA National Mechanical Code, 1993 Editions.
(2) Standard Building Code, Standard Plumbing Code, Standard
Mechanical Code and Standard Gas Code, 1991 Editions, including the
revisions specified in paragraph (a)(1)(ii) of this section, and the
National Electrical Code, 1993 Edition.
(3) Uniform Building Code, Uniform Plumbing Code and Uniform
Mechanical Code, 1991 Editions, including the 1993 Accumulative
Supplements to the Building and Mechanical Codes, and the 1992 Code
Changes to the Uniform Plumbing Code, and the National Electrical Code,
NFPA 70, 1993 Edition.
(4) The National Electrical Code, NFPA 70, 1993 Edition.
[49 FR 18696, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58
FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]
Sec. 200.926 Minimum property standards for one and two family dwellings.
(a) Construction standards--(1) Applicable structures. The standards
identified or contained in this section, and in Sec. Sec. 200.926a-
200.926e, apply to single family detached homes, duplexes, three-unit
homes, and to living units in a structure where the units are located
side-by-side in town house fashion. Section 200.926d(c)(4) also applies
to four-unit homes.
(2) Applicability of standards to new construction. The standards
referenced in paragraph (a)(1) of this section are applicable to
structures which are:
(i) Approved for insurance or other benefits prior to the start of
construction, including approval under the Direct Endorsement process
described in Sec. 203.5 of this chapter, or under the Lender Insurance
process described in Sec. 203.6 of this chapter;
(ii) Approved for insurance or other benefits based upon
participation in an insured warranty program; or
(iii) Insured as new construction based upon a Certificate of
Reasonable Value issued by the Department of Veterans Affairs.
(b) Conflicting standards. The requirements contained in Sec.
200.926d do not preempt local or State standards, nor do they alter or
affect a builder's obligation to comply with any local or State
requirements. However, a property shall be eligible for benefits only if
it complies with the requirements of this subpart, including any
referenced standards. When any of the requirements identified in Sec.
200.926c are in conflict with a partially accepted local or state code,
the conflict will be resolved by the HUD Field Office servicing the
jurisdiction in which the property is to be located.
(c) Standard for evaluating local or state building codes. The
Secretary shall compare a local building code submitted under paragraph
(d) of this section or a State code to the list of construction related
areas contained in Sec. 200.926a.
(1) A local or State code will be accepted if it regulates each area
and subarea on the list.
(2) A State or local building code will be partially accepted if it
regulates most of the areas on the list. However, no code may be
partially accepted if it fails to regulate the subarea for seismic
design (see Sec. 200.926a(c)(5)), or if it fails to regulate subareas
in more than one of the following major areas listed in Sec. 200.926a:
fire safety, light and ventilation, structural loads and seismic design,
foundation systems, materials standards, construction components, glass,
mechanical, plumbing, and electrical.
(3) For purposes of this paragraph, a local or State code regulates
an area or subarea if it establishes a standard concerning that area or
subarea. However, for earthquake loads (see Sec. 200.926a(c)(5)), ASCE
7-88 is mandatory.
(d) Code selection. Any materials required to be submitted under
this section must be submitted by the time the lender or other
interested party applies
[[Page 55]]
for mortgage insurance or other benefits.
(1) Jurisdictions without previously accepted building codes. The
following submission requirements apply to lenders and other interested
parties in jurisdictions without building codes, jurisdictions with
building codes which have never been submitted for acceptance, and
jurisdictions with building codes which previously have been submitted
for acceptance and have not been accepted or partially accepted by the
Secretary.
(i) In jurisdictions without local building codes:
(A) If the State building code is acceptable, the lender or other
interested party must comply with the State building code and the
requirements of Sec. 200.926d;
(B) If the State building code is partially acceptable, the lender
or other interested party must comply with:
(1) The acceptable portions of the partially acceptable code; and
(2) Those portions of the CABO One and Two Family Dwelling Code
designated by the HUD Field Office in accordance with Sec. 200.926c;
and
(3) The requirements of Sec. 200.926d.
(C) If there is no State building code or if the State building code
is unacceptable, the lender or other interested party must comply with:
(1) The CABO One and Two Family Dwelling Code as identified in Sec.
200.926b(a); and
(2) The requirements of Sec. 200.926d.
(ii) In jurisdictions with local building codes which have never
been submitted for review, lenders or other interested parties must:
(A) Comply with the requirements of paragraph (d)(1)(i) (A), (B) or
(C) of this section, as appropriate; or
(B) Request the Secretary's acceptance of the local building code in
accordance with paragraph (d)(1)(iv) of this section.
(1) If the Secretary determines that the local building code is
unacceptable, then the lender or other interested party must comply with
the requirements of paragraph (d)(1)(i) (A), (B) or (C) of this section
as appropriate.
(2) If the Secretary determines that the local code is partially
acceptable, then the lender or other interested party must comply with:
(i) The acceptable portions of the partially acceptable local code;
and
(ii) Those portions of the CABO One and Two Family Dwelling Code
designated by the HUD Field Office in accordance with Sec. 200.926c;
and
(iii) The requirements of Sec. 200.926d.
(3) If the Secretary determines that the local code is acceptable,
then the lender or other interested party must comply with the local
building code and the requirements of Sec. 200.926d.
(iii) In jurisdictions with local building codes which previously
have been submitted for review and which have been found unacceptable by
the Secretary:
(A) If the local code has not been changed since the date the code
or changes thereto were submitted to the Secretary, the lender or other
interested party must comply with the requirements of paragraph
(d)(1)(i) (A), (B) or (C) of this section, as appropriate; or
(B) If the local code has been changed since the date when the code
or changes thereto were submitted to the Secretary, the lender or other
interested party must submit a copy of all changes to the local building
code, including all applicable service codes and appendices and a copy
of the statute, ordinance, regulation or order making such changes in
the code, which have been made since the date when the code or other
changes thereto were last submitted to the Secretary. However, the
lender or other interested party need not submit any part already in the
possession of the HUD Field Office. Based upon the Secretary's
determination concerning the acceptability of the local code as changed,
the lender or other interested party must comply with the requirements
of paragraph (d)(1)(ii)(B) (1), (2) or (3) of this section, as
appropriate.
(iv) In order to obtain the Department's approval of a local code,
the lender or other interested party must submit the following material
to the HUD Field Office serving the jurisdiction in which the property
is to be constructed:
[[Page 56]]
(A) A copy of the jurisdiction's local building code, including all
applicable service codes and appendices; and
(B) A copy of the statute, ordinance, regulation, or order
establishing the code, if such statute, ordinance, regulation or order
is not contained in the building code itself.
However, the lender or other interested party need not submit any
document already on file in the HUD Field Office.
(2) Jurisdictions with previously accepted or partially accepted
building codes. The following submission requirements apply to lenders
or other interested parties in any jurisdiction with a building code
which has been accepted or partially accepted by the Secretary:
(i) The lender or other interested party shall submit to the HUD
Field Office serving the jurisdiction in which the property is to be
constructed:
(A) A certificate stating that, since the date when the code or any
changes thereto were last submitted to the Secretary, the jurisdiction's
local building code has not been changed; or
(B)(1) A copy of all changes to the jurisdiction's building code,
including all applicable service codes and appendices, which have been
made since the date when the code or other changes thereto were last
submitted to the Secretary. However, the lender or other interested
party need not submit any part already in the possession of the HUD
Field Office; and
(2) A copy of the statute, ordinance, regulation, or order making
such changes in the code.
(ii) If, based upon changes to the local building code, the
Secretary determines that it is unacceptable, the lender or other
interested party must comply with the requirements of paragraph (d)(1)
(i)(A), (B) or (C) of this section, as appropriate.
(iii) If the local building code was previously found by the
Secretary to be partially acceptable and there have been no changes to
it or if the local building code was previously found by the Secretary
to be partially acceptable and if, based upon changes to it, the
Secretary determines that it is still partially acceptable or if the
local building code was previously found by the Secretary to be
acceptable and if, based upon changes to it, the Secretary determines
that it is partially acceptable, then the lender or other interested
party must comply with paragraphs (d)(1)(ii)(B)(2) (i), (ii) and (iii)
of this section.
(iv) If the local building code was previously found by the
Secretary to be partially acceptable and if, based upon changes to it,
the Secretary determines that it is acceptable, or if the local building
code was previously found by the Secretary to be acceptable and there
have been no changes to the code, or if the local building code was
previously found by the Secretary to be acceptable and if, based upon
changes to it, the Secretary determines that it is still acceptable,
then the lender or other interested party must comply with the local
building code and the requirements of Sec. 200.926d.
(3) Notification of decision. (i) Fire retardant treated plywood,
where approved by a State or local building code, shall not be permitted
for use in roof construction unless a HUD technical suitability bulletin
has been issued by the Department for that product.
(ii) The Secretary shall review the material submitted under Sec.
200.926(d). Following that review, the Secretary shall issue a written
notice (except where there is a previously accepted or partially
accepted code which has not been changed) to the submitting party
stating whether the local building code is acceptable, partially
acceptable, or not acceptable. Where the local building code is not
acceptable, the notice shall also state whether the State code is
acceptable, partially acceptable or not acceptable. The notice shall
also contain the basis for the Secretary's decision and a notification
of the submitting party's right to present its views concerning the
denial of acceptance if the code is neither accepted nor partially
accepted. The Secretary may, in his or her discretion, permit either an
oral or written presentation of views.
(4) Department's responsibilities. (i) Each Regional and Field
Office will maintain a current list of jurisdictions with accepted local
or State building codes, a current list of jurisdictions with partially
accepted local or State
[[Page 57]]
building codes and a current list of jurisdictions with local or State
building codes which have not been accepted. For local codes, the lists
will state the most recent date when the code or changes thereto were
submitted to the Secretary. The lists, which shall be prepared by the
Field Offices and submitted to the Regional Offices, will be available
to any interested party upon request. In addition, the list of
jurisdictions whose codes have been partially accepted shall identify in
accordance with Sec. 200.926c those portions of the codes listed at
Sec. 200.926b(a) with which the property must comply.
(ii) The Department is responsible for obtaining copies of the State
codes and any changes thereto.
(Approved by the Office of Management and Budget under control number
2502-0474)
[50 FR 39592, Sept. 27, 1985, as amended at 57 FR 27927, June 23, 1992;
57 FR 58340, Dec. 9, 1992; 58 FR 13536, Mar. 12, 1993; 58 FR 41337, Aug.
3, 1993; 58 FR 60249, Nov. 15, 1993; 59 FR 36695, July 19, 1994; 62 FR
30225, June 2, 1997; 64 FR 56110, Oct. 15, 1999]
Sec. 200.926a Residential building code comparison items.
HUD will review each local and State code submitted under this
subpart to determine whether it regulates all of the following areas and
subareas:
(a) Fire Safety. (1) Allowable height;
(2) Fire separations;
(3) Fire resistance requirements;
(4) Egress doors and windows;
(5) Unit smoke detectors;
(6) Flame spread.
(b) Light and ventilation. (1) Habitable rooms;
(2) Bath and toilet rooms.
(c) Structural loads and seismic design. (1) Design live loads;
(2) Design dead loads;
(3) Snow loads (for jurisdictions with snow loading conditions
identified in Section 7 of ASCE-7-88 (formerly ANSI A58.1-82);
(4) Wind loads;
(5) Earthquake loads (for jurisdictions in seismic zones 3 or 4, as
identified in Section 9 of ASCE-7-88 (formerly ANSI A58.1-82)).
(d) Foundation systems. (1) Foundation depths;
(2) Footings;
(3) Foundation materials criteria.
(e) Materials standards. (1) Materials standards.
(f) Construction components. (1) Steel;
(2) Masonry;
(3) Concrete;
(4) Lumber;
(5) Roof construction and covering;
(6) Chimneys and fireplaces.
(g) Glass. (1) Thickness/area requirements;
(2) Safety glazing.
(h) Mechanical. (1) Heating, cooling and ventilation systems;
(2) Gas, liquid and solid fuel piping and equipment;
(3) Chimneys and vents;
(4) Ventilation (air changes).
(i) Plumbing. (1) Materials standards;
(2) Sizing and installing drainage systems;
(3) Vents and venting;
(4) Traps;
(5) Cleanouts;
(6) Plumbing fixtures;
(7) Water supply and distribution;
(8) Sewage disposal systems.
(j) Electrical. (1) Branch circuits;
(2) Services;
(3) Grounding;
(4) Wiring methods;
(5) Cable;
(6) Conduit;
(7) Outlets, switches and junction boxes;
(8) Panelboards.
[50 FR 39594, Sept. 27, 1985, as amended at 59 FR 36695, July 19, 1994]
Sec. 200.926b Model codes.
(a) Incorporation by reference. The following model code
publications are incorporated by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. The incorporation by reference of these
publications has been approved by the Director of the Federal Register.
The locations where copies of these publications are available are set
forth below.
(1) CABO One and Two Family Dwelling Code, 1992 Edition, including
the 1993 amendments, but excluding Chapter I--Administrative, and the
phrase ``or approved fire retardant wood'' contained in the exception of
paragraph R-218.2.2(2), but including the Appendices A, B, D, and E of
the Code. (Available from the Council of American Building Officials,
Suite 708, 5203 Leesburg Pike, Falls Church, VA 22041.)
[[Page 58]]
(2) Electrical Code for One and Two Family Dwellings, NFPA 70A, 1990
Edition, including Tables and Examples. Available from the National Fire
Protection Association, Batterymarch Park, Quincy, MA 02269.
(b) Model code compliance requirements. (1) When a one or two family
dwelling is to comply with the model codes set forth in Sec.
200.926b(a), the following requirements of those model codes shall not
apply to those properties:
(i) Those provisions of the model codes that establish energy
requirements for one and two family dwellings; and
(ii) Those provisions of the model codes that require or allow the
issuance of permits of any sort.
(2) Where the model codes set forth in paragraph (a) of this section
designate a building, fire, mechanical, plumbing or other official, the
Secretary's designee in the HUD Field Office serving the jurisdiction in
which the dwelling is to be constructed shall act as such official.
(c) Designation of Model Codes. When a one or two family dwelling or
townhouse is to comply with portions of the model code or the entire
model code, the dwelling shall comply with the CABO One and Two Family
Dwelling Code 1992 Edition, including the 1993 amendments, or portion
thereof as modified by Sec. 200.926e of this part and designated by the
HUD Field Office serving a jurisdiction in which a property is located.
In addition, the property shall comply with all of the standards which
are referenced for any designated portions of the model code, and with
the Electrical Code for One and Two Family Dwellings, NFPA 70A/1990.
[50 FR 39594, Sept. 27, 1985, as amended at 58 FR 60249, Nov. 15, 1993]
Sec. 200.926c Model code provisions for use in partially accepted
code jurisdictions.
If a lender or other interested party is notified that a State or
local building code has been partially accepted, then the properties
eligible for HUD benefits in that jurisdiction shall be constructed in
accordance with the applicable State or local building code, plus those
additional requirements identified below. Depending upon the major area
identified in Sec. 200.926a which is not adequately regulated by the
State or local code, the HUD Field Office will designate, in accordance
with the schedule below, those portions of one of the model codes with
which the property must comply.
Schedule for Model Code Supplements to Local or State Codes
------------------------------------------------------------------------
Portions of the CABO One and
Two Family Dwelling Code,
Deficient major items from Sec. 200.926a 1992 Edition, including the
as determined by field office review 1993 amendments, with which
a property must comply
------------------------------------------------------------------------
(a) Fire safety........................... Chapters 2, 9; Section R-
402.
(b) Light and ventilation................. Chapter 2; Section R-309.
(c) Structural loads and seismic design... Chapter 2.
(d) Foundation systems.................... Chapter 3.
(e) Materials standards................... Chapter 26.
(f) Construction components............... Part III.
(g) Glass................................. Chapter 2.
(h) Mechanical............................ Part IV.
(i) Plumbing.............................. Part V.
(j) Electrical............................ Electrical code for 1- and 2-
family dwellings (NFPA 70A-
1990).
------------------------------------------------------------------------
[50 FR 39594, Sept. 27, 1985, as amended at 58 FR 60249, Nov. 15, 1993;
59 FR 36695, July 19, 1994]
Sec. 200.926d Construction requirements.
(a) Application--(1) General. These standards cover the agency
requirements for accessibility to physically handicapped people,
variations to standards, real estate entity, trespass and utilities,
site conditions, access, site design, streets, dedication of utilities,
drainage and flood hazard exposure, special construction and product
acceptance, thermal requirements, and water supply systems.
(2) Requirements for accessibility to physically handicapped people.
The HUD Field Office will advise project sponsors as to the extent
accessibility will be required for new construction of one- and two-
family dwellings on a project-by-project basis.
(i) Technical standards. See HUD Handbook, 4910.1, Sections 100-1.3b
and 100-1.3c.
(3) Variations to standards--(i) New materials and technologies. See
paragraph (d) of this section. Alternatives, nonconventional or
innovative methods and materials shall be equivalent
[[Page 59]]
to these standards in the areas of structural soundness, durability,
economy of maintenance or operation and usability.
(ii) Variation procedures. Variations from the requirements of any
standard with which the Department requires compliance shall be made in
the following ways:
(A) For a particular design or construction method to be used on a
single case or project, the decision is the responsibility of the Field
Office. Headquarters concurrence is not required.
(B) Where a variation is intended to be on a repetitive basis, a
recommendation for a Local Acceptable Standard, substantiating data, and
background information shall be submitted by the Field Office to the
Director, Office of Manufactured Housing and Regulatory Functions.
(iii) Variances which require individual analysis and decision in
each instance are not considered as repetitive variances even though one
particular standard is repeatedly the subject of variation. Such
variances are covered by paragraph (a)(3)(ii)(A) of this section.
(b) General acceptability criteria--(1) Real estate entity. The
property shall comprise a single plot except that a primary plot with a
secondary plot for an appurtenant garage or for other use contributing
to the marketability of the property will be acceptable provided the two
plots are in such proximity as to comprise a readily marketable real
estate entity.
(2) Service and facilities--(i) Trespass. Each living unit shall be
one that can be used and maintained individually without trespass upon
adjoining properties, except when the windowless wall of a detached
dwelling is located on a side lot line. A detached dwelling may be
located on a side lot line if:
(A) legal provision is made for permanent access for the maintenance
of the exterior portion of the lot line wall, and
(B) the minimum distances from the dwelling to the dwellings on the
abutting properties are not less than the sum of the side yard distances
computed as appropriate for the type of opposing walls. (minimum
distance 10 ft).
(ii) Utilities. Utility services shall be independent for each
living unit, except that common services such as water, sewer, gas and
electricity may be provided for living units under a single mortgage or
ownership. Separate utility service shut-off for each unit shall be
provided. For living units under separate ownership, common utility
services may be provided from the main to the building line when
protected by an easement or convenant and maintenance agreement
acceptable to HUD, but shall not pass over, under or through any other
living unit. Individual utilities serving a living unit may not pass
over, under or through another living unit under the same mortgage
unless provision is made for repair and maintenance of utilities without
trespass or when protected by an easement or covenant providing
permanent access for maintenance and repair of the utilities. Building
drain cleanouts shall be accessible from the exterior where a single
drain line within the building serves more than one unit.
(3) Site conditions. (i) The property shall be free of those
foreseeable hazards and adverse conditions which may affect the health
and safety of occupants or the structural soundness of the improvements,
or which may impair the customary use and enjoyment of the property. The
hazards include toxic chemicals, radioactive materials, other pollution,
hazardous activities, potential damage from soil or other differential
ground movements, ground water, inadequate surface drainage, flood,
erosion, or other hazards located on or off site. The site must meet the
standards set forth in 24 CFR part 51, and HUD Handbook 4910.1, section
606 for termite and decay protection.
(ii) When special conditions exist or arise during construction
which were unforeseen and which necessitate precautionary or hazard
mitigation measures, the HUD Field Office shall require corrective work
to mitigate potential adverse effects from the special conditions as
necessary. Special conditions include rock formations, unstable soils or
slopes, high ground water levels, springs, or other conditions which may
adversely affect a property. It shall be the builder's responsibility to
ensure
[[Page 60]]
proper design, construction and satisfactory performance where these
conditions are present.
(4) Access. (i) Each property shall be provided with vehicular or
pedestrian access by a public or private street. Private streets shall
be protected by permanent easement.
(ii) Each living unit shall have a means of access such that it is
unnecessary to pass through any other living unit.
(iii) The rear yard shall be accessible without passing through any
other living unit.
(iv) For a townhouse type dwelling, access to the rear yard may be
by means of alley, easement, passage through the dwelling, or other
means acceptable to the HUD Field Office.
(c) Site design--(1) General. (i) A site design shall be provided
which includes an arrangement of all site facilities necessary to create
a safe, functional, healthful, durable and energy efficient living
environment.
(ii) With the exception of paragraph (c)(4) of this section, these
site design standards apply only in communities that have not adopted
criteria for site development applicable to one and two family
dwellings.
(iii) Single family detached houses situated on individual lots
located on existing streets with utilities need not comply with the
requirements of paragraphs (c)(2) and (c)(3) of this section.
(2) Streets. (i) Existing or proposed streets on the site shall
connect to private or public streets and shall provide all-weather
access to all buildings for essential and emergency use, including
access needed for deliveries, service, maintenance and fire equipment.
(ii) Streets shall be designed for dedication for public use and
maintenance or, when approved by the HUD Field Office, may be retained
as private streets where protected by permanent easements.
(3) Dedication. Utilities shall be located to permit dedication to
the local government or appropriate public body.
(4) Drainage and flood hazard exposure--(i) Residential structures
with basements located in FEMA-designated areas of special flood hazard.
The elevation of the lowest floor in structures with basements shall be
at or above the base flood level (100-year flood level) required for new
construction or substantial improvement of residential structures under
regulations for the National Flood Insurance Program (NFIP) (see 44 CFR
60.3 through 60.6), except where variances from this standard are
granted by communities under the procedures of the Federal Emergency
Management Agency (FEMA) at 44 CFR 60.6(a) or exceptions from this NFIP
standard for basements are approved by FEMA in accordance with
procedures at 44 CFR 60.6(c).
(ii) Residential structures without basements located in FEMA-
designated areas of special flood hazard. The elevation of the lowest
floor in structures without basements shall be at or above the FEMA-
designated base flood elevation (100-year flood level).
(iii) Residential structures located in FEMA-designated ``coastal
high hazard areas''. (A) Basements or any permanent enclosure of space
below the lowest floor of a structure are prohibited.
(B) Where FEMA has determined the base flood level without
establishing stillwater elevations, the bottom of the lowest structural
member of the lowest floor (excluding pilings and columns) and its
horizontal supports shall be at or above the base flood level.
(iv)(A) In all cases in which a Direct Endorsement (DE) mortgagee or
a Lender Insurance (LI) mortgagee seek to insure a mortgage on a newly
constructed one-to four-family dwelling (including a newly erected
manufactured home) that was processed by the DE or LI mortgagee, the DE
or LI mortgagee must determine whether the property improvements
(dwelling and related structures/equipment essential to the value of the
property and subject to flood damage) are located in a 100-year
floodplain, as designated on maps of the Federal Emergency Management
Agency. If so, the DE mortgagee, before submitting the application for
insurance to HUD, or the LI mortgagee, before submitting all the
required data regarding the mortgage to HUD, must obtain:
(1) A final Letter of Map Amendment (LOMA);
(2) A final Letter of Map Revision (LOMR); or
[[Page 61]]
(3) A signed Elevation Certificate documenting that the lowest floor
(including basement) of the property improvements is built at or above
the 100-year flood elevation in compliance with National Flood Insurance
program criteria 44 CFR 60.3 through 60.6.
(B) Under the DE program, these mortgages are not eligible for
insurance unless the DE mortgagee submits the LOMA, LOMR, or Elevation
Certificate to HUD with the mortgagee's request for endorsement.
(v) Streets. Streets must be usable during runoff equivalent to a
10-year return frequency. Where drainage outfall is inadequate to
prevent runoff equivalent to a 10-year return frequency from ponding
over 6 inches deep, streets must be made passable for commonly used
emergency vehicles during runoff equivalent to a 25-year return
frequency, except where an alternative access street not subject to such
ponding is available.
(vi) Crawl spaces. Crawl spaces must not pond water or be subject to
prolonged dampness.
(d) Special construction and product acceptance--(1) Structural
features of factory produced (modular or panelized) housing or
components.
(i) For factory fabricated systems or components, HUD Handbook
4950.1, ``Technical Suitability of Products Program Technical and
Processing Procedures'' shall apply.
(ii) The requirements of this part shall apply to structural
features, consisting of factory fabricated systems or components
assembled either at the factory or at the construction site, if the
total construction is covered by these standards and can be inspected
on-site for determination of compliance.
(2) Non-structural or non-standard features. These features include
methods of construction, systems, sub-systems, components, materials and
processes which are not covered by these requirements. See HUD Handbook
4950.1 for procedures to be followed in order to obtain acceptance of
non-structural components or materials. See HUD Handbook 4910.1,
appendix F for a list of Use of Materials Bulletins. Products and
methods shall conform to the appropriate Use of Materials Bulletin.
(3) Standard Features. These features include methods of
construction, systems, sub-systems, components, materials and processes
which are covered by national society or industry standards. For a list
of standards and practices to which compliance is required, see HUD
Handbook 4910.1, Appendix C and Appendices E and F, available from HUD,
451 Seventh Street, SW., Attention: Mailroom B-133, Washington, DC
20410.
(e) Energy efficiency. All detached one- and two-family dwellings
and one-family townhouses not more than three stories in height shall
comply with the CABO Model Energy Code, 1992 Edition, Residential
Buildings, except for Sections 101.3.1, 101.3.2, 104, and 105, but
Section 101.3.2.2, Historic Buildings, shall remain, and including the
Appendix, and HUD intermediate MPS Supplement 4930.2 Solar Heating and
Domestic Hot Water Systems, 1989 edition.
(f) Water supply systems--(1) General. (i) Each living unit shall be
provided with a continuing and sufficient supply of safe water under
adequate pressure and of appropriate quality for all household uses.
Newly constructed residential property for which a building permit has
been applied for on or after June 19, 1988 from the competent authority
with jurisdiction in this matter shall have lead-free water piping. For
purposes of these standards, water piping is ``lead free'' if it uses
solders and flux containing not more than 0.2 percent lead and pipes and
pipe fittings containing not more than 8.0 percent lead. This system
shall not impair the function or durability of the plumbing system or
attachments.
(ii) The chemical and bacteriological standards of the local health
authority shall apply. In the absence of such standards, those of the
appropriate State agency shall apply. A water analysis may be required
by either the health authority or the HUD Field Office.
(iii) Whenever feasible, connection shall be made to a public water
system. When a public system is not available, connection shall be made
to a community system which complies with HUD Handbook 4940.2, if
feasible.
[[Page 62]]
(2) Individual water systems. (i) The system should be capable of
delivering a flow of 5 gpm over at least a 4 hour period.
(ii) The chemical and bacteriological standards of the local health
authority shall apply. In the absence of such standards, those of the
appropriate State agency shall apply. A water analysis may be required
by either the health authority or the HUD Field Office.
(iii) After installation, the system shall be disinfected in
accordance with the recommendations or requirements of the local health
authority. In the absence of a health authority, system cleaning and
disinfection shall conform to the current EPA Manual of Individual Water
Supply Systems.
(iv) Bacteriological or chemical examination of a water sample
collected by a representative of the local or state health authority
shall be made when required by that authority or the HUD Field Office.
(3) Location of wells. (i) A well located within the foundation
walls of a dwelling is not acceptable except in arctic or subarctic
regions.
(ii) Water which comes from any soil formation which may be
polluted, contaminated, fissured, creviced or less than 20 ft. below the
natural ground surface is not acceptable, unless acceptable to the local
health authority.
(iii) Individual water supply systems are not acceptable for
individual lots in areas where chemical soil poisoning has been or is
practiced if the overburden of soil between the ground surface and the
water bearing strata is coarse grained sand, gravel, or porous rock, or
is creviced in a manner which will permit the recharge water to carry
the toxicants into the zone of saturation.
(iv) The following table shall be used in establishing the minimum
acceptable distances between wells and sources of pollution located on
either the same or adjoining lots. These distances may be increased by
either the health authority having jurisdiction or the HUD Field Office.
Distance From Source of Pollution
------------------------------------------------------------------------
Minimum
horizontal
Source of pollution distance
(feet)
------------------------------------------------------------------------
Property Line............................................ 10
Septic Tank.............................................. 50
Absorption Field......................................... \1\ 100
Seepage Pit.............................................. \1\ 100
Absorption Bed........................................... \1\ 100
Sewer Lines w/Permanent Watertight Joints................ 10
Other Sewer Lines........................................ 50
Chemically Poisoned Soil................................. \3\ 25
Dry Well................................................. 50
Other.................................................... (\2\)
------------------------------------------------------------------------
\1\ This clearance may be increased or decreased depending upon soil and
rock penetrated by the well and aquifer conditions. The clearance may
be increased in creviced limestone and permeable strata of gravel and
sand. The clearance may be reduced to 50 ft. only where the ground
surface is effectively separated from the water bearing formation by
an extensive, continuous and impervious strata of clay, hardpan, or
rock. The well shall be constructed so as to prevent the entrance of
surface water and contaminants.
\2\ The recommendations or requirements of the local health authority
shall apply.
\3\ This clearance may be reduced to 15 feet only where the ground
surface is effectively separated from the water bearing formation by
an extensive, continuous and impervious strata of clay, hardpan, or
rock.
(4) Well construction. (i) The well shall be constructed so as to
allow the pump to be easily placed and to function properly.
(ii)(A) All drilled wells shall be provided with a sound, durable
and watertight casing capable of sustaining the loads imposed.
(B) The casing shall extend from a point several feet below the
water level at drawdown or from an impervious strata above the water
level to 12 in. above either the ground surface or the pump room floor.
The casing shall be sealed at the upper opening to a depth of at least
15 feet.
(iii) Bored wells shall be lined with concrete, vitrified clay or
equivalent materials.
(iv) The space between the casing or liner and the wall of the well
hole shall be sealed with cement grout.
(v) The well casing shall not be used to convey water except under
positive pressure. A separate drop pipe shall be used for the suction
line.
(vi) When sand or silt is encountered in the water-bearing
formation, the well shall either be compacted and gravel packed, or a
removable strainer or screen shall be installed.
(vii) The surface of the ground above and around the well shall be
compacted and graded to drain surface water away from the well.
[[Page 63]]
(viii) Openings in the casing, cap, or concrete cover for the
entrance of pipes, pumps or manholes shall be watertight.
(ix) If a breather is provided, it shall extend above the highest
level to which surface water may rise. The breather shall be watertight,
and the open end shall be screened and positioned to prevent entry of
dust, insects and foreign objects.
(5) Pump and equipment. (i) Pumps shall be capable of delivering the
volume of water required under normal operating pressure within the
living unit. Pump capacity shall not exceed the output of the well.
(ii) Pumps and equipment shall be mounted to be free of
objectionable noises, vibrations, flooding, pollution, and freezing.
(iii) Suction lines shall terminate below maximum drawdown of the
water level in the well.
(iv) Horizontal segments of suction line shall be placed below the
frost line in a sealed casing pipe or in at least 4 in. of concrete. The
distance from suction line to sources of pollution shall be not less
than shown in the table at paragraph (f)(3)(iv) of this section.
(6) Storage tanks. (i) A pressure tank having a minimum capacity of
42 gallons shall be provided. However, prepressured tanks and other
pressurizing devices are acceptable provided that delivery between pump
cycles equals or exceeds that of a 42 gallon tank.
(ii) Tanks shall be equipped with a clean-out plug at the lowest
point, and a suitable pressure relief valve.
(Approved by the Office of Management and Budget under control number
2502-0474)
[50 FR 39594, Sept. 27, 1985, as amended at 53 FR 11271, Apr. 6, 1988;
56 FR 5350, Feb. 11, 1991; 57 FR 9609, Mar. 19, 1992; 57 FR 27927, June
23, 1992; 58 FR 41337, Aug. 3, 1993; 58 FR 60249, Nov. 15, 1993; 59 FR
19112, Apr. 21, 1994; 62 FR 30225, June 2, 1997; 64 FR 56110, Oct. 15,
1999]
Sec. 200.926e Supplemental information for use with the CABO One and
Two Family Dwelling Code.
The following shall be used in Table No. R-202, Climatic and
Geographic Design Criteria of the CABO One and Two Family Dwelling Code.
(a) Roof live loads.
Roof slope 3 in 12 or less: 20 psf
Roof slope over 3 in 12: 15 psf
Roof used as deck: 40 psf
(b) Roof snow load. The roof snow load shall be in accordance with
section 7 of ASCE 7-88.
(c) Wind pressures. The minimum Design Wind Pressures (net
pressures) set forth below apply to areas designated as experiencing
basic wind speeds up to and including 80 mph, as shown in ASCE 7-88,
Figure 1, Basic Wind Speed Map. These pressures also apply to buildings
not over 30 ft. in height above finish grade, assuming exposure C or
defined in ASCE 7-88.
(1) Minimum design wind pressure criteria. (i) Buildings (for
overturning racking or sliding); p = 20 psf.
(ii) Chimneys, p = 30 psf.
(iii) Exterior walls, p = 15 psf inward or outward. Local pressure
at corners of walls shall be not less than p = 30 psf outward. These
local pressures shall not be included with the design pressure when
computing overall loads. The pressures shall be applied perpendicularly
outward on strips of width equal to 10 percent of the least width of
building.
(iv) Partitions, p = 10 psf.
(v) Windows, p = 20 psf inward or outward.
(vi) Roof, p = 20 psf inward or outward.
Roofs with slopes greater than 6 in 12 shall be designed to withstand
pressures acting inward normal to the surface, equal to the design wind
pressure for exterior walls. Overhanging eaves, cornices, and ridges, 40
psf upward normal to roof surface. These local pressures shall not be
included with the design pressure when computing overall loads. The
pressures shall be applied perpendicularly outward on strips of width
equal to 10 percent of the least width of building. Net uplift on
horizontal projection of roof shall not be less than 12 psf.
(2) Severe wind design pressures. If the construction is higher than
30 ft., or if it is located in an area experiencing wind speeds greater
than 80 mph, higher design wind pressures than shown above are required.
Use Section 6 of ASCE 7-88 for higher criteria and for
[[Page 64]]
determining where wind speeds greater than 80 mph occur. Pressures are
assumed to act horizontally on the gross area of the vertical projection
of the structure except as noted for roof design.
(d) Seismic conditions shall be in accordance with Section 9 of ASCE
7-88.
(e) Subject to damage from: weathering. A jurisdiction's weathering
region shall be as established by the map in ASTM C 62-83.
(f) Subject to damage from: frost line depth. Exterior wall footings
or foundation walls including those of accessory buildings shall extend
a minimum of 6 in. below the finished grade and, where applicable, the
prevailing frost line.
(g) Subject to damage from: termites. ``Yes'' shall be used in
locations designated as Regions I, II or III. ``No'' shall be used in
locations designated as Region IV. The map for Termite Infestation
Probability in appendix A of CABO, One and Two Family Dwelling Code
shall be used to determine the jurisdiction's region.
(h) Subject to damage from: decay. ``Yes'' shall be used in
locations designated as moderate to severe and slight to moderate.
``No'' shall be used in locations designated as none to slight. The
Decay Probability map in appendix A of CABO, One and Two Family Dwelling
Code shall be used to determine the jurisdiction's decay designation.
(Approved by the Office of Management and Budget under control number
2502-0338)
[50 FR 39599, Sept. 27, 1985, as amended at 59 FR 36695, July 19, 1994]
Sec. 200.927 Incorporation by reference of minimum property standards.
The Minimum Property Standards as contained in the handbooks
identified in Sec. 200.929(b) are incorporated by reference into this
section as though set forth in full in accordance with 5 U.S.C. 552(a)
and 1 CFR part 51.
[50 FR 39592, Sept. 29, 1985]
Sec. 200.929 Description and identification of minimum property
standards.
(a) Description. The Minimum Property Standards describe physical
standards for housing. They are intended to provide a sound basis for
determining the acceptability of housing built under the HUD mortgage
insurance and low-rent public housing programs. The Minimum Property
Standards refer to material standards developed by industry and accepted
by HUD. In addition, under Section 521 of the National Housing Act, HUD
adopts its own technical suitability standards for materials and
products for which there are no industry standards acceptable to HUD.
These standards are contained in Use of Materials Bulletins that apply
to products and methods and Materials Releases that apply to specific
materials. Use of Materials Bulletins and Materials Releases are addenda
to the Minimum Property Standards. Unless otherwise stated, the current
edition, issue, or version of each of these documents, as available from
its source, is applicable to this subpart S. A list of the Use of
Materials Bulletins, Materials Releases, and MPS Appendix listing the
applicable referenced Standards may be obtained from the Construction
Standards Division, Office of Manufactured Housing and Construction
Standards, room 6170 Department of Housing and Urban Development, 451
7th Street, SW, Washington, DC 20410.
(b) Identification. The Minimum Property Standards have been
published as described below:
(1) MPS for One and Two Family Dwellings. See Sec. Sec. 200.926,
200.926 (a) through (e).
(2) MPS for Housing 4910.1, 1994 edition. This volume applies to
buildings and sites designed and used for normal multifamily occupancy,
including both unsubsidized and subsidized insured housing, and to care-
type housing insured under the National Housing Act. It also includes,
in Appendix K, a reprint of the MPS for One and Two Family Dwellings
identified in paragraph (b)(1) of this section.
[39 FR 26895, July 24, 1974, as amended at 42 FR 33890, July 1, 1977; 47
FR 29524, July 7, 1982; 47 FR 35761, Aug. 17, 1982; 49 FR 18695, May 1,
1984; 50 FR 39592, Sept. 29, 1985; 51 FR 28699, Aug. 11, 1986; 58 FR
60250, Nov. 15, 1993; 63 FR 5423, Feb. 2, 1998]
[[Page 65]]
Sec. 200.929a Fair Housing Accessibility Guidelines.
Builders and developers may use the Department's Fair Housing
Accessibility Guideline when designing or constructing covered
multifamily dwelling units in order to comply with the Fair Housing Act.
The Guidelines may be found in the 24 CFR Chapter I, Subchapter A,
Appendix II, titled Fair Housing Accessibility Guidelines--Design
Guidelines for Accessible/Adaptable Dwellings.
[58 FR 60250, Nov. 15, 1993]
Sec. 200.931 Statement of availability.
(a) Updated copies of the Minimum Property Standards and Use of
Materials Bulletins are available for public examination in the Office
of Consumer and Regulatory Affairs, Department of Housing and Urban
Development, room 9156, 451 Seventh St. SW., Washington, D.C. 20410-
8000. In addition, copies of volumes 1, 2, and 3 of the Minimum Property
Standards may be purchased from the U.S. Government Printing Office,
Washington, D.C. 20402.
(b) Publications approved by the Director of the Federal Register
for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1
CFR part 51 are available for inspection at the National Archives and
Records Administration (NARA). For information on the availability of
this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
[63 FR 5423, Feb. 2, 1998]
Sec. 200.933 Changes in minimum property standards.
Changes in the Minimum Property Standards will generally be made
every three years. Changes will be made in accordance with HUD policy
for the adoption of rules and regulations set forth in part 10 of this
title. Notice of such changes will be published in the Federal Register.
As the changes are made, they will be incorporated into the volumes of
the Minimum Property Standards to which they apply. The volumes
available for public examination and for purchase will contain all
changes up to the date of examination or purchase. An official, historic
file of such changes will be available in the office of the Rules Docket
Clerk in the HUD Central Office in Washington, DC, and in each HUD
Regional, Area, and Insuring Office. A similar copy of the standards
will also be maintained in the Office of the Federal Register,
Washington, DC.
[39 FR 26895, July 24, 1974, as amended at 58 FR 60250, Nov. 15, 1993]
Sec. 200.934 User fee system for the technical suitability of
products program.
(a) General. This section establishes fee requirements for the
issuance of Structural Engineering Bulletins (SEBs), Mechanical
Engineering Bulletins (MEBs), Truss Connector Bulletins (TCBs), Area
Letters of Acceptance (ALAs), Materials Releases (MRs), and review of
program administrator applications submitted pursuant to Sec. 200.935
of this title.
(b) Filing address--(1) Applications containing payment. When
applications for or correspondence concerning SEBs, MEBs, TCBs, MRs, or
program administrator approval contain payment, such applications or
correspondence shall be sent to the following address:
U.S. Department of Housing and Urban Development, Technical Suitability
of Product Fees, P.O. Box 954199, St. Louis, MO. 63195-4199.
(2) Other correspondence. All other correspondence concerning SEBs,
MEBs, TCBs, MRs, and program administrator acceptance shall be sent to
the following address:
Manufactured Housing and Construction Standards Division, Department of
Housing and Urban Development, 451 Seventh Street, SW., Attn: Mail Room
B-133, Washington, DC 20410.
(3) Application for ALAs. Applications for or correspondence
concerning ALAs shall be submitted to the Housing Division of the field
office having jurisdiction over the area in which the production
facility of the system is located, except that applications containing
payment shall be addressed to the attention of the Collection Officer
for deposit to Account No. 86-09-0300.
(c) Fees. Applicants for renewal and applicants for acceptance as
program
[[Page 66]]
administrators under Sec. 200.935 of this title shall include the
entire processing fee with the application. All other applicants shall
submit one half of the required processing fee with each application.
The applicant shall pay the balance when the draft issuance is returned
to HUD with the applicant's concurrence signature. The Department will
not prepare a final document for printing and distribution until it has
received the full processing fee. From time to time, as may be
necessary, the Department will establish and amend the fee schedule by
publication of a Notice in the Federal Register.
(d) Initial application and review--(1) Content of applications.
Each application shall include only one item. All applications will be
promptly processed on receipt by the Department.
(i) With respect to Mechanical Engineering Bulletins (MEBs),
Structural Engineering Bulletins (SEBs), Truss Connector Bulletins
(TCBs), and Area Letters of Acceptance (ALAs), each structural design
shall constitute a different item.
(ii) With respect to Materials Releases (MRs), each product or
system shall constitute a different item.
(2) Revisions. A recipient of a technical suitability document
issued by the Department may apply for revision of that document at any
time. The revision may be in the form of an amendment of or supplement
to the document, for which the recipient will be charged the applicable
revision fee. However, where the Department determines that a proposed
revision constitutes a different item, the schedule of fees for initial
applications shall apply.
(3) Renewals. Each issuance shall be valid for a period of three
years from the date of initial issuance or most recent renewal,
whichever is later. An applicant shall submit an application for renewal
with the entire required fee three months before the expiration of the
three-year period. Failure to submit a timely renewal application along
with the required fee shall constitute a basis for cancellation of the
issuance.
(4) Initial and revision applications requiring further study or
additional data. In its discretion, the Department may request an
applicant to submit additional data or to conduct further study to
supplement or clarify an initial application or an application for
revision of a previously issued technical suitability document. If the
applicant fails to comply with the Department's request within ninety
days of the date of that request or within such longer time as may be
specified by the Secretary, the Department will return the application
to the applicant. The Department will not refund any fees paid toward an
application returned under this paragraph. The application will be
considered further only if it is resubmitted along with payment of the
full fee as required by these regulations.
(5) Ineligible applications. If the Secretary determines that an
application or request will not be considered because it is not eligible
for issuance of a technical suitability document, the Department will
promptly return the application or request, refund any fees paid, and
explain why the application or request is ineligible.
(6) Cancellation of a technical suitability document. If the
Department determines that (i) the conditions under which a technical
suitability document was issued have so changed as to affect the
production of, or to compromise the integrity of, the material, product,
or system approved thereby, or (ii) that the producer has changed its
organizational form without notifying HUD, or (iii) that the producer is
not complying with the responsibilities it assumed as a condition of
HUD's acceptance of its material, product or system, the Department will
notify the producer or manufacturer that the technical suitability
document may be cancelled. However, before cancelling a technical
suitability document, the Department will give the manufacturer
reasonable notice in writing of the specific reasons therefore and an
opportunity to present its views on why the technical suitability
document should not be cancelled. No refund of fees will be made on a
cancelled document.
(e) Identification. (1) Applications for issuance of a MEB, SEB,
TCB, or MR submitted to HUD Headquarters will be identified with a case
number. The applicant will be notified of the case number when receipt
of the application
[[Page 67]]
is acknowledged. Thereafter, the case number will be used on all
correspondence relating to the application. When a final draft of a new
document is prepared for publication and distribution, a bulletin or
release number will be assigned to the new issuance.
(2) In the case of an application for an ALA submitted to a field
office, the application will be processed in accordance with the
identification and processing procedures established by the responsible
field office. The field office will notify the applicant of receipt of
the application and inform the applicant of the procedures that will be
followed with respect to the issuance of an ALA.
(Information collection requirements in paragraphs (b), (c), (d)(1),
(2), (3) and (4) were approved by the Office of Management and Budget
under control number 2502-0313)
[49 FR 31856, Aug. 9, 1984, as amended at 58 FR 60250, Nov. 15, 1993]
Sec. 200.935 Administrator qualifications and procedures for HUD
building products certification programs.
(a) General. This section establishes administrator qualifications
and procedures for the HUD Building Products Certification Programs
under section 521 of the National Housing Act and the HUD Minimum
Property Standards. Under these programs organizations acceptable to HUD
validate manufacturers' certifications that certain building products or
materials meet applicable standards. HUD may decide to implement a
certification program for a particular building product or material for
a variety of reasons, such as when deemed necessary by HUD to facilitate
the introduction of new and innovative products or materials; or in
response to reports of fraud or misrepresentation by manufacturers in
advertising that their product or materials comply with a standard.
(b) Definitions--(1) Certification program (``program''). The
procedure under which accepted administrators validate manufacturers'
certifications that particular building products or materials meet
applicable HUD standards. A separate program is used to validate
certifications for each particular product or material for which HUD
requires certifications.
(2) Program administrator (``administrator''). An organization which
conducts the program validating the manufacturer's certification that a
particular building product or material meets applicable HUD standards.
(c) Administrator qualifications and application procedures--(1)
Qualifications. Each program administrator shall be capable of
conducting a certification program with respect to organization, staff
and facilities, and have a reputation for adhering to high ethical
standards. To be considered acceptable for conducting a certification
program, each administrator shall:
(i) Be a technically qualified organization with past experience in
the administration of certification programs. The certification
program(s) shall be under the supervision of a qualified professional
with six years of experience in interpreting testing standards, test
methods, evaluating test reports and quality control programs. Each
administrator is responsible for staffing the program with qualified
professional personnel with experience in interpreting testing
standards, test methods, evaluating test reports and quality control
programs. The staff shall be adequate to service all aspects of the
program.
(ii) Have field inspectors trained to make selections of materials
for testing from manufacturer's stock or from distributors'
establishments and to conduct product compliance inspections. Such
inspectors must be trained and experienced in evaluating manufacturer's
quality control records to ascertain with a reasonable degree of
assurance that continuing production remains in compliance with the
applicable standard set forth in the Use of Materials (UM) Bulletin.
When inspectors are used to evaluate laboratory operations, they shall
be qualified and under the supervision of the administrator. They shall
be knowledgeable in such areas as test methods, quality control, testing
techniques, and instrument calibration.
(iii) Have facilities and capabilities for communications with
manufacturers, laboratories, and HUD, including publication of a
directory of certified products and a list of accredited laboratories,
if required by the program.
[[Page 68]]
(iv) Have adequate policies and practices for preserving information
entrusted to its care. HUD reserves the right to review all technical
records related to the program for the purpose of monitoring.
(v) Have a copy of all applicable standards, test methods and
related information necessary to carry out the program.
(vi) Have a registered or pending certification mark at the United
States Patent Office and be willing to license, on a uniform basis, the
use of that mark by manufacturers as a validation of the manufacturer's
certification that the product complies with the applicable standard.
(2) Applications procedures. Any organization desiring HUD
acceptance as a qualified administrator to conduct a certification
program shall make application in writing to the Director, Office of
Architecture and Engineering Standards. The application shall state the
particular certification program for which acceptance is requested and
include information indicating compliance with each of the qualification
requirements by number and subsection. Attached to the application shall
be:
(i) A list of certification programs in which the organization is
participating or has participated and the types of participation
(sponsor, administrator, testing laboratory, etc.).
(ii) A procedural guide used in one of these programs.
(iii) A directory or listing used in one of these programs.
(iv) A reproduction or facsimile of the organization's registered or
pending mark.
(v) A proposed procedural guide for the particular certification
program. HUD certification program procedures described in paragraph (d)
of this section shall be followed.
(3) Acceptance. HUD shall review each submission and notify the
applicant whether or not they are accepted or rejected. HUD shall be
notified immediately of any change(s) in the administrator's submission
regarding program procedures and/or major personnel associated with the
program. HUD reserves the right to suspend or debar an administrator in
accordance with 2 CFR part 2424.
(d) HUD building products certification procedures--(1)
Certification program development. Certification program development by
an administrator shall be based upon the procedures and standards for
the specific building product described in a Use of Materials Bulletin
or a Materials Release.
(2) License agreement. Each administrator shall have a written
license agreement with each participating manufacturer binding each to
the provisions of the specific program and authorizing the manufacturer
to use the administrator's mark, seal, or label on its products. The
administrator shall have the right to terminate any agreement prior to
an expiration date, for example, if there has been a breach of the
requirement of the certification program by the manufacturer.
(3) Laboratory approval. The administrator shall review laboratories
that apply for participation in this program on the basis of the
procedures described in paragraph (e) of this section. A list of
approved laboratories shall be maintained by the administrator. When the
certification program allows the use of the administrator's testing
laboratories, the laboratories shall be reviewed by a qualified party
acceptable to HUD. As accreditation procedures are made available
through the National Voluntary Laboratory Accreditation Program (NVLAP)
for specifc products, HUD may require such accreditation.
(4) Initial testing and quality control review--(i) Initial testing.
Each participating manufacturer shall submit to the appropriate
administrator, the product(s) specification and statement(s) that the
product complies with the applicable standard. The administrator shall
select samples of the product(s), or when HUD specifies as acceptable, a
prototype. The particular method of sample selection shall be determined
by HUD for each specific product certification program. Other methods of
initial sample selection may be used if deemed necessary. If a failure
occurs on the initial tests, additional sampling and testing may be done
at the manufacturer's request. The administrator's validation of the
[[Page 69]]
manufacturer's declaration of certification shall be withheld until a
finding of compliance is achieved.
(ii) Quality assurance system review. (A) Each administrator shall
examine a participating manufacturer's facilities and quality assurance
system procedures to determine that they are adequate to assure
continuing production of the product that complies with the applicable
standard. These quality assurance system procedures shall be documented
in the administrator's and the manufacturer's files. If a manufacturer's
quality assurance system is not satisfactory to the administrator,
validation of the manufacturer's declaration of certification shall be
withheld. The following American Society for Quality Control (ASQC)
standards, which are incorporated by reference, may be used as
guidelines in any quality assurance review:
(1) ASQC Q9000-1-1994 Quality Management and Quality Assurance
Standards Guidelines for Selection and Use;
(2) ASQC Q9001-1994 Quality Systems--Model for Quality Assurance in
Design, Development, Production, Installation, and Servicing;
(3) ASQC Q9002-1994 Quality Systems--Model for Quality Assurance in
Production, Installation, and Servicing;
(4) ASQC Q9003-1994 Quality Systems--Model for Quality Assurance in
Final Inspection and Test;
(5) ASQC Q9004-1-1994 Quality Management and Quality System
Elements-Guidelines.
(B) These standards have been approved by the Director of the
Federal Register for incorporation by reference in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. They are available from the American
Society for Quality Control (ASQC), 611 East Wisconsin Avenue,
Milwaukee, WI 53202.
(5) Notice of validation. When initial testing, quality control
review, and evaluation of other technical data are satisfactory to the
administrator, a Notice of Validation or Certification shall be issued
to the manufacturer. This allows the use of the administrator's
registered mark on the product label.
(6) Labeling. Each administrator shall issue to the manufacturer
labels, tags, marks containing the administrator's validation mark, and
the manufacturer's certification of compliance with the applicable
standard. The registered administrator's (validator's) mark shall be on
the label. A sponsor's (association, testing agencies, society or
others) mark may be used in addition to the administrator's mark. The
manufacturer's certification of compliance to the standard may be coded.
Additional information such as type, grade, class, etc., may also be
coded. When coding is used, the code shall be described in the directory
or listing.
(7) Directory or listing. When required by the program, the
administrator shall publish a directory or listing for all certified
products. The directory shall list the items described in paragraph
(d)(6) of this section. The directly shall also carry a complete list of
approved laboratories and shall be updated to reflect additions or
deletions of certified products and laboratories. Directories or
listings shall be published periodically as described in the specific
program. Each administrator shall make a complimentary distribution of
the directory or listing to the HUD Field Offices and other government
agencies designated by HUD. A subscription fee may be charged to others
requesting copies.
(8) Periodic tests and quality control inspections. Samples of the
certified product or prototype shall be selected periodically from the
plant, warehouse inventory or sales points. The samples shall be sent to
an administrator-approved laboratory and tested in accordance with the
applicable standard. The frequency of testing shall be described in the
specific building product program. The administrator shall periodically
visit the manufacturer's facility to assure that the initially accepted
quality control procedures are being followed.
(9) Product decertification. If a failure should occur in any test,
the laboratory shall notify the administrator and the manufacturer. The
manufacturer shall notify the administrator if a retest if requested. If
a retest is not requested, validation shall be withdrawn. If the
manufacturer requests a retest, the administrator shall select new
samples and submit them to the same
[[Page 70]]
or another laboratory at the manufacturer's expense, for retest of only
the test requirement(s) in which the failure(s) occurred. If the
specified number of specimens pass the retest, the product can continue
to be validated and listed. If the designated number of specimens
described in the UM Bulletin fail, the administrator shall decertify the
product. The manufacturer may request that a new selection be made of
the product after corredction or modifications and be subjected to the
initial acceptance testing procedure or to a program of retesting
established by the administrator. The administrator may decertify the
product on the basis of inadequate quality control by the manufacturer.
The administrator shall notify the manufacturer, HUD headquarters and
the HUD Field Offices of any decertification within 7 days. When the
product is decertified the magnufacturer shall remove labels, tags or
marks from all production and inventory in his/her control determined to
be in noncompliance.
(10) Challenge response. Any person or organization may submit a
sample of a manufacturer's certified product to the administrator in
substantiation of a claim of noncompliance. Submission shall be made to
the administrator that validated the manufacturer's product. The
administrator shall notify the manufacturer that its product has been
challenged and shall make arrangements to obtain test samples of the
challenged product. An estimate of the cost of the special sample
selection and testing shall be made to the complainant. The complainant
shall pay the estimated cost of the investigation in advance of any
testing of the challenged product, unless HUD believes the complaint to
be in the public's interest. HUD may conduct its own investigation when
deemed necessary based upon a complaint or a product failure. The
administrator shall submit the sample of the challenged product to an
approved laboratory of the administrator's choice with the request to
test compliance of only the challenged requirement(s). If the samples
tested prove that the product failed to meet the standard, the product
shall be decertified immediately. The manufacturer whose product is
decertified shall reimburse the administrator for all costs of the
investigation and the administrator shall refund the complainant's
advance payment. If the tests prove that the product does comply with
the standard, the complainant shall be notified that the tests do not
support the complaint and that the advance fee has been used for the
cost of testing and investigating the claim.
(11) Maintainance of the program. Each administrator shall maintain
the program in conformance with administrative letters issued by HUD for
the purpose of clarifying procedures and interpreting the applicable
standard. These letters may also be used to revise and amend the
procedures used in specific programs. Significant changes in any program
shall be published in the Federal Register.
(e) Laboratory qualifications. The following laboratory
qualifications apply to all testing laboratories participating in the
program including manufacturer's laboratories and the administrator's
own laboratories when designated in the specific program.
(1) Organization and personnel. Laboratories wishing to participate
in a certification program shall apply to the administrator and shall
furnish the following information:
(i) Name of laboratory, address, telephone number, name and title of
official to be contacted for this program.
(ii) Name and qualifications of person assigned by the laboratory to
supervise testing under a specific certification program.
(iii) Name and qualifications of engineers and other key personnel
who shall conduct the testing.
(iv) Brief review of training program for personnel associated with
program to assure the operational efficiency and uniformity of the
testing and quality control procedures.
Each laboratory shall notify the administrator of any change in its
submission regarding procedures and/or major personnel associated with
the program.
(2) Equipment and facilities. Each laboratory shall:
(i) Describe the test instruments and testing facilities to be used
in making the test(s) required by the applicable standard. Information
shall include:
[[Page 71]]
Item of equipment, manufacturer, type or model, serial number, range,
precision, frequency of calibration and dates of calibration.
(ii) Provide photographs of the listed equipment.
(iii) Provide a description of the applicable standards and
calibration equipment being used and the calibration procedures
followed, including National Bureau of Standards traceability, when
applicable. List outside organizations providing calibration services,
if used.
(iv) Demonstrate that measurements can be made with existing
equipment and repeated precision within the limits established by the
applicable standards. Administrator may periodically require
laboratories to conduct collaborative testing on standard reference
materials.
(v) Provide evidence, when regulated temperatures and humidity are
required, that charts are maintained from a continuous recorder
registering both wet and dry bulb temperature or relative humidity. The
charts are to be properly dated, retained and available for inspection.
(vi) Provide a list of standards, test methods and other information
necessary to carry out the program.
(3) Testing methodology. (i) Describe concisely the procedures for
conducting the tests required and the specific equipment to be used.
(ii) Attach a sample test report showing representative test results
and accompanied by test data forms for each test required. When approved
for program participation, testing laboratories may be required by
administrator to report test results on standard summary report forms.
(4) Subcontractors. If a testing laboratory plans to subcontract any
of its testing to other laboratories, only approved laboratories
acceptable to the administrator shall be used.
(5) Laboratory quality control. The laboratory shall develop
operating quality control procedures acceptable to the administrator.
The procedures of the American Council of Independent Laboratories \1\
may be used as a guideline.
---------------------------------------------------------------------------
\1\ Copies are available from the American Council of Independent
Laboratories, Inc., 1725 ``K'' Street, NW., Washington, DC 20006.
---------------------------------------------------------------------------
(6) Approval of laboratories. Administrators shall develop detailed
laboratory approval requirements and conduct periodic inspections to
assure each test laboratory's capability. Laboratory approval may be
granted for 2 years. Reapproval of the laboratory shall be necessary
every 2 years. When a program allows the use of an administrator's own
laboratories, these laboratories shall be reviewed by a qualified third
party acceptable to HUD. Documentation of acceptance for administrator
laboratories shall be maintained by the administrator and HUD.
Administrator laboratories shall be subject to reapproval every two
years.
(7) Withdrawal of approval. Laboratory approval shall be withdrawn
or temporarily suspended if it is determined that the laboratory is not
complying with the approved requirements. Causes for suspension include,
but are not limited to, the following:
(i) Incompetence.
(ii) Failure to test in accordance with the test methods described
in the standard.
(iii) Issuance of test reports which fail to comply with the
requirements described in the specific product certification program.
(iv) Falsification of the information reported.
(v) A statement implying validation of the product using a test
report which constitutes only part of the total standard.
(vi) Deceptively utilizing references in advertising or other
promotional activities.
(vii) Submission of incomplete or inadequate information and
documentation called for herein.
[44 FR 54656, Sept. 20, 1979, as amended at 63 FR 5423, Feb. 2, 1998; 72
FR 73494, Dec. 27, 2007]
[[Page 72]]
Sec. 200.936 Supplementary specific procedural requirements under
HUD building products certification program for solid fuel type room
heaters and fireplace stoves.
(a) Applicable standards. Solid fuel type room heaters and fireplace
stoves certified under the HUD Building Products Certification Program
shall be designed, assembled and tested in conformance with the
following standards, which are incorporated by reference:
(1) ANSI/UL 737 (1978), for fireplace stoves;
(2) ANSI/UL 1482 (1979), for solid fuel type room heaters with coal
amendments.
(b) Labelling. (1) Under the procedures set forth in paragraph
(d)(6) of Sec. 200.935, concerning labelling of a product, the
administrator's validation mark and the manufacturer's certification of
compliance with the applicable standards are required to be on the
certification label issued by the administrator to the manufacturer. In
the case of solid fuel type room heaters and fireplace stoves, the
following additional information must be included on the certification
label:
(i) The manufacturer's statement of conformance to the HUD Building
Products Certification Program;
(ii) The manufacturer's name and the identity and location of
manufacturing plant;
(iii) The specification designation and manufacturer series or model
number; and
(iv) The type of fuel to be used.
(2) The certification label must be permanently affixed to the
heater or stove and be readily visible after the heater or stove is
installed.
(c) Periodic tests and quality control inspections. Under the
procedures set forth in paragraph (d)(8) of Sec. 200.935, concerning
periodic tests and quality control inspections, the frequency of testing
for a product must be described in the specific building product
certification program. In the case of solid fuel type room heaters and
fireplace stoves, testing and inspection shall be conducted as follows:
(1) Once every four years, beginning with the initial administrator
visit, a sample of each certified product shall be selected by the
administrator for testing for compliance with the applicable standards
in a laboratory which has been accredited under the National Voluntary
Laboratory Accreditation Program.
(2) The administrator shall visit the manufacturer's facility two
times a year to assure that the initially accepted quality control
procedures are being followed.
[48 FR 1955, Jan. 17, 1983]
Sec. 200.937 Supplementary specific procedural requirements under HUD
building product standards and certification program for plastic bathtub
units, plastic shower receptors and stalls, plastic lavatories, plastic
water closet bowls and tanks.
(a) Applicable standards. (1) Plastic bathtub units, plastic shower
receptors and stalls, plastic lavatories, and plastic water closet bowls
and tanks shall be designed, assembled and tested in compliance with the
following standards, which are incorporated by reference:
ANSI Z124.1--(1980) Plastic Bathtub Units
ANSI Z124.2--(1980) Plastic Shower Receptors and Stalls
ANSI Z124.3--(1980) Plastic Lavatories
ANSI Z124.4--(1983) Plastic Water Closet Bowls and Tanks
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. They are available from
the American National Standards Institute, Inc., 11 West 42nd Street,
New York, NY 10036. The standards are also available for inspection at
the National Archives and Records Administration (NARA). For information
on the availability of this material at NARA, call 202-741-6030, or go
to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
(b) Labeling. (1) Under the procedures set forth in paragraph (d)(6)
of Sec. 200.935, concerning labeling of a product, the administrator's
validation mark and the manufacturer's certification of compliance with
the applicable standards are required to be on the certification label
issued by the administrator to the manufacturer. In the case of plastic
bathtub units, plastic shower receptors and stalls, plastic lavatories,
[[Page 73]]
and plastic water closet bowls and tanks, the following additional
information shall be included on the certification label:
(i) Manufacturer's statement of conformance to UM 73a;
(ii) Manufacturer's name and code identifying the plant location.
(2) The certification label shall be affixed to each plastic
bathroom fixture.
(c) Periodic tests and quality control inspections. Under the
procedures set forth in paragraph (d)(8) of Sec. 200.935, concerning
periodic tests and quality control inspections, the frequency of testing
for a product shall be described in the specific building product
certification program. In the case of plastic bathroom fixtures, testing
and inspection shall be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample of each certified plastic
bathtub unit, plastic shower receptor and stall, plastic water closet
bowl and tank for testing in an approved laboratory, in accordance with
applicable standards.
(2) At least every twelve months, the administrator shall visit the
manufacturer's facility to select a sample of each certified plastic
lavatory for testing in accordance with applicable standards.
(3) The administrator shall also review quality control procedures
at each visit to determine that they continue to be followed.
[49 FR 378, Jan. 4, 1984, as amended at 59 FR 36695, July 19, 1994]
Sec. 200.940 Supplementary specific requirements under the HUD
building product standards and certification program for sealed
insulating glass units.
(a) Applicable standards. (1) All sealed insulating glass units
shall be designed, manufactured, and tested in compliance with the
American Society for Testing and Materials standard: ASTM E-774-92
Standard Specification for Sealed Insulating Glass Units.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference. The standard is available from
the American Society for Testing and Materials, 1916 Race Street,
Philadelphia, PA 19103. This standard is also available for inspection
at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are issued by the administrator to the manufacturer. Each
sealed insulating glass unit shall be marked as conforming to UM 82a.
The label shall be located on each sealed insulating unit so that it is
available for inspection. The label shall include the manufacturer's
name and plant location.
(c) Periodic tests and quality assurance inspections. Under the
procedures set forth in Sec. 200.935(d)(8) concerning periodic tests
and quality assurance inspections, the frequency of testing for a
product shall be described in the specific building product
certification program. In the case of sealed insulating glass units,
testing and inspection shall be conducted as follows:
(1) At least once a year, the administrator shall visit the
manufacturer's facility to select a sample, of the maximum size
commercially available, for testing in a laboratory approved by the
administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[58 FR 67674, Dec. 22, 1993]
Sec. 200.942 Supplementary specific procedural requirements under
HUD building product standards and certification program for carpet
and carpet with attached cushion.
(a) Applicable standards. (1) Carpet and carpet with attached
cushion certified for this program shall be designed, manufactured and
tested in accordance with the following standards:
(i) AATCC 20A-81--Fiber Analysis: Quantitative;
[[Page 74]]
(ii) AATCC 16E-82--Colorfastness to Light: Water-Cooled Xenon-Arc
Lamp, Continuous Light;
(iii) AATCC 8-85--Colorfastness to Crocking: AATCC Crockmeter
Method;
(iv) AATCC 24-85--Insect, Resistance to Textiles to;
(v) ASTM D1335-67 (Reapproved 1972)--Standard Test Method for Tuft
Bind of Pile Floor Coverings;
(vi) ASTM D3676-78 (Reapproved 1983)--Standard Specification for
Rubber Cellular Cushion Used for Carpet or Rug Underlay;
(vii) ASTM E648-78--Standard Test Method for Critical Radiant Flux
of Floor-Covering Systems Using a Radiant Heat Energy Source;
(viii) ASTM D2646-79--Standard Methods of Testing Backing Fabrics;
(ix) ASTM D3936-80--Standard Test Method for Delamination Strength
of Secondary Backing of Pile Floor Coverings;
(x) ASTM D297-81--Standard Methods for Rubber Products--Chemical
Analysis;
(xi) ASTM D418-82--Standard Methods of Testing Pile Yarn Floor
Covering Construction; and
(xii) National Bureau of Standards DOC FF 1-70. (ASTM D2859-76)--
Standard Test Method for Flammability of Finished Textile Floor Covering
Materials.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. They are available from
the (i) American Association of Textile Chemists and Colorists (AATCC),
P.O. Box 12215, Research Triangle Park, NC 27709;
(ii) American Society for Testing and Materials (ASTM), 1916 Race
Street, Philadelphia, PA 19103; and
(iii) U.S. Department of Commerce, National Bureau of Standards,
Washington, DC 20234.
The standards are also available for inspection at the National Archives
and Records Administration (NARA). For information on the availability
of this material at NARA, call 202-741-6030, or go to: http://
www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
(b) Labeling. (1) Under the procedures set forth in Sec.
202.935(d)(6), concerning labeling of a product, the administrator's
validation mark and the manufacturer's certification of compliance with
the applied standard is required to be on the certification label issued
by the administrator to the manufacturer. In the case of carpet and
carpet with attached cushion, the following additional information shall
be included on the certification label, mark or stamp:
(i) Manufacturer's name or code identifying the manufacturing plant
location; and
(ii) Manufacturer's statement of compliance with UM 44d.
(2) The certification mark shall be applied to each carpet at
intervals of at least every six feet, not less than one foot from the
edge.
(c) Periodic tests and quality control inspections. (1) Five samples
of carpet and carpet with attached cushion shall be tested annually by
the administrator or by an administrator-approved laboratory. Three
samples of each certified quality shall be taken from the plant
annually. Of these, two shall be interim samples (taken every six
months) and one an annual sample. In addition, two samples of each
certified quality shall be taken annually from sources other than the
manufacturer, i.e., brought in the market place from distributors or
stores, not from the factory. The administrator shall select samples for
testing, and testing shall be conducted, in accordance with the
applicable standards in a laboratory accredited by the National
Voluntary Laboratory Accreditation Program (NVLAP) of the National
Bureau of Standards, U.S. Department of Commerce.
(2) The administrator shall visit the manufacturer's facility at
least once every six months to assure that the initially accepted
quality control procedures continue to be followed.
[51 FR 17928, May 16, 1986]
Sec. 200.943 Supplementary specific requirements under the HUD
building product standards and certification program for the grademarking
of lumber.
(a) Applicable standard. (1) In accordance with UM 38j, lumber shall
be
[[Page 75]]
grademarked in compliance with the U.S. Department of Commerce Voluntary
Product Standard PS 20-94 American Softwood Lumber Standard.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. It is available from the U.S. Department of
Commerce, NIST, Office of Voluntary Product Standards, Gaithersburg, MD
20899.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standard are required on the certification label issued by the
administrator to the manufacturer. However, in the case of grademarking
of lumber, the following information shall be included on the
certification label or mark:
(1) The registered symbol which identifies the grading agency;
(2) Species or species combination;
(3) Grade;
(4) Identification of the applicable grading rules when not
indicated by the species identification or agency symbol;
(5) Mill or grader;
(6) For members which are less than 5 inches in nominal thickness,
indication that the lumber was green or dry at the time of dressing;
(7) Indication that the lumber was finger jointed; and
(8) The certification mark shall be affixed to each piece of lumber.
(c) Periodic tests and quality assurance. Periodic tests and quality
assurance inspections shall be carried out by the American Lumber
Standard Committee as defined in PS 20-94.
[63 FR 5423, Feb. 2, 1998]
Sec. 200.944 Supplementary specific requirements under the HUD
building product standards and certification program for plywood and
other performance rated wood-based structural-use panels.
(a)(1) All plywood made to specifications of Voluntary Product
Standard, PS 1-83, ``Construction and Industrial Plywood'' (published by
the U.S. Department of Commerce, National Bureau of Standards (May
1984)) and grade marked as PS 1-83 shall conform to the requirements of
PS 1-83, except that all veneers may be D-grade. A copy of PS 1-83 may
be obtained from the U.S. Department of Commerce, National Institute for
Standards and Technology, Office of Product Standards, Gaithersburg, MD
20899.
(2) All plywood panels not meeting the veneer grade requirements of
PS 1-83, and all performance rated composite and nonveneer structural-
use panels shall comply with the requirements described in the APA PRP-
108, ``Performance Standards and Policies for Structural-Use panels''
(published by the American Plywood Association, June 1988). However, in
ASTM D-3043-87, ``Standard Methods of Testing Structural Panels in
Flexure'' (published by the American Society for Testing and Materials,
August 28, 1987), Method B may be used in lieu of Method C for measuring
the mechanical properties of the panel, provided that the test specimen
has a width of at least 12 inches. The impact load shall be 150 ft. lbs.
for single-layer floor panels excluding any floor finishes. Copies of
the APA Standard may be obtained from the American Plywood Association,
P.O. Box 11700, Tacoma, WA 98411-0770. Copies of the ASTM Standard may
be obtained from the American Society of Testing and Materials, 1916
Race Street, Philadelphia, PA 19103.
(3) Structural-use panels shall be installed in accordance with the
manufacturer's installation instructions and Form No. E30K, ``APA
Design/Construction Guide-Residential and Commercial'' (published by the
American Plywood Association, January 1989).
(4) These standards have been approved by the Director of the
Federal Register for incorporation by reference in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. Copies of the standards are available
for inspection at the National Archives and Records Administration
(NARA). For information on the availability of this material at NARA,
call 202-741-6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
[[Page 76]]
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are required to be on the certification label issued by the
administrator to the manufacturer. Panels that conform to the
Performance Standards and Policy for Structural-Use Panels shall be
marked as conforming to UM 40c. All panels complying with APA PRP-108
shall be marked with a label formatted in the manner similar to the
trademark examples shown in APA PRP-108. All panels will be marked with
the mill number. The certification mark shall be stamped on each panel
and be located so that it is available for inspection.
(c) Periodic tests and qualify control inspections. Under the
procedures set forth in Sec. 200.935(d)(8) concerning periodic tests
and quality control inspections, the frequency of testing for a product
shall be described in the specific building product certification
program. In the case of plywood and wood-based structural-use panels,
testing and inspection shall be conducted as follows:
(1) Testing shall be done in an Administrator's laboratory or an
Administrator-approved laboratory every three months. All plywood
qualified for conformance with PS 1-83 shall be tested in accordance
with PS 1-83.
(2) All thickness and lay-ups of structural-use panels in production
made in conformance with the Performance Standards shall be tested in
accordance with procedures set forth in APA PRP-108 Performance
Standards and Policies for Structural-Use Panels (published by the
American Plywood Association Standard June 1988).
(3) The Administrator shall examine each manufacturer's quality
control procedures to assure they are the same as or equivalent to those
set forth under the Quality Assurance Policy section 4.2.3 of the
publication referenced in paragraph (2) above or PS 1-83 section
3.8.6.6, Reexamination.
(4) The Administrator shall inspect the manufacturer's procedures at
the plant at least every three months to assure that the initially
accepted quality control procedures are being followed.
[55 FR 38785, Sept. 20, 1990]
Sec. 200.945 Supplementary specific requirements under the HUD
building product standards and certification program for carpet.
(a) Applicable standards. (1) All carpet shall be designed,
manufactured, and tested in compliance with the following standards from
the American Society for Testing and Materials and the American
Association of Textile Chemists and Colorists:
(i) ASTM D418-92--Standard Test Methods for Tuft and Yarn Length of
Uncoated Floor Coverings;
(ii) ASTM D1335-67--(Reapproved 1972) Standard Test Method for Tuft
Bind of Pile Floor Coverings;
(iii) ASTM D 2646-87--Standard Test Methods for Backing Fabrics;
(iv) ASTM D 3936-80--Standard Test Method for Delamination Strength
of Secondary Backing of Pile Floor Coverings;
(v) AATCC Test Method 16e-82--Colorfastness to Light: Water-Cooled
Xenon-Arc Lamp, Continuous Light;
(vi) AATCC Test Method 165-86--Colorfastness to Crocking: Carpets--
AATCC Crock Meter Method;
(vii) ASTM D 3676-78--(Reapproved 1989) Standard Specification for
Rubber Cellular Cushion Used for Carpet or Rug Underlay;
(viii) ASTM D 3574-91--Standard Test Methods for Flexible Cellular
Materials--Slab, Bonded and Molded Urethane Foams.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. The standards are
available from the American Society for Testing and Materials, 1916 Race
Street, Philadelphia, PA 19103 and the American Association of Textile
Chemists and Colorists, P.O. Box 12215, Research Triangle Park, NC
27709. These standards are also available for inspection at the National
Archives and Records Administration (NARA). For information on the
availability of this material at NARA, call 202-741-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
[[Page 77]]
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with UM 44d are
required to be on the certification label issued by the Administrator to
the manufacturer. The label shall be placed on each carpet every six
feet not less than one foot from the edge.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) Every six months, three samples and one annual field sample of
carpet shall be submitted to the Administrator for testing in a
laboratory accredited by the National Voluntary Laboratory Accreditation
Program of the U.S. Department of Commerce.
(2) The administrator also shall review the quality assurance
procedures every six months to assure that they are being followed by
the manufacturer.
[58 FR 67674, Dec. 22, 1993]
Sec. 200.946 Building product standards and certification program
for exterior finish and insulation systems, use of Materials Bulletin
UM 101.
(a) Applicable standards: (1) All Exterior Finish and Insulation
Systems shall be designed, manufactured, and tested in compliance with
the following standards:
(i) ASCE 7-93, American Society of Civil Engineers--Minimum Design
Loads for Buildings and Other Structures.
(ii) ASTM C 150-94 Standard Specification for Portland Cement.
(iii) ASTM C 920-87 Standard Specification for Elastomeric Joint
Sealants.
(iv) ASTM C-1186-91 Standard Specification for Flat Non-Asbestos
Fiber-Cement Sheets.
(v) ASTM D 579-90 Standard Specification for Greige Woven Glass
Fabrics.
(vi) ASTM D 3273-86--(Reapproved 1991) Standard Test Method for
Resistance to Growth of Mold on the Surface of Interior Coatings in an
Environmental Chamber.
(vii) ASTM E 330-90 Standard Test Method for Structural Performance
of Exterior Windows, Curtain Walls, and Doors by Uniform Static Air
Pressure Difference.
(viii) ASTM E 695-79 (Reapproved 1991), Standard Method of Measuring
Relative Resistance of Wall, Floor, and Roof Construction to Impact
Loading.
(ix) ASTM G 26-93 Standard Practice for Operating Light-Exposure
Apparatus (Xenon-Arc Type) With and Without Water for Exposure of
Nonmetallic Materials.
(x) Council of American Building Officials, Model Energy Code, 1993
Edition.
(xi) EIMA Test Method 101.01-95 (modified ASTM C67-91) Standard Test
Method for Freeze/Thaw Resistance of Exterior Insulation and Finish
Systems (EIFS), Class PB.
(xii) EIMA Test Method 101.02-95 (modified ASTM E331-91)--Standard
Test Method for Resistance to Water Penetration of Exterior Insulation
and Finish Systems (EIFS), Class PB.
(xiii) EIMA Test Method 101.03-95 (modified ASTM C297-91)--Standard
Test Method for Determining the Tensile Adhesion Strength of an Exterior
Insulation and Finish System (EIFS), Class PB.
(xiv) EIMA Test Method 105.01-95--Standard Test Method for Alkali
Resistance of Glass Fiber Reinforcing Mesh for Use in Exterior
Insulation and Finish Systems (EIFS), Class PB.
(xv) European Agreement Union Technical Committee--June 88--UEAtc
Directives for the Assessment of External Insulation System for Walls
(Expanded Polystyrene Insulation Faced with a Thin Rendering) Section
3.3.3.3.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. They are available from:
(i) American Society Civil Engineers (ASCE) 345 East 47th Street,
New York, NY 10017.
(ii) American Society for Testing and Materials (ASTM), 1916 Race
Street, Philadelphia, Pennsylvania 19103;
(iii) Council of American Building Officials, 5203 Leesburg Pike,
Falls Church, Virginia 22041;
[[Page 78]]
(iv) EAUTC Centre Scientifique ET Technique Du Batiment (CSTB), 84
Avenue Jesu Jaures, B.P. 02-77421 Marne-LA-Valee Cedex 2, Paris, France.
(v) Exterior Insulation Manufacturers Association (EIMA), 2759 State
Road 580, Suite 112, Clearwater, Florida 34621-3350.
(3) The standards are available also for inspection at the Office of
Manufactured Housing and Regulatory Functions, Standards and Products
Branch, Department of Housing and Urban Development, room 3214, L'Enfant
Plaza, 490E, Mail Room B-133, Washington, DC 20410-8000, and at the
National Archives and Records Administration (NARA). For information on
the availability of this material at NARA, call 202-741-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
(b) Labeling. Under the procedures as set forth in Sec.
200.935(d)(6), concerning labeling of a product, the administrator's
validation mark and the manufacturer's certification of compliance with
the applied standard is required to be on the certification label issued
by the administrator to the manufacturers. In the case of exterior wall
insulation and finish systems, the certification label containing the
administrator's mark shall be permanently affixed on the package or
container of base and finish coating materials. Further, additional
information shall be included on the certification label or mark:
(1) Manufacturer's name.
(2) Manufacturer's statement of conformance with UM 101.
(c) The Administrator shall visit the manufacturer's or sponsor's
facility every 6 months, to assure that the initially accepted quality
assurance procedures are being followed. At least every four years, the
Administrator also shall have the exterior wall insulation and finish
systems tested in an approved laboratory to assure that the original
performance is maintained.
(d) The administrator's (or administration-accepted inspection
agency) inspection of EFIS system installation of 5000 sq. ft. or more,
shall be made during and upon completion of the construction. Reports of
the inspection shall be made to the owner. These reports shall state:
(1) The coverage of the finish coat per square foot for a given
volume of finish.
(2) The minimum thickness of the base and finish coatings.
(3) The fiberglass mesh is installed properly around joints and
insulation. All penetrations, including windows, flashing, etc., are
sealed; and there is a caulk and sealant continuity evaluation; and
(4) There is a caulk and sealant continuity evaluation with special
concerns on maintenance.
(e) The manufacturer shall warrant their exterior wall insulation
and finish system, including any caulks and sealants, for twenty years
against faulty performance. The warranty shall include correction of
delamination, chipping, denting, peeling, blistering, flaking, bulging,
unsightly discoloration, or other serious deterioration of the system
such as the intrusion of water through the wall or structural failure of
the system's surface materials. Should any of these defects occur, the
manufacturer shall make a pro-rata allowance for replacement or pay the
owner the amount of the allowance. The manufacturer shall not be liable
for damages or defects resulting from misuse, natural catastrophes, or
other causes beyond the control of the manufacturer. The contractor
shall provide a statement to the owner that the product has been
installed in compliance with HUD requirements and that the
manufacturer's warranty does not relieve the builder, in any way, of
responsibility under the terms of the Builder's Warranty required by the
National Housing Act, or under any other housing program.
[60 FR 47841, Sept. 14, 1995]
Sec. 200.947 Building product standards and certification program
for polystyrene foam insulation board.
(a) Applicable standards. (1) All polystyrene foam insulation board
shall be designed, manufactured, and tested in compliance with the
American Society for Testing and Materials (ASTM) standard C-578-92,
Standard Specification for Rigid, Cellular Polystyrene Thermal
Insulation.
[[Page 79]]
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference. The standard is available from
the American Society for Testing and Materials, 1916 Race Street,
Philadelphia, PA 19103. This standard is also available for inspection
at the National Archives and Records Administration (NARA). For
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's certification of
compliance with the applicable standards and the type of board are
required to be on the certification label issued by the administrator to
the manufacturer.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample of each certified polystyrene
foam insulation board for testing by a laboratory approved by the
administrator.
(2) The administrator also shall review the quality assurance
procedures every six months to assure that they are being followed by
the manufacturer.
[58 FR 67675, Dec. 22, 1993]
Sec. 200.948 Building product standards and certification program
for carpet cushion.
(a) Applicable standards. (1) All carpet cushion shall be designed,
manufactured, and tested in compliance with the following standards from
the American Society for Testing and Materials:
(i) ASTM D 1667-76--(Reapproved 1990) Standard Specification for
Flexible Cellular Materials--Vinyl Chloride Polymers and Copolymers
(Closed-Cell Foam);
(ii) ASTM D2646-87--Standard Test Methods for Backing Fabrics;
(iii) ASTM D629-88--Standard Test Methods for Quantitative Analysis
of Textiles;
(iv) ASTM D3574-91--Standard Test Methods for Flexible Cellular
Materials--Slab, Bonded, and Molded Urethane Foams;
(v) ASTM D3676-78--Standard Specification for Rubber Cellular
Cushion Used for Carpet or Rug Underlay.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. The standards are
available from the American Society for Testing Materials, 1916 Race
Street, Philadelphia, PA 19103. These standards are also available for
inspection at the National Archives and Records Administration (NARA).
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal_register/
code_of_federal_regulations/ibr_locations.html.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark,
the manufacturer's certification of compliance with the applicable
standards, and the type and class all are required to be on the
certification label issued by the administrator to the manufacturer.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample of each certified carpet
cushion for testing by a laboratory approved by the administrator.
(2) The administrator also shall review the quality assurance
procedures every six months to assure that they are being followed by
the manufacturer.
[58 FR 67675, Dec. 22, 1993]
Sec. 200.949 Building product standards and certification program
for exterior insulated steel door systems.
(a) Applicable standards. (1) All Exterior Insulated Steel Door
Systems shall be designed, manufactured, and tested in compliance with
the following standards from the American Society for Testing and
Materials and Insulated Steel Door Systems Institute:
[[Page 80]]
(i) ASTM A591/A591M-89--Standard Specification for Steel Sheet,
Electrolytic-Zinc Coated, for Light Coating Mass Applications;
(ii) ISDSI-100-90--Door Size Dimensional Standard and Assembly
Tolerances for Insulated Steel Door Systems;
(iii) ISDSI-101-83--(Reapproved 1989) Air Infiltration Performance
Standard for Insulated Steel Door Systems;
(iv) ISDSI-102-84--Installation Standard for Insulated Steel Door
Systems;
(v) ISDSI-104-86--Water Penetration Performance Standard for
Insulated Steel Door Systems;
(vi) ISDSI-105-80--Test Procedure and Acceptance Criteria for
Physical Endurance for Steel Doors and Hardware Reinforcings;
(vii) ISDSI-106-80--Test Procedure and Acceptance Criteria for Prime
Painted Steel Surfaces for Steel Doors and Frames;
(viii) ISDSI-107-80--Thermal Performance Standard for Insulated
Steel Door Systems;
(ix) ASTM F476-84--(Reapproved 1991) Standard Test Methods for
Security of Swinging Door Assemblies.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. These standards are
available from the American Society for Testing and Materials, 1916 Race
Street, Philadelphia, PA 19103 or the Insulated Steel Door Institute,
712 Lakewood Center North, 14600 Detroit Avenue, Cleveland, OH 44107.
These standards are also available for inspection at the National
Archives and Records Administration (NARA). For information on the
availability of this material at NARA, call 202-741-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's certification of
compliance with the applicable standards is required to be on the
certification label issued by the administrator to the manufacturer.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) At least every four years, the administrator shall visit the
manufacturer's facility to select a sample of each certified exterior
insulated steel door system for testing by an approved laboratory in
accordance with the applicable standard.
(2) The administrator also shall review the quality assurance
procedures every year to assure that they are being followed by the
manufacturer.
[58 FR 67675, Dec. 22, 1993]
Sec. 200.950 Building product standards and certification program
for solar water heating system.
(a) Applicable standards. (1) All solar water heating systems shall
be designed, manufactured, and tested in compliance with Solar Rating
and Certification Corporation (SRCC) Document OG-300-93, Operating
Guidelines and Minimum Standards for Certifying Solar Water Heating
Systems: An Optional SWH System Certification and Rating Program.
Section 10 of the SRCC standard has been omitted because it was
considered proprietary, since it describes an administrative program
specifically carried out by SRCC.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference. The standard is available from
the Solar Rating and Certification Corporation, 777 North Capitol
Street, NE., suite 805, Washington, DC 20002. This standard is also
available for inspection at the National Archives and Records
Administration (NARA). For information on the availability of this
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal_register/code_of_federal_regulations/ibr_locations.html.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are required to be on the certification label issued by the
administrator to the manufacturer. Each solar water heating system shall
be marked as conforming to UM 100. The label shall include the
manufacturer's name and plant location.
[[Page 81]]
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) The Administrator shall visit the manufacturer's factory every
two years to assure that the initially accepted quality assurance
procedures are being followed.
(2) At least every four years, the administrator shall visit the
manufacturer's facility to select a sample of each certified solar water
heating system for testing by a laboratory approved by the
administrator.
(d) Warranty. The manufacturer shall provide, at no cost, a full
five-year warranty against defects in material or workmanship, on the
absorber plate, cooling passages, and the collector (excluding any
glass), running from the date of installation of the solar water heating
system. The warranty also shall include the full costs of field
inspection, parts, and labor required to remedy the defects, and will
include the cost of replacement at the site if required. This warranty
is not required to cover defects resulting from exposure to harmful
materials, fire, flood, lightning, hurricane, tornado, hailstorms,
earthquakes, or other acts of God, vandalism, explosions, harmful
chemicals or other fluids, fumes or vapors. This exclusion will apply to
the operation of the collector under excessive pressures or excessive
flow rates, misuse, abuse, negligence, accidents, alterations, falling
objects or other causes beyond the control of the manufacturer.
Following the initial five years, the manufacturer shall provide a
limited no-cost five-year warranty for collector parts on a prorata
allowance basis.
[58 FR 67676, Dec. 22, 1993]
Sec. 200.952 Supplementary specific requirements under the HUD
building product standards and certification program for particleboard
interior stair treads.
(a) Applicable standards. (1) All interior particleboard stair
treads shall be designed, manufactured, and tested in compliance with
ANSI A208.1-1993 Particleboard, Grade M-3.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51, and is available from the American National
Standards Institute, Inc., 11 West 42nd Street, New York, NY 10036.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standard are required to be on the certification label issued by the
administrator to the manufacturer. Each interior particleboard stair
tread shall include the manufacturer's statement of conformance to UM
70b, a statement that this product is for interior use only, and the
manufacturer's name and plant location.
(c) Periodic tests and quality assurance. Under the procedures set
forth in Sec. 200.935(d)(8) concerning periodic tests and quality
assurance inspections, the frequency of testing for a product shall be
described in the specific building product certification program. In the
case of interior particleboard stair treads, testing and inspection
shall be conducted as follows:
(1) At least once every three months, the administrator shall visit
the manufacturer's facility to select a sample for testing in a
laboratory approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[63 FR 5424, Feb. 2, 1998]
Sec. 200.954 Supplementary specific requirements under the HUD
building product standard and certification program for construction
adhesives for wood floor systems.
(a) Applicable standards. (1) All construction adhesives for field
glued wood floor systems shall be designed, manufactured, and tested in
compliance with the following American Society for Testing and Materials
(ASTM) standard: D 3498-93 Standard Specification for Adhesives for
Field-Gluing Plywood to Lumber Framing for Floor Systems except that the
mold and bacteria resistance tests shall not be included.
(2) This standard has been approved by the Director of the Federal
Register
[[Page 82]]
for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1
CFR part 51, and is available from the American Society for Testing &
Materials Inc., 100 Barr Harbor Drive, West Conshohocken, PA. 19428.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standard are required to be on the certification label issued by the
administrator to the manufacturer. Each container shall be marked as
being in compliance with UM 60a. The label shall also include the
manufacturer's name, plant location, and shelf life.
(c) Periodic tests and quality assurance. Under the procedures set
forth in Sec. 200.935(d)(8) concerning periodic tests and quality
assurance inspections, the frequency of testing for a product shall be
described in the specific building product certification program. In the
case of construction adhesives for field glued wood floor systems,
testing and inspection shall be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample for testing in a laboratory
approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[63 FR 5424, Feb. 2, 1998]
Sec. 200.955 Supplementary specific requirements under the HUD
building product standard and certification program for fenestration
products (windows and doors).
(a) Applicable standards. (1) All windows and doors shall be
designed, manufactured, and tested in compliance with American
Architectural Manufacturers Association (AAMA) standard, AAMA/NWWDA 101/
I.S.2-97 Voluntary Specifications for Aluminum, Vinyl (PVC) and Wood
Windows and Glass Doors.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51, and is available from the American
Architectural Manufacturers Association, 1827 Walden Office Square,
Suite 104, Schaumburg, IL 60173.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are required to be on the certification label issued by the
administrator to the manufacturer. Each window or glass door shall
include the manufacturer's name, plant location, and statement of
compliance with UM 111.
(c) Periodic tests and quality assurance inspections. Under the
procedures set forth in Sec. 200.935(d)(8) concerning periodic tests
and quality assurance inspections, the frequency of testing for a
product shall be described in the specific building product
certification program. In the case of windows and glass doors, testing
and inspection shall be conducted as follows:
(1) At least once every four years, the administrator shall visit
the manufacturer's facility to select a commercial sample for testing in
a laboratory approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[63 FR 5424, Feb. 2, 1998]
Subpart T_Social Security Numbers and Employer Identification Numbers;
Assistance Applicants and Participants
Sec. 200.1001 Cross-reference.
The provisions in subpart B of part 5 of this title apply to Social
Security Numbers and Employer Identification Numbers for assistance
applicants and participants.
[61 FR 11118, Mar. 18, 1996]
[[Page 83]]
Subpart U_Social Security Numbers and Employer Identification Numbers;
Applicants in Unassisted Programs
Sec. 200.1101 Cross-reference.
The provisions in subpart B of part 5 of this title apply to Social
Security Numbers and Employer Identification Numbers for applicants in
unassisted programs.
[61 FR 11118, Mar. 18, 1996]
Subpart V_Income Information; Assistance Applicants and Participants
Sec. 200.1201 Cross-reference.
The provisions in subpart B of part 5 of this title apply to income
information for assistance applicants and participants.
[61 FR 11118, Mar. 18, 1996]
Subpart W_Administrative Matters
Sec. 200.1301 Expiring programs--Savings clause.
(a) No new loan assistance, additional participation, or new loans
are being insured under the programs listed in this section. Existing
loan assistance, ongoing participation, or insured loans under the
programs shall continue to be governed by regulations in effect as
described in this section.
(b) Any existing loan assistance, ongoing participation, or insured
loans under the programs listed in this paragraph will continue to be
governed by the regulations in effect as they existed immediately before
October 11, 1995 (24 CFR parts 205, 209, 224-228, 240, 277, 278, 1994
edition):
(1) Part 205, Mortgage Insurance for Land Development (Title X of
the National Housing Act, repealed by section 133(a) of the Department
of Housing and Urban Development Reform Act of 1989 (Public Law 101-235,
approved December 15, 1989).
(2) Part 209, Individual Homes; War Housing Mortgage Insurance (12
U.S.C. 1736-1743).
(3) Part 224, Armed Services Housing-Military Personnel (12 U.S.C.
1736-1746a).
(4) Part 225, Military Housing Insurance (12 U.S.C. 1748b).
(5) Part 226, Armed Services Housing-Civilian Employees (12 U.S.C.
1748h-1).
(6) Part 227, Armed Services Housing-Impacted Areas (12 U.S.C.
1478h-2).
(7) Part 228, Individual Residences; National Defense Housing
Mortgage Insurance (12 U.S.C. 1750 as amended by 42 U.S.C. 1591c).
(8) Part 240, Mortgage Insurance on Loans for Fee Title Purchase (12
U.S.C. 1715z-5).
(9) Part 277, Loans for Housing for the Elderly or Handicapped (12
U.S.C. 1701q).
(10) Part 278, Mandatory Meals Program in Multifamily Rental or
Cooperative Projects for the Elderly or Handicapped (12 U.S.C. 1701q).
(c) Any existing loan assistance, ongoing participation, or insured
loans under the programs listed in this paragraph will continue to be
governed by the regulations in effect as they existed immediately before
May 11, 1996 (24 CFR parts 215, 222, and 237, 1995 edition):
(1) Part 215, Rent Supplement Payments Program (12 U.S.C. 1715f).
(2) Part 222, Service Person's Mortgage Insurance Program (12 U.S.C.
1715m).
(3) Part 237, Special Mortgage Insurance for Low and Moderate Income
Families (12 U.S.C. 1715z-2).
(d) Any existing loan assistance, ongoing participation, or insured
loans under the program listed in this paragraph will continue to be
governed by the regulations in effect as they existed immediately before
December 26, 1996 (24 CFR part 233, 1995 edition):
(1) Part 233, Experimental Housing Mortgage Insurance Program (12
U.S.C. 1715x).
(2) [Reserved]
(e) Any existing loan assistance, ongoing participation, or insured
loans under the program listed in this paragraph will continue to be
governed by the regulations in effect as they existed immediately before
August 15, 2014 (24 CFR part 257):
(1) Part 257, HOPE for Homeowners Program (12 U.S.C. 1701z-22).
(2) [Reserved]
(f) No new emergency mortgage assistance, emergency mortgage relief
[[Page 84]]
loans, advances of credit or emergency mortgage relief payments, or any
other type of assistance permitted under the Emergency Housing Act of
1975, title I of the Emergency Homeowners' Relief Act (12 U.S.C. 2701),
as amended by section 1496 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Pub. L. 111-203) is being provided under the
programs listed below. Any existing emergency assistance, emergency
mortgage relief loans, advances of credit or emergency mortgage relief
payments under these programs will continue to be governed by the
regulations in effect as they existed immediately before September 8,
2014 (24 CFR part 2700):
(1) Part 2700, Emergency Homeowners' Loan Program (12 U.S.C. 2701 et
seq.)
(2) [Reserved]
(g) Any existing loan assistance (including recapture of loan
assistance), ongoing participation, or insured loans under the program
listed in this paragraph will continue to be governed by the regulations
in effect as they existed immediately before May 4, 2015 (24 CFR part
235, 2014 Edition):
(1) Part 235, Mortgage Insurance and Assistance Payments for Home
Ownership and Project Rehabilitation (12 U.S.C. 1715z).
(2) [Reserved]
(h) Any existing loan assistance (including recapture of loan
assistance), ongoing participation, or insured loans under the program
listed in this paragraph will continue to be governed by the regulations
in effect as they existed immediately before February 10, 2016 (24 CFR
part 280, 2015 Edition):
(1) Part 280, Mortgage Insurance and Assistance Payments for Home
Ownership and Project Rehabilitation (12 U.S.C. 17151).
(2) [Reserved]
[79 FR 41423, July 16, 2014, as amended at 79 FR 46182, Aug. 7, 2014; 80
FR 18096, Apr. 3, 2015; 81 FR 1121, Jan. 11, 2016]
Sec. 200.1303 Annual income exclusions for the Rent Supplement Program.
(a) The exclusions to annual income described in 24 CFR 5.609(c)
apply to those rent supplement contracts governed by the regulations at
24 CFR part 215 in effect immediately before May 1, 1996 (contained in
the April 1, 1995 edition of 24 CFR, parts 200 to 219), in lieu of the
annual income exclusions described in 24 CFR 215.21(c) (contained in the
April 1, 1995 edition of 24 CFR, parts 200 to 219).
(b) The mandatory deductions described in 24 CFR 5.611(a) also apply
to the rent supplement contracts described in paragraph (a) of this
section in lieu of the deductions provided in the definition of
``adjusted income'' in 24 CFR 215.1 (as contained in the April 1, 1995
edition of 24 CFR, parts 200 to 219).
(c) The definition of ``persons with disabilities'' in paragraph (c)
of this section replaces the terms ``disabled person'' and ``handicapped
person'' used in the regulations in 24 CFR part 215, subpart A (as
contained in the April 1, 1995 edition of 24 CFR, parts 200 to 219).
Person with disabilities, as used in this part, has the same meaning as
provided in 24 CFR 891.305.
[66 FR 6224, Jan. 19, 2001]
Subpart Y_Multifamily Accelerated Processing (MAP): MAP Lender Quality
Assurance Enforcement
Source: 70 FR 43242, July 26, 2005, unless otherwise noted.
Sec. 200.1500 Sanctions against a MAP lender.
(a) In addition to any other legal remedy available to HUD, HUD may
take the following actions with respect to a MAP lender:
(1) Warning letter;
(2) Probation;
(3) Suspension;
(4) Termination;
(5) Limited Denial of Participation (LDP);
(6) Referral to the Mortgagee Review Board; and
(7) Referral to the Office of Inspector General.
(b) The actions listed in paragraphs (a)(1) through (a)(4) of this
section are carried out in accordance with the requirements of this
subpart. An LDP is a sanction applied in accordance with subpart J of 2
CFR part 2424 to participants in loan transactions other than
[[Page 85]]
FHA-insured lenders. The Mortgagee Review Board procedures are found at
24 CFR part 25.
[70 FR 43242, July 26, 2005, as amended at 72 FR 73494, Dec. 27, 2007]
Sec. 200.1505 Warning letter.
(a) In general. HUD may issue a warning letter, which specifies
problems or violations identified by HUD, to a MAP lender.
(b) Effect of warning letter. The warning letter:
(1) Does not suspend a lender's MAP privileges;
(2) May impose a higher level of review of the lender's underwriting
by HUD;
(3) May direct the taking of a corrective action; and
(4) May require a meeting in a designated HUD office with the
principal owners or officers, or both, of the MAP lender to discuss the
specified problems and violations, and possible corrective actions.
(c) Relationship to other sanctions. The issuance of a warning
letter is not subject to the MAP Lender Review Board procedures in
accordance with Sec. 200.1535, and is not a prerequisite to the
probation, or suspension, or termination of MAP privileges.
Sec. 200.1510 Probation.
(a) In general. Only the MAP Lender Review Board (or Board) may
place a lender on probation, in accordance with the procedures of Sec.
200.1535.
(b) Effect of probation. (1) Probation is intended to be corrective
in nature and not punitive. As a result, release from probation is
conditioned upon the lender meeting a specific requirement or
requirements, such as replacement of a staff member. A lender's failure
to take prompt corrective action after being placed on probation may be
the basis for a recommendation of either suspension or termination. Any
such recommendation shall, when possible, go to a MAP Lender Review
Board composed of the same members who issued the original probation.
(2) During the probation period, a MAP lender:
(i) Shall be removed from the MAP-Approved Lender list posted on
HUD's website;
(ii) May not submit, and HUD may not accept, materials after the
close of business of the date of the probation letter for a new
application under MAP for multifamily mortgage insurance from HUD; and
(iii) May continue to process any existing application for
multifamily mortgage insurance submitted to a Multifamily Hub or Program
Center before the date of the probation letter.
(3) The MAP Lender Review Board may impose a higher level of review
of the lender's underwriting by HUD;
(4) Probation is nationwide in effect.
(c) Duration of probation. (1) Probation continues until all
specific corrective actions required by the MAP Lender Review Board (for
example, exclusion of a specific staff member from work on MAP loans)
are taken by the MAP lender. When all corrective actions have been
taken, the MAP lender shall notify the Board. Once the Board is
satisfied that the corrective actions have occurred, the probation
period shall end.
(2) A false statement that corrective action has been taken
constitutes a false certification and may constitute a violation of 18
US.C. 1001.
(3) When probation is lifted, the lender's name shall be promptly
reinstated on the MAP-Approved Lender list posted on HUD's Web site.
Sec. 200.1515 Suspension of MAP privileges.
(a) In general. Only the MAP Lender Review Board may suspend a
lender's eligibility for MAP, in accordance with the procedures of Sec.
200.1535.
(b) Effect of suspension. (1) A suspension may impose any conditions
that may be imposed by probation.
(2) During the suspension period a MAP lender:
(i) Shall be removed from the MAP-approved lender list posted on
HUD's Web site;
(ii) May not submit, and the HUD field office may not accept,
materials after the close of business of the date of the suspension
letter for a new application for multifamily mortgage insurance from
HUD; and
(iii) May continue to process any existing application for
multifamily mortgage insurance submitted to a
[[Page 86]]
Multifamily Hub or Program Center before the date of the suspension
letter.
(3) The MAP Lender Review Board may impose a higher level of review
of the lender's underwriting by HUD;
(4) Suspension is nationwide in effect.
(c) Duration of suspension. (1) Suspension may not exceed 12 months,
except where conditions are imposed. If both a time period and
conditions are imposed, a suspension shall terminate only when:
(i) The time period of the suspension has expired;
(ii) The MAP lender has submitted a certification of compliance with
those conditions to the Board; and
(iii) The Board has notified the MAP lender it has received the
certification of compliance and is satisfied that the corrective actions
have occurred.
(2) When suspension is lifted, the lender's name shall be promptly
reinstated on the MAP-Approved Lender list posted on HUD's Web site.
Sec. 200.1520 Termination of MAP privileges.
(a) In general. Except as provided in paragraph (b) of this section,
only the MAP Lender Review Board may terminate a lender's MAP
privileges, in accordance with the procedures of Sec. 200.1535.
(b) Administrative termination. HUD will notify a lender of
immediate termination of MAP privileges when either of the following
circumstances is present:
(1) Failure by the MAP lender to maintain its status as an FHA-
approved lender; or
(2) Failure by the MAP lender to maintain a minimum level of MAP
lender activity, as evidenced by failure to submit either a pre-
application package or firm commitment application at least once every
12 months.
(c) Effect of termination. (1) The terminated lender shall be
removed from the MAP-Approved Lender list on HUD's Web site.
(2) A terminated lender may not submit, and the HUD field office may
not accept, materials after the close of business of the date of the
termination letter for new multifamily mortgage insurance from HUD.
(3) Any MAP pre-application or MAP application in process may no
longer be processed under MAP by the terminated lender. The lender will
either:
(i) Immediately transfer the transaction to the traditional
application processing (TAP) procedure. HUD will completely reprocess
all stages of the transaction; or
(ii) Immediately transfer the project to a new MAP lender. The new
MAP lender must completely reprocess all stages of the transaction. At
no time can the new MAP lender assign the pre-application, the firm
application, the mortgage insurance commitment, or the insured
construction loan back to the original MAP lender.
(4) HUD will not endorse any MAP loan processed by the terminated
lender unless a firm commitment was issued before the date of
termination.
(i) Firm commitments involving new construction or substantial
rehabilitation must be immediately transferred to a new MAP lender. At
no time can the new MAP lender assign the firm mortgage insurance
commitment, or the insured construction loan, back to the original MAP
lender.
(ii) Firm commitments issued for Section 223(f) projects may be
transferred before final endorsement to any approved FHA lender or kept
in the lender's portfolio.
(iii) For those construction loans that have been initially
endorsed, the MAP lender will lose its MAP privileges for construction
loan administration. HUD will assume all the construction loan
administration duties it normally performs for TAP processing.
(iv) The original lender may service a transferred loan once it is
finally endorsed.
(5) Termination is nationwide in effect.
(6) When a MAP lender loses its MAP lender status as a result of
termination, the lender's status to process transactions using TAP is
unaffected, provided that the lender has maintained its status as an
FHA-approved multifamily lender.
(d) Reinstatement. An application for reinstatement of MAP authority
may not be made until at least 12 months after the date of termination.
The requirements for reinstatement shall be
[[Page 87]]
the same as for initial qualification, and the applicant must show that
the problems that led to termination have been resolved.
Sec. 200.1525 Settlement agreements.
(a) HUD staff, as authorized, may negotiate a settlement agreement
with a MAP lender before or after the issuance of a warning letter or
referral to the MAP Lender Review Board. Once a matter has been referred
to the MAP Lender Review Board, only the Board may approve a settlement
agreement.
(b) Settlement agreements may provide for:
(1) Cessation of any violation;
(2) Correction or mitigation of the effects of any violation;
(3) Removal of lender staff from positions involving origination,
underwriting, and/or construction loan administration;
(4) Actions to collect sums of money wrongfully or incorrectly paid
by the MAP lender to a third party;
(5) Implementation or revision of a quality control plan or other
corrective measure acceptable to HUD; and
(6) Modification of the duration or provisions of any administrative
sanction deemed to be appropriate by HUD.
(c) A MAP lender's compliance with a settlement agreement is
evidenced by the lender certifying its compliance with the conditions of
the agreement, and HUD's determination that the lender is in compliance
with the conditions of the agreement.
(d) Failure by a MAP lender to comply with a settlement agreement
may result in a probation, or suspension, or termination of MAP
privileges, or referral to the Mortgagee Review Board.
Sec. 200.1530 Bases for sanctioning a MAP lender.
It is HUD policy that approved MAP lenders are expected to comply at
all times with HUD's underwriting and construction loan administration
requirements and not to take any action that presents a risk to HUD's
insurance funds. A MAP lender's improper underwriting and construction
loan administration activities may lead to a warning letter or other
sanction from HUD. Examples of such activities include, but are not
limited to, the following:
(a) Minor offenses that may be the basis for a warning letter
include:
(1) Failure to provide required exhibits or the submission of
incomplete or inaccurate exhibits. Although the MAP lender will be
permitted to correct minor errors or provide additional information,
substantial inaccuracies or lack of significant information will result
in a return of the application and retention of any fee collected;
(2) Repeated failure to complete processing to firm commitment
unrelated to an underwriting analysis that demonstrates that the process
should not proceed to firm commitment;
(3) Preparation of an underwriting summary that is not supported by
the appropriate documentation and analysis;
(4) Failure to notify the HUD processing office promptly of changes
in the mortgage loan application for a firm commitment submitted, such
as changes in rents, numbers of units, or gross project area;
(5) Failure to meet MAP closing requirements or construction loan
administration requirements;
(6) Business practices that do not conform to those generally
accepted by prudent lenders or that show irresponsibility; and
(7) Failure to cooperate with a Lender Qualifications and Monitoring
Division review by HUD.
(b) Serious offenses that might be a basis for a warning letter or
probation, suspension, or termination include:
(1) Receipt of multiple warning letters over any one-year period. In
determining which sanction to pursue as a result of prior warning
letters, HUD will consider the facts and circumstances surrounding those
warning letters and the corrective actions, if any, undertaken by the
lender;
(2) Fraud or material misrepresentation in the lender's
participation in FHA multifamily programs;
(3) Lender collusion with, or influence upon, third party
contractors to modify reports affecting the contractor's independent
evaluation;
(4) A violation of MAP procedures by a third party contractor, which
the MAP lender knew, or should have known, was occurring and which, if
performed by the MAP lender itself,
[[Page 88]]
would constitute a ground for a sanction under this chapter;
(5) Evidence that a lender's inadequate or inaccurate underwriting
was a cause for assignment of an FHA-insured mortgage and claim for
insurance benefits to HUD;
(6) Identity-of-interest violations as defined by Chapter 2 of the
MAP Guide;
(7) Payment by, or receipt of a payment by, a MAP lender of any
kickback or other consideration, directly or indirectly, which would
affect the lender's independent evaluation, or represent a conflict of
interest, in connection with any FHA-insured mortgage transaction;
(8) Failure to comply with any agreement, certification,
undertaking, or condition of approval listed in a MAP lender's
application for approval;
(9) Noncompliance with any requirement or directive of the MAP
Lender Review Board;
(10) Violation of the requirements of any contract with HUD, or
violation of the requirements in any statute or regulation;
(11) Submission of false information, or a false certification, to
HUD in connection with any MAP mortgage transaction;
(12) Failure of a MAP lender to respond in a timely manner to
inquiries from the MAP Lender Review Board in accordance with this
subpart;
(13) Indictment or conviction of a MAP lender or any of its
officers, directors, principals, or employees for an offense that
reflects on the responsibility, integrity, or ability of the lender to
participate in the MAP initiative;
(14) Employing or retaining an officer, partner, director, or
principal at the time when the person was suspended, debarred,
ineligible, or subject to an LDP under 2 CFR part 2424, or otherwise
prohibited from participation in HUD programs, when the MAP lender knew
or should have known of the prohibition;
(15) Employing or retaining an employee who is not an officer,
partner, director, or principal, and who is or will be working on HUD-
FHA program matters, at a time when that person was suspended, debarred,
ineligible, or subject to an LDP under 2 CFR part 2424, or otherwise
prohibited from participation in HUD programs, when the MAP lender knew
or should have known of the prohibition;
(16) Failure to cooperate with an audit or investigation by the HUD
Office of Inspector General or an inquiry by HUD into the conduct of the
MAP lender's FHA-insured loans; and
(17) Failure to fund MAP mortgage loans or any misuse of mortgage
loan proceeds.
[70 FR 43242, July 26, 2005, as amended at 72 FR 73494, Dec. 27, 2007]
Sec. 200.1535 MAP Lender Review Board.
(a) Authority--(1) Sanctions. The MAP Lender Review Board (or Board)
is authorized to impose appropriate sanctions on a MAP lender after:
(i) Conducting an impartial review of all information and
documentation submitted to the Board; and
(ii) Making factual determinations that there has been a violation
of MAP requirements.
(2) Settlement agreements. The Board is authorized to approve
settlement agreements in accordance with Sec. 200.1525 of any matter
pending before the Board.
(3) Extensions. The Board is authorized to extend, on its own
initiative or for good cause at the written request of a MAP lender, any
time limit otherwise applicable under this section. Notice of any such
extension shall be timely provided to a MAP lender.
(b) Notice of violation. Before the Board reviews a matter for
consideration of a sanction, the Board's Chairman will issue written
notice of violation to the MAP lender's contact person as listed on the
Multifamily MAP Web site. The notice is sent by overnight delivery and
must be signed for by an employee of the MAP lender upon receipt. The
notice:
(1) Informs the lender that the Board is considering a specific
violation;
(2) States the specific facts alleged concerning the violation, with
citation to the HUD requirements that have been violated;
(3) Includes as attachments copies of all documents evidencing the
violation and upon which the Board will rely in reaching a decision;
(4) Provides the lender with the opportunity to request in writing,
within
[[Page 89]]
15 business days after the date of the issuance of the notice, to:
(i) Meet for an informal conference with the Board in person or by
video conference using HUD facilities at Headquarters or one of HUD's
field offices; and
(ii) Present written evidence and any other relevant information at
the conference;
(5) Requires a written response to be submitted to the Board by a
date specified within the notice;
(6) Provides the street address, email address, or facsimile (FAX)
number for purposes of receiving the lender's request for an informal
conference and written response; and
(7) Is made part of the administrative record of the Board's
decision of the matter.
(c) Response to notice. (1) The MAP lender's written response
required by the notice of violation may not exceed 15 double-spaced
typewritten pages and must include an executive summary, a statement of
the facts, an argument, and a conclusion. The response and supporting
documentation must be submitted in triplicate.
(2) Failure to respond by the dates specified within the notice may
result in a determination by the Board without conducting an informal
conference with the MAP lender and without consideration of any written
response submitted by the MAP lender.
(d) Informal conference. (1) The Board will schedule an informal
conference and notify the lender of the time and place of the
conference, if one is requested.
(2) At the conference, the Board will meet with the lender or its
designees and HUD staff to review documentary evidence and presentations
by both sides.
(3) Oral statements made at the informal meeting will not be
considered as part of the administrative record of the Board's
determination, except:
(i) The Board may note for the record and consider voluntary
admissions, made by the lender or a representative of the lender, of any
element of the violation charged;
(ii) Statements substantiated by any additional documents or
evidence submitted in accordance with paragraphs (e)(1) or (e)(3) of
this section; and
(iii) Transcripts prepared and submitted in accordance with
paragraph (e)(2) of this section.
(e) Post-conference submissions. (1) Any additional documents,
evidence, or written arguments relevant to the notice of violation and
the informal conference that the lender or HUD staff wish to present to
the Board, must be presented within five business days after date of the
informal conference.
(2) No transcript of the informal conference will be made, unless
the lender elects to have a transcript made by a certified court
reporter at its own expense. If the lender elects to have a transcript
made, the lender must provide three copies of the transcript to HUD
within five business days after the date of the informal conference. The
transcript will not become a part of the administrative record of the
Board's decision unless it is submitted within the required five-day
period frame.
(3) Following the receipt of any post-conference submissions, the
Board may request or permit additional documents or evidence to be
submitted within a period set by the Board for inclusion in the
administrative record.
(f) Board action. (1) The Board will confer to consider the evidence
included in the administrative record and make a final decision
concerning the matter. Any record of confidential communications between
and among Board members at this stage of the proceedings is privileged
from disclosure and will not be regarded as a part of the administrative
record of any matter.
(2) In determining what action is appropriate concerning the matter,
the Board considers, among other factors:
(i) The seriousness and the extent of the violation;
(ii) Any history of prior offenses;
(iii) Deterrence of future violations;
(iv) Any inappropriate benefits received by the MAP lender;
(v) Potential inappropriate benefit to other persons; and
(vi) Any mitigating factors.
(3) Board decisions will be determined by majority vote.
[[Page 90]]
(g) Notice of action. (1) The Board will issue its final decision
within 10 business days after the date of the informal conference or the
expiration of any period allowed for the submission of documents and
evidence, whichever is later.
(2) The Board will notify the MAP lender of its final decision by
overnight delivery of a written notice of the final decision to the MAP
lender's contact person as listed on the Multifamily MAP Web site. The
Board will also notify HUD field offices of its final decision.
(3) The final decision finds that a violation either does, or does
not, exist. If a violation is found to exist, the final decision:
(i) States the violation and any factual findings of the Board;
(ii) States the nature and duration of the sanction;
(iii) Informs the MAP lender of its right to an appeal conference
and identifies the appeals official to be contacted; and
(iv) May add to or modify the violation as stated in the initial
notice of violation.
Sec. 200.1540 Imminent harm notice of action.
The Board may issue an imminent harm notice of action to terminate a
MAP lender, or to place a MAP lender on probation or suspension without
advance notice to the MAP lender in those instances where the Board
determines there exists a need to protect the financial interest of HUD
from imminent harm. In all such instances, the Board shall notify the
lender of the Board's decision promptly and give the reasons for the
decision in accordance with Sec. 200.1535(g)(2) and (3). The lender
shall have the right to submit materials to the Board and to appear
before the Board to seek prompt reconsideration of the Board's decision
in accordance with the procedures of Sec. 200.1535.
Sec. 200.1545 Appeals of MAP Lender Review Board decisions.
(a) Request for appeal. Whenever the Board imposes a sanction of
probation, suspension, or termination against a MAP lender, the lender
may request, in writing, an appeal conference before the appeals
official. The MAP lender must deliver the written request for an appeal
to the appeals official within 10 business days after the date noted on
the notice of action or the right to an appeal is deemed waived.
Participation in the appeal process under this section is not a
prerequisite to filing an action for judicial review under the
Administrative Procedure Act.
(b) Appeals Official. The appeals official must be an individual who
has not been previously involved with the proceedings or settlement
discussions at issue.
(c) Notice of action in effect. The notice of action issued by the
Board remains in effect while the appeal is pending.
(d) Scheduling of appeal. (1) Upon receipt of the request for an
appeal, the appeals official will promptly notify the MAP lender of the
time and place of the appeal conference. The appeal conference will be
held within 10 business days after receipt of the MAP lender's appeal
request, except as provided in paragraph (d)(2) of this section.
(2) A MAP lender may request, and the appeals official may agree, to
have an appeal conference held more than 10, but not more than 30
business days after the date of the lender's request for an appeal.
(e) Scope of appeal. The appeals official may consider information
included in the administrative record and any new information presented
at the appeal conference that is substantiated in accordance with
paragraph (f) of this section. In addition, the appeals official may
consider voluntary admissions by the lender or a representative of the
lender of any element of the violation charged.
(f) Additional documents--(1) Transcript. No transcript of the
appeal conference will be made, unless the MAP lender elects to have a
transcript made by a certified court reporter at its own expense. If the
lender elects to have a transcript made, it must provide three copies of
the transcript to the appeals official within five business days after
the date of the appeal conference.
(2) Other documents. Any additional, relevant documents or written
arguments that the MAP lender wishes to
[[Page 91]]
present to the appeals official must be presented within five business
days after the date of the appeal conference.
(g) Determination of appeal. Within 10 business days after the date
of the appeal conference or the expiration of the period allowed for the
submission of documents and written arguments, whichever is later, the
appeals official will make a written determination to confirm, modify,
or overturn the Board's decision and notice of action. If the appeals
official overturns the Board's decision, the lender shall immediately
return to an active status as a MAP lender and the written determination
to overturn will be posted on HUD's MAP Web site.
Sec. Appendix A to Part 200--Standards Incorporated by Reference in the
Minimum Property Standards for Housing (HUD Handbook 4910.1)
The following publications are incorporated by reference in the HUD
Minimum Property Standards (MPS) in 24 CFR part 200. The MPS are
available for public inspection and can be obtained for appropriate use
at 490 L'Enfant Plaza East, Suite 3214, or at each HUD Regional, Area,
and Service Office. Copies are available for inspection at the National
Archives and Records Administration (NARA). For information on the
availability of this material at NARA, call 202-741-6030, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/
ibr_locations.html. The individual standards referenced in the MPS are
available at the address contained in the following table. They are also
available for public inspection at the HUD, Manufactured Housing and
Construction Standards Division, Suite 3214, 490 L'Enfant Plaza East,
Washington, DC 20024.
Air Conditioning Contractors of America 1513 16th Street, NW.,
Washington, DC 20036, (202) 483-9370.
Load Calculation for Residential Winter and Summer Air Conditioning,
Manual J 1986
Aluminum Association, 900 19th Street, NW., Washington, DC 20006,
Telephone (202) 862-5100.
AA-ASM 35-80 Specifications for Aluminum Sheet Metal Work in
Building Construction
American Architectural Manufacturers Association, 1540 East Dundee Road,
Paletine, IL 60067, Telephone (708) 202-1350.
AAMA-800-92 Voluntary Specifications and Test Methods for Sealants
AAMA-1503.1-88 Voluntary Test Method for Thermal Transmittance and
Condensation Resistance of Windows, Doors and Glazed Wall Sections
AAMA 1504-88 Voluntary Standards for Thermal Performance of Windows,
Doors and Glazed Wall Sections
American Concrete Institute, P. O. Box 19150, Redford Station, Detroit,
Michigan 48219, Telephone (313) 532-2600.
ACI 211.1-89 Standard Practice for Selecting Proportions for Normal,
Heavyweight and Mass Concrete
ACI 211.2-91 Standard Practice for Selecting Proportions for
Structural Lightweight Concrete
ACI 213R-87 Guide for Structural Lightweight Aggregate Concrete
ACI 301-89 Specifications for Structural Concrete for Buildings
ACI 302.1R-80 Guide for Concrete Floor and Slab Construction
ACI 304R-89 Guide for Measuring, Mixing, Transporting and Placing
Concrete
ACI 305R-77 Hot Weather Concreting (Revised 1989)
ACI 306R-78 Cold Weather Concreting (Revised 1988)
ACI 311.4R-80 Guide for Concrete Inspection (Revised 1988)
ACI 315-80 Guide for Detailing of Concrete Reinforcement
ACI 318-89 Building Code Requirements for Reinforced Structural
Plain Concrete (Revised 1992)
ACI 322-72 Structural Plain Concrete
ACI 347-78 Recommended Practice for Concrete Formwork (Reapproved
1984)
ACI 504R-77 Guide to Joint Sealants for Concrete Structures
ACI 506-90 Recommended Practice for Shotcreting
ACI 515.1R-79 A Guide to the Use of Waterproofing, Dampproofing,
Protective and Decorative Barrier Systems for Concrete (Revised 1985)
ACI 533.1R-69 Quality Standards and Tests for Precast Concrete Wall
Panels
ACI 533.2R-69 Selection and Use of Materials for Precast Concrete
Wall Panels
ACI 533.3R-70 Fabrication, Handling and Erection of Precast Concrete
Wall Panels
American Forest & Paper Association, (formerly National Forest Products
Association), 1250 Connecticut Ave., NW., Washington, DC
20036. National Design Specification for Wood Construction--
1991.
American National Standards Institute, 11 West 42nd Street, New York, NY
10036, Telephone (212) 642-4900.
ANSI A108.1A-92 Specifications for Installation of Ceramic Tile, in
the Wet Set Method with Portland Cement Mortar
ANSI A137.1-1988 Specifications for Ceramic Tile
ANSI/BHMA A156.2-1989 Standard for Bored and Preassembled Locks and
Latches
ANSI/NKCA A161.1-1985 Recommended Performance and Construction
Standards for
[[Page 92]]
Kitchen and Vanity Cabinets (Approved March 18, 1986)
ANSI A208.1-1989 Wood Particleboard
ANSI/AAMA 101-1988 Voluntary Specifications for Aluminum Prime
Windows and Sliding Glass Doors
ANSI/AAMA 1002.10-1983 Voluntary Specifications for Aluminum
Insulating Storm Products for Windows and Sliding Glass Doors
ANSI/AAMA 1102.7-1989 Voluntary Specifications for Aluminum Storm
Doors
ANSI/AAMA 1402-1986 Standard Specifications for Aluminum Siding,
Soffit and Fascia (ANSI Approved 1989)
ANSI/ACI 214-77 Recommended Practice for Evaluation of Strength Test
Results of Concrete (Reapproved 1983)
ANSI/AHA A135.4-1982 Basic Hardboard (Reaffirmed 1988)
ANSI/AHA A135.6-1990 Hardboard Siding
ANSI/AHA A194.1-1985 Cellulosic Fiber Board
ANSI/APA 1-1984 Mosaic-Parquet Hardboard Slat Flooring
ANSI/NSPI-1-91 Standard for Public Swimming Pools
ANSI Z34.1-1987 American National Standard for Certification, Third-
Party Certification Program
ANSI Z124.5-1989 American National Standard for Plastic Toilet Seats
(Water Closet Seats)
American Society of Civil Engineers, 345 East 47th Street, New York, NY
10017.
ASCE 7-88 Minimum Design Loads for Buildings and Other Structures
(Formerly ANSI A58.1)
American Society of Mechanical Engineers, 345 E 47th Street, New York,
NY 10017.
ASME/ANSI A17.1-87 Safety Code for Elevators and Escalators
Including the A17.1b-89 Addenda
ASME A 112.18.1M89 Plumbing Fixture Fittings
American Society for Testing and Materials, 1916 Race Street,
Philadelphia, PA 19103, Telephone (215) 299-5400.
ASTM C 12-91 Standard Practice for Installing Vitrified Clay Pipe
Lines
ASTM C 208-72 Insulating Board (Cellulosic Fiber), Structural and
Decorative (Reapproved 1982)
ASTM C 209-84 Standard Methods of Testing Insulating Board
(Cellulosic Fiber), Structural and Decorative
ASTM C 216-91c Standard Specification for Facing Brick (Solid
Masonry Units Made from Clay or Shale)
ASTM C 220-91 Standard Specification for Flat Asbestos-Cement Sheets
ASTM C 221-91 Standard Specification for Corrugated Asbestos-Cement
Sheets
ASTM C 223-91 Standard Specification for Asbestos-Cement Siding
ASTM C 509-91 Standard Specification for Elastomeric Cellular
Preformed Gasket and Sealing Material
ASTM C 516-80 Standard Specification for Vermiculite Loose Fill
Thermal Insulation (Reapproved 1985)
ASTM C 549-81 Standard Specification for Perlite Loose Fill
Insulation (Reapproved 1986)
ASTM C 578-92 Standard Specification for Rigid, Cellular Polystyrene
Thermal Insulation
ASTM C 640-83 Standard Specification for Insulation Board, Thermal
(Cork)
ASTM C 726-88 Standard Specification for Mineral Fiber and Roof
Insulation Board
ASTM C 739-91 Standard Specification for Cellulosic Fiber (Wood-
Based) Loose-Fill Thermal Insulation
ASTM C 754-88 Standard Specification for Installation of Steel
Framing Members to Receive Screw-Attached Gypsum
ASTM C 834-91 Standard Specification for Latex Sealants
ASTM C 841-90 Standard Specification for Installation of Interior
Lathing and Furring
ASTM C 842-85 Standard Specification for Application of Interior
Gypsum Plaster (Reapproved 1990)
ASTM C 843-92 Standard Specification for Application of Gypsum
Veneer Plaster
ASTM C 844-85 Standard Specification for Application of Gypsum Base
to Receive Gypsum Veneer Plaster
ASTM C 846-76 Standard Practice for Application of Structural
Insulating Board (Fiberboard) Sheathing (Reapproved 1982)
ASTM C 864-90 Standard Specification for Dense Elastomeric
Compression Seal Gaskets, Setting Blocks and Spacers.
ASTM C 926-90 Standard Specification for Application of Portland
Cement-Based Plaster
ASTM C 1036-91 Standard Specification for Flat Glass
ASTM D 1037-89 Standard Test Methods for Evaluating the Properties
of Wood-Base Fiber and Particle Panel Materials
ASTM C 1048-91 Standard Specification for Heat-Treated Flat Glass-
Kind HS, Kind FT Coated and Uncoated Glass
ASTM D 1557-91 Test Method for Laboratory Compaction Characteristics
of Soil Using the Modified Method (56,000 ft-lbf/ft3 (2,700
kN-m/m3))
ASTM D 2316-75 Standard Recommended Practice for Installing
Bituminized Fiber Drain and Sewer Pipe (Reapproved 1984)
ASTM D 2321-89 Standard Practice for Underground Installation of
Thermoplastic Pipe for Sewers and Other Gravity-Flow Applications
ASTM D 3656-89 Standard Specifications for Insect Screening and
Louver Cloth Woven From Vinyl-Coated Glass Yarns
[[Page 93]]
ASTM D 3679-92 Standard Specification for Rigid Poly (Vinyl
Chloride) (PVC) Siding
ASTM E 72-80 Standard Methods of Conducting Strength Tests of Panels
for Building Construction
ASTM E 283-91 Standard Test Method for Determining the Rate of Air
Leakage Through Exterior Windows, Curtain Walls, and Doors Under
Specified Pressure Differences Across the Spectrum
ASTM E 330-90 Standard Test Method for Structural Performance of
Exterior Windows, Curtain Walls, and Doors by Uniform Static Air
Pressure Difference
ASTM E 331-86 Standard Test Method for Water Penetration of Exterior
Windows, Curtain Walls, and Doors by Uniform Static Air Pressure
Difference
ASTM E 380-91a Standard Practices for Use of the International
Systems of Units (SI) (the Modernized Metric System)
American Society of Heating, Refrigerating and Air Conditioning
Engineers, 1791 Tullie Circle, NE, Atlanta, GA 30329. ASHRAE
Handbook--Fundamentals--1989. ASHRAE Cooling and Heating Load
Calculation Manual--GRP 158 1979. ASHRAE Handbook--Equipment--
1988. ASHRAE Handbook--HVAC Systems and Applications--1987.
American Welding Society, 550 NW Le Jeune Road, P. O. Box 351040, Miami,
FL 33126, Telephone (305) 443-9353. ANSI/AWS D1.1-90
Structural Welding Code--Steel. ANSI/AWS D1.4-79 Structural
Welding Code-Reinforcing Steel.
The Asphalt Institute, Asphalt Institute Building, College Park, MD
20740 Telephone (301) 277-4258.
MSI-1-81 Thickness Design--Asphalt Pavements for Highways and
Streets
Asphalt Roofing Manufacturers Association, 6288 Montrose Road,
Rockville, MD 20852, Telephone (301) 231-9050. Residential
Asphalt Roofing Manual--1988.
Carpet and Rug Institute, 310 Holiday Avenue, Box 2048, Dalton, GA
30722-0048, Telephone (404) 278-3176. How to Specify
Commercial Carpet Installation, 1984.
Council of American Building Officials, Suite 708, 5203 Leesburg Pike,
Falls Church, VA 22041, Telephone (703) 931-4533. CABO One and
Two Family Dwelling Code 1992 edition with Errata Package and
1993 Amendments. CABO Model Energy Code 1992 edition CABO/ANSI
A117.1-92 Accessible and Usable Buildings and Facilities.
Department of Agriculture, Publications Division, 14th and Independence
Avenue, SW., Washington, DC 20050, Telephone (202) 447-3957.
Agriculture Handbook No. 73, Wood Frame House Construction
Home and Garden Bulletin No. 64. Subterranean Termites--Their
Prevention and Control in Buildings, October 1983
Home and Garden Bulletin No. 73, Wood Decay in Houses, How to
Prevent and Control It, May 1986
Department of Commerce, National Institute of Standards and Technology,
Gaithersburg, Maryland 20899, Telephone (301) 975-4025. PS 1-
83 Product Standard for Construction and Industrial Plywood
with Typical APA Trademarks. PS 2-92 Performance Standard for
Wood-Based Structural-Use Panels.
Commercial Standards:
CS 138-55 Insect Wire Screening
CS 242-62 1 \3/4\'' Steel Doors & Frames
Department of Defense, Naval Publication and Forms Center, 5801 Taber
Road, Philadelphia, PA 19120, Telephone (215) 697-2179.
Federal Specifications:
L-S-125B Screening, Insect, Non-metallic Febuary 3, 1972
L-F-001641 Floor Covering Translucent or Transparent Vinyl Surface
with Backing--1971 and Amendment 2--September 24, 1982
L-F-00450A Flooring, Vinyl Plastic (GSAFSS)--1970 and Amendment 1,
August 5, 1975
L-F-475A Floor Covering Vinyl, Surface Tile and Roll, with Backing
including Amendment 2--February 9, 1971
HH-I-521F Insulation Blankets, Thermal (Mineral Fiber--for Ambient
Temperatures--1980)
HH-I-526C Insulation Board, Thermal (Mineral Fiber)--1968
HH-I-529B Insulation Board, Thermal (Mineral Aggregate)--1971
HH-I-530B Insulation Board, Thermal, Unfaced, Polyurethane or
Polyisocyanurate and Interim I--1982
HH-I-551E Insulation Block and Boards, Thermal (Cellular Glass)
Fiber, for Ambient Temperatures, 1974
HH-I-558B Insulation Blocks, Boards, Blankets, Felts Sleeving (Pipe
and Tube Covering), and Pipe Fitting Covering, Thermal (Mineral Fiber,
Insulation Type) and Amendment 3--1976
HH-I-574B Insulation, Thermal (Perlite) and Interim Amendment--1976
HH-I-585C Insulation, Thermal (Vermiculite) and Interim Amendment
1--1976
HH-I-1030B Insulation, Thermal (Mineral Fiber, for Pneumatic or
Poured Application)--1980
HH-I-1252B Insulation, Thermal Reflective, (Aluminum Foil) and
Interim Amendment 1--1976
HH-I-1972 Insulation Board, Thermal, Faced, Gen; 1, 2, 3,
Polyurethane and Polyisocyanurate and 4, 5 & 6 Amendments--1985
LLL-I-535B Insulation Board, Thermal, Cellulosic Fiber, 1977
[[Page 94]]
SS-S-346C Siding (Shingles, Clapboards, and Sheets) 1968
SS-T-312B Tile, Floor: Asphalt, Rubber, Vinyl-Composition and
Interim Amendment--1979
Department of Housing and Urban Development, 451 Seventh Street, SW.,
Mail Room B-133, Washington, DC 20410, Telephone (202) 755-
7440.
Handbooks:
4940.2-1973 Minimum Design Standards for Community Water Supply
Systems
4940.3-1992 Minimum Design Standards for Community Sewerage Systems
(Rev. 1-92)
4950.1-1988 Technical Suitability of Products Program, Technical and
Processing Procedures (Rev. 2 which includes revisions and changes
through October 24, 1991)
4930.2-1989 HUD Intermediate MPS Supplement, Solar Heating &
Domestic Hot Water Systems
Use of Materials Bulletins:
25d Power Driven, Mechanically Driven and Manually Driven
Fasteners--9/5/73
38h Grademarking of Lumber--7/31/79
44c HUD/FHA Standard for Carpet and Carpet Certification Program--2/
22/78 (Plus Addendum 1 & 2)
48 Labels of Independent Programs for Certifying Pressure-Treated
Lumber and Plywood (Plus 5 Supplements--11/15/67)
52a Quality Certification and Labeling for Wood Flush Doors--10/7/
75)
58a Acrylic Plastic Sheets for Glazing--9/2/75
60 Field Glued Plywood & Wood Frame Structural Floor Systems--12/9/
70
62a Factory-Applied Laminated Roofing Systems Based on
Chlorosulfonated Polyethylene (CPSE)--11/16/72
65 Controlled Density Cellular Concrete Floor Fill--10/11/73
67 Polycarbonate Plastic Sheets for Glazing--9/3/75
70a Particleboard Interior Stair Treads and Certification Program--
5/19/82
71 Polystyrene Foam Insulation Sheathing Board--1/10/77
72 HUD Standard for Carpet Cushion--2/6/80
76 Chlorinated Poly (Vinyl Chloride) CPVC and Polybutylene (PB) Hot
and Cold Water Distribution--4/25/78
77a Cast Iron Sanitary Drainage System with Hubless Pipe and
Fittings--3/28/80
78 Polyethylene (PE), Acrylonitrile-Butadiene-Styrene (ABS), Poly
Vinyl Chloride (PVC) and Polybutylene (PB) Plastic Piping for Domestic
Cold Water Service--4/25/78
79a Acrylonitrile-Butadiene-Styrene (ABS) and Poly (Vinyl Chloride)
(PVC) Plastic Drain, Waste and Vent Pipe and Fittings--3/7/82
80 Spray Applied Cellulosic Thermal Insulation--10/31/79
101 HUD Building Product Standards and Certification Program for
Exterior Wall Insulation and Finish Systems, July 26, 1993
Environmental Protection Agency, Office of Drinking Water, 401 M Street,
SW., Washington, DC 20460, Telephone (202) 382-5533.
EPA 570/9-82-004 Manual of Individual Water Supply (NTIS-PB
85242279) Systems (October 1982)
Flat Glass Marketing Association, White Lakes Professional, Building
3310 Harrison Street, Topeka, KS 66611, Telephone (913) 266-
7013. FGMA Glazing Manual--1986. FGMA Sealant Manual--1990.
Hardwood Plywood Manufacturers Association, P.O. Box 2789, 1825 Michael
Faraday Drive, Reston, VA 22090, Telephone (703) 435-2900.
ANSI/HPMA LHF-1987 Laminated Hardwood Flooring.
Insect Screening Weavers Assn., 2000 Maple Hill Street, P.O. Box 309,
Yorktown Heights, NY 10598. IWS-089 Insect Wire Screening
(Wire Fabric).
National Academy of Sciences, 2101 Constitution Avenue, NW., Washington,
DC 20418. Publication 1571 Criteria for Selection and Design
of Residential Slabs-on-Ground, Report 33, Building Research
Advisory Board (BRAB), 1968.
National Association of Home Builders, Research Center, 400 Prince
Georges Boulevard, Upper Marlboro, MD 20772, Telephone (301)
249-4000. Insulation Manual, Homes and Apartments--1979.
National Association of Plumbing-Heating-Cooling Contractors, P.O. Box
6808, Falls Church, VA 22046, Telephone (703) 237-8100.
National Standard Plumbing Code--1993.
National Fire Protection Association, Batterymarch Park, Quincy, MA
02269, Telephone 1-800-344-3555.
ANSI/NFPA 58-89 Standard for the Storage and Handling of Liquefied
Petroleum Gases
NFPA 54-88 National Fuel Gas Code (ANSI Z223.1-1988) NFPA 70-93
National Electrical Code
National Institute of Building Sciences, 1201 L Street, NW., Washington,
DC 20005. Metric Guide for Federal Construction--1992.
National Oak Flooring Manufacturers Association, 22 North Front Street,
Memphis, TN 38103. Official Grading Rules, Oak, Beech, Birch,
Hard Maple, Pecan (OFGR/Vol. 1, No. 1/1986 and the 1989
Addendum). Hardwood Flooring Finishing/Refinishing Manual,
1986. Hardwood Flooring Installation Manual, 1986.
National Roofing Contractors Association, One O'Hare Centre, 6250 River
Road, Rosemont, IL 60018, Telephone (708) 318-6722. NRCA
Roofing and Waterproofing Manual, 1989.
[[Page 95]]
National Terrazzo and Mosaic Association, 3166 Des Plaines Avenue, Suite
132, Des Plaines, IL 60018, Telephone (708) 635-7744. NTMA
Specifications, Details and Technical Data, ``Terrazzo Ideas &
Design Guide'', 1990.
National Wood Window and Door Association, 205 West Touhy Avenue, Park
Ridge, IL 60018, Telephone (708) 299-5200.
ANSI/NWWDA IS 1-87 Industry Standard for Wood Flush Doors
ANSI/NWWDA IS 2-87 Industry Standard for Wood Windows
NWWDA IS 3-88 Industry Standard for Wood Sliding Patio Doors
ANSI/NWWDA IS 6-86 Industry Standard for Wood Stile and Rail Doors
Post-tensioning Institute, 301 West Osborn, Suite 3500, Phoenix, AZ
85013, Telephone (602) 870-7540. Design and Construction of
Post-tensioned Slabs-on-Ground--1980.
Prestressed Concrete Institute, 175 West Jackson Boulevard, Suite 1859,
Chicago, IL 60604, Telephone (312) 786-0353.
PCI MNL 116 Manual for Quality Control for Plants and Production for
Precast Prestressed Concrete Products--1985 PCI MNL 117 Manual for
Quality Control for Plants and Production of Architectural Precast
Concrete Products--1977
Resilient Floor Covering Institute, 966 Hungerford Drive, Suite 12-B,
Rockville, MD 20850, Telephone (301) 340-8580. Recommended
Installation Specifications for Vinyl Composition, Solid Vinyl
and Asphalt Tile Floorings, 1987.
Safety Glazing Certification Council, c/o ETL Testing Laboratories,
Industrial Park, Route 11, Cortland, New York 13045, Telephone
(607) 753-6711. Certified Products Directory--1990.
Southern California Association of Cabinet Manufacturers, 1933 South
Broadway, L. 39, Los Angeles, CA 90007, Telephone (213) 749-
4355. Certified Construction Standards and Specifications,
Guide for Uniform Cabinet Specifications--1973 (Revised 1985).
Steel Door Institute, 30200 Detroit Road, Cleveland, OH 44145, Telephone
(216) 899-0010. ANSI/SDI A123.1-82 Nomenclature for Steel
Doors and Steel Door Frames.
Tile Council of America, Inc., Box 326, Princeton, NJ 08542-0326,
Telephone (609) 921-7050. Handbook for Ceramic Tile
Installation--1993.
Underwriters Laboratories, 333 Pfingsten Road, Northbrook, IL 60062,
Telephone (708) 272-8800. Electrical Appliance and Utilization
Equipment Directory, 1992.
Water Quality Association, 4151 Naperville Road, Lisle, IL 60532.
Telephone (708) 396-1600.
WQA S-100 Household Commericial and Portable Exchange Water
Softeners--1985
WQA S-200 Household and Commercial Water Filters--1988
WQA S-300 Point-of-Use, Low Pressure Reverse Osmosis Drinking Water
Systems--1984
WQA S-400 Point-of-Use Distillation Drinking Water Systems--1986
Wood Moulding and Millwork Producers, P.O. Box 25278, Portland, OR
97225, Telephone (503) 292-9288.
WM 3-79 Exterior Wood Door Frames
[58 FR 60250, Nov. 15, 1993]
[[Page 96]]
SUBCHAPTER B_MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL HOUSING
ACT AND OTHER AUTHORITIES
PART 201_TITLE I PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS
--Table of Contents
Subpart A_General
Sec.
201.1 Purpose.
201.2 Definitions.
201.3 Applicability of the regulations.
201.4 Rules of construction.
201.5 Waivers.
201.6 Disclosure and verification of Social Security and Employer
Identification Numbers.
201.7 Qualified mortgage.
Subpart B_Loan and Note Provisions
201.10 Loan amounts.
201.11 Loan maturities.
201.12 Requirements for the note.
201.13 Interest and discount points.
201.14 Payments on the loan.
201.15 Late charges to borrowers.
201.16 Default provision.
201.17 Prepayment provision.
201.18 Modification agreement or repayment plan.
201.19 Refinanced and assumed loans.
Subpart C_Eligibility and Disbursement Requirements
201.20 Property improvement loan eligibility.
201.21 Manufactured home loan eligibility.
201.22 Credit requirements for borrowers.
201.23 Borrower's initial payment.
201.24 Security requirements.
201.25 Charges to borrower to obtain loan.
201.26 Conditions for loan disbursement.
201.27 Requirements for dealer loans.
201.28 Flood and hazard insurance, and Coastal Barriers properties.
201.29 Ineligible participants.
Subpart D_Insurance of Loans
201.30 Reporting of loans for insurance.
201.31 Insurance charge.
201.32 Insurance coverage reserve account.
Subpart E_Loan Administration
201.40 Post-disbursement loan requirements.
201.41 Loan servicing.
201.42 Bankruptcy, insolvency or death of borrower.
201.43 Administrative reports and examinations.
Subpart F_Default Under the Loan Obligation
201.50 Lender efforts to cure the default.
201.51 Proceeding against the loan security.
201.52 Acquisition by voluntary conveyance or surrender.
201.53 Disposition of manufactured home loan property.
201.54 Insurance claim procedure.
201.55 Calculation of insurance claim payment.
Subpart G_Debts Owed to the United States Under Title I
201.60 General.
201.61 Claims against debtors--principal amount of debt.
201.62 Claims against debtors--interest, penalties, and administrative
costs.
201.63 Claims against lenders.
Authority: 12 U.S.C. 1703; 15 U.S.C. 1639c; 42 U.S.C. 3535(d).
Source: 50 FR 43523, Oct. 25, 1985, unless otherwise noted.
Subpart A_General
Sec. 201.1 Purpose.
These regulations implement the provisions of section 2 of title I
of the National Housing Act (12 U.S.C. 1703). They contain the
requirements under which an approved financial institution may obtain
insurance on loans made for the alteration, repair or improvement of
property, for the purchase of a manufactured home and/or the lot on
which to place such home, for the purchase and installation of fire
safety equipment in existing health care facilities, and for the
preservation of historic structures. The insurance granted by the
Secretary of Housing and Urban Development shall be available only for
loans involving property located within a State, as that term is defined
in Sec. 201.2. The insurance can cover up to 10 percent of the amount
of all insured Title I loans in the financial institution's portfolio,
as reflected in the
[[Page 97]]
total amount of insurance coverage contained at any time in an insurance
coverage reserve account established by the Secretary, less amounts for
insurance claims paid. As limited by the amount of insurance coverage in
such a reserve account, the insurance can cover up to 90 percent of the
loss of any individual loan.
[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19795, May 2, 1996]
Sec. 201.2 Definitions.
As used in the regulations in this part the term:
Act means the National Housing Act, 12 U.S.C. 1703.
Actuarial method means the method of allocating payments made on a
loan between the outstanding balance of the principal amount borrowed
and the interest due on a loan obligation, under which a payment is
applied first to the accrued interest, and any remainder is subtracted
from, or any deficiency is added to, the unpaid balance of the
obligation.
Borrower means one who applies for and receives a loan insured under
this part. The term may also include any co-maker or co-signer or any
assumptor who is obligated for the repayment of a loan obligation
insured under this part.
Combination loan means a loan made for the purchase or refinancing
in a single transaction of a manufactured home and a manufactured home
lot, and may also include a garage, patio, carport, or other comparable
appurtenance.
Dealer means, in the case of property improvement loans, a seller,
contractor, or supplier of goods or services. In the case of
manufactured home loans, dealer means one who engages in the business of
manufactured home retail sales.
Dealer loan means a loan where a dealer, having a direct or indirect
financial interest in the transaction between the borrower and the
lender, assists the borrower in preparing the credit application or
otherwise assists the borrower in obtaining the loan from the lender. In
the case of a property improvement loan, the lender may disburse the
loan proceeds solely to the borrower, or jointly to the borrower and the
dealer or other parties to the transaction. In the case of a
manufactured home loan, the lender may disburse the loan proceeds solely
to the dealer or the borrower, or jointly to the borrower and the dealer
or other parties to the transaction.
Debtor means the borrower, any co-maker or co-signer, and any
assumptor who is liable for the repayment of a defaulted loan obligation
insured under this part.
Default means a failure by the borrower to make any payment due
under the note, when such failure continues for a period of 30 days. For
the purpose of these regulations, the ``date of default'' shall be
considered as 30 days after the first failure to make an installment
payment on the note which is not covered by subsequent payments, when
applied to the overdue installments in the order in which they became
due.
Direct loan means a loan for which a borrower makes application
directly to a lender without any assistance from a dealer. The credit
application, signed by the borrower, may be filled out by the borrower
or by a person acting at the direction of the borrower who does not have
a financial interest in the loan transaction. The lender may disburse
the loan proceeds solely to the borrower or jointly to the borrower and
other parties to the transaction. If a dealer takes legal action
required by State law in order for the lender to obtain a valid and
enforceable lien against the property, such action by the dealer will
not convert an otherwise direct loan to a dealer loan.
Discount points means a fee charged by the lender, separate from
interest but part of the total finance charges on the loan, that is part
of the lender's total yield on the loan needed to maintain a competitive
position with other types of investments. One discount point equals one
percent of the principal amount of the loan. As discount points on the
loan increase, the interest rate can be expected to decrease in a fairly
consistent relationship.
Existing structure means a dwelling, including a manufactured home,
that was completed and occupied at least 90 days prior to an application
for a Title I loan, or a nonresidential structure
[[Page 98]]
that was a completed building with a distinctive functional use prior to
an application for a Title I loan. However, these occupancy and
completion requirements shall not apply to:
(1) Loans having a principal obligation of $1000 or less; or
(2) Residential structures which have been damaged by conditions
determined by the President to warrant relief under the provisions of
title 42, chapter 68, of the United States Code.
Fire safety equipment loan means a loan made to finance the purchase
and installation of any device or construction feature which is
recognized in the latest edition of the Department of Housing and Urban
Development's Minimum Property Standards for Care Type Housing (HUD
Handbook 4920.1) or the Fire Safety Code of the National Fire Protection
Association, and which is designed to reduce the risk of death, personal
injury, or property damage resulting from a fire in a health care
facility.
Furniture means movable articles of personal property relating to a
home or dwelling, such as beds, chairs, sofas, lamps, tables, rugs,
etc.; however, furniture does not include:
(1) Items built into the home or dwelling such as wall-to-wall
carpeting or heating or cooling equipment; or
(2) Large appliances such as refrigerators, ovens, ranges,
dishwashers, clothes washers or clothes dryers.
Health care facility means a proprietary facility or facility of a
private nonprofit corporation or association, licensed or regulated by
the State or by the municipality or other political subdivision in which
the facility is located, and operated as one or more of the following:
(1) A nursing home for the accommodation of convalescents or other
persons who are not acutely ill and not in need of hospital care, but
who require skilled nursing care and related medical services performed
under the general direction of persons licensed by the law of the State
where the facility is located to provide such care or services;
(2) An intermediate health care facility for the accommodation of
persons who, because of incapacitating infirmities, require minimum but
continuous care, but not continuous medical care or nursing services;
(3) An extended health care facility for inpatient care for
convalescents or chronic disease patients who require skilled nursing
care and related medical services; or
(4) Other comparable health care facility.
Historic preservation loan means a loan to finance the preservation
(restoration or rehabilitation) of an historic residential structure
which is listed on the National Register of Historic Places or which is
certified by the Secretary of the Interior as conforming with National
Register criteria.
Lender means a financial institution that:
(1) Holds a valid Title I contract of insurance and is approved by
the Secretary under 24 CFR part 202 to originate, purchase, hold,
service, and/or sell loans insured under this part; or
(2) Is under suspension or holds a Title I contract of insurance
that has been terminated, but that remains responsible for servicing or
selling Title I loans that it holds and is authorized to file insurance
claims on such loans.
Loan means a disbursement of proceeds (funds) or an advance of
credit to or for the benefit of a borrower who promises to repay the
principal amount of such disbursement or advance, plus interest, if any,
at a stated annual rate over time, with the borrower's obligation
evidenced by the borrower's execution of a note. Loan also means a
purchase by a lender of a note evidencing such obligation, or a
refinancing of an existing obligation with or without an additional
disbursement of proceeds or advance of credit.
Manufacturer's invoice means a document issued by a manufacturer and
provided with a manufactured home to a retail dealer which separately
details the wholesale (base) prices at the factory for specific models
or series of manufactured homes and itemized options (large appliances,
built-in items and equipment), plus actual itemized charges for freight
from the factory to the dealer's lot or the homesite (including any
rental of wheels and axles) and for any sales taxes to be paid by the
dealer. The invoice may recite such prices and charges on an itemized
basis
[[Page 99]]
or by stating an aggregate price or charge, as appropriate, for each
category. The manufacturer shall certify on the invoice, or on a
supplement which is attached to and made a part of the invoice, as
follows:
The undersigned certifies under applicable criminal and civil
penalties for fraud and misrepresentation that: (1) The wholesale (base)
prices for the manufactured home and itemized options, the charges for
freight and dealer-paid sales taxes, and all other statements in this
invoice are true and accurate; (2) all such prices reflect the actual
dealer costs at the factory, as quoted in the applicable current
manufacturer's wholesale (base) price list; (3) except for any payments
of volume incentives or special benefits related to this transaction,
all such prices and charges exclude any costs of trade association fees
or charges, discounts, bonuses, refunds, rebates, prizes, loan discount
points or other financing charges, or anything else of more than nominal
value which will inure to the benefit of the dealer and/or home
purchaser at any date; and (4) the manufacturer has not made and will
not make any payments to or for the benefit of the dealer and/or home
purchaser that are not disclosed on this invoice or invoice supplement.
Manufactured home means a transportable structure, comprised of one
or more modules, each built on a permanent chassis, with or without a
permanent foundation, designed for occupancy as a principal residence by
a single family. A new manufactured home shall comply with the minimum
property standards prescribed by the Secretary to assure its livability
and durability that are published as the Manufactured Home Construction
and Safety Standards implementing the National Manufactured Housing
Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426, at
24 CFR part 3280. To qualify for a manufactured home loan insured under
this part, an existing manufactured home must have been constructed in
accordance with standards published at 24 CFR part 3280 and must meet
standards similar to the minimum property standards applicable to
existing homes insured under title II of the Act, as prescribed by the
Secretary.
Manufactured home improvement loan means a loan made to finance the
alteration, repair or improvement of an existing manufactured home which
is classified as personalty by the State or locality in which the
property is located. The proceeds of a manufactured home improvement
loan may also be used for improvements to the homesite, as long as the
borrower is the owner of the home and the underlying real estate.
Manufactured home loan means a loan for the purchase or refinancing
of a manufactured home and/or the lot on which to place such home.
Unless otherwise indicated, the term includes manufactured home purchase
loans, manufactured home lot loans, and combination loans.
Manufactured home lot loan means a loan for the purchase or
refinancing of a portion of land acceptable to the Secretary as a
manufactured home lot. A manufactured home lot may consist of platted or
unplatted land, a lot in a recorded or unrecorded subdivision or in an
improved area of such subdivision, or a lot in a planned unit
development. A manufactured home lot may also consist of an interest in
a manufactured home condominium project (including any interest in the
common areas) or a share in a cooperative association which owns and
operates a manufactured home park.
Manufactured home purchase loan means a loan for the purchase or
refinancing of a manufactured home exclusive of any lot or site, and may
also include a garage, patio, carport, or other comparable appurtenance.
Multifamily property improvement loan means a loan to finance the
alteration, repair, improvement, or conversion of an existing structure
used or to be used as an apartment house or a dwelling for two or more
families. The multifamily structure may not be owned by a corporation,
partnership, or trust, unless the prior approval of the Secretary is
obtained for an exception to this requirement.
Nonresidential property improvement loan means a loan made to
finance the construction of a new exclusively nonresidential structure
or the alteration, repair or improvement of an existing structure that
is nonresidential. Such a structure may be temporarily used for
residential purposes while the borrower constructs a new dwelling to
replace a dwelling previously occupied by the borrower that was
destroyed or
[[Page 100]]
damaged by conditions determined by the President to warrant relief
under the provisions of title 42, chapter 68, of the U.S.C., provided
that the credit application is filed within one year from the date of
such a determination.
Note means the written instrument evidencing the borrower's
signature to a promise to repay the principal indebtedness and to pay
any interest due on a loan, whether the instrument is separate from or
included within another document, and unless otherwise specified means
also any security instrument with respect to that loan obligation.
Owner means a person, including a borrower, who has title in whole
or in part to the property which is the subject of a loan transaction.
Principal residence means a home where the borrower expects to live
at least nine months of the year.
Property improvement loan means a loan made to finance actions or
items that substantially protect or improve the basic livability or
utility of a property. Unless otherwise indicated, the term includes
single family, multifamily and nonresidential property improvement
loans; manufactured home improvement loans where the home is classified
as personalty; historic preservation loans; and fire safety equipment
loans in existing health care facilities.
Rehabilitation means the process of returning an historic
residential structure to a state of utility, through repair or
alteration, which makes possible an efficient contemporary use. In
rehabilitation, those portions of the property important in illustrating
historic, architectural and cultural values are preserved or restored.
Restoration means the process of accurately recovering the form and
details of an historic residential structure as it appeared at a
particular period of time by removing later work and by replacing
missing original work.
Security instrument means a properly recorded chattel mortgage, real
estate mortgage or deed of trust, or conditional sales contract.
Single family property improvement loan means a loan to finance
alterations, repairs and improvements to or in connection with an
existing structure used or to be used as a single family residence,
including an existing one-family manufactured home that qualifies as
real property in that the home is placed on a permanent foundation, the
home and lot are classified as realty by the State or locality in which
the property is located, and any loans on the property are secured by
mortgages or deeds of trust covering the home and lot.
Solar energy system means any addition, alteration or improvement to
an existing structure for single family or multifamily residential use
which is designed to utilize wind or solar energy to reduce the energy
requirements of that structure from other energy sources, and which
complies with standards prescribed by the Secretary.
Special benefits means benefits other than volume incentives for
dealers which a home manufacturer funds from general corporate revenues
by charging them against corporate overhead and profit without changing
the wholesale (base) price of a manufactured home (or series of homes),
as reflected in the manufacturer's published wholesale (base) price
list, and which are limited to payments by the manufacturer directly to:
(1) A financial institution to buy down or reduce the interest rate,
discount points, or other fees or charges related to a lending agreement
for a dealer's manufactured home inventory or floor plan financing
needs; or
(2) One or more advertising media for all or part of the costs of
advertising the manufacturer's homes, one or more dealer's services, and
related manufactured home materials and products in such media.
State means any State of the United States, Puerto Rico, the
District of Columbia, Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, or the United States Virgin Islands.
Volume incentives means specified dollar benefits to dealers under a
published marketing and promotional plan, payable by a home manufacturer
in cash or in kind in amounts or levels relating to the volume of sales
of manufactured homes to dealers, other than
[[Page 101]]
benefits of a nominal value of less than $10 per home, which:
(1) The manufacturer funds from general corporate revenues by
including them in the prices quoted in the manufacturer's wholesale
(base) price list and charging them against corporate overhead and
profit;
(2) Whether or not available on an optional basis, do not increase
or decrease the wholesale (base) prices for the sale of a specific home
or options or the charges for freight and dealer-paid sales taxes as
detailed in the manufacturer's invoice, for a specific sale to a retail
dealer;
(3) The manufacturer provides without creating a special product
line where the cost of the benefits is the only substantive difference
between the special product line and other essentially similar homes;
(4) Whether or not also of benefit to the ultimate purchaser, do not
increase or decrease the retail price of the home;
(5) Are available to any dealer in a particular market area doing
business with the manufacturer;
(6) The manufacturer provides only for volume sales of manufactured
homes to dealers over a specified period of time;
(7) The plan provides in escalating and different amounts or levels
related to either the number of homes (or modules) sold or the dollar
value of such sales to a dealer, or some combination of such elements,
in a specified period of time;
(8) Are structured so that only some of the dealer participants are
expected to be paid the maximum benefits under the program, with
substantial numbers of participants expected to receive less than the
maximum amount or level of benefits; and
(9) Accrue for volume sales to a dealer over a specified period of
time which is at least quarterly in length, and are paid not more
frequently than quarterly.
Wholesale (base) price list means the price list or lists, as
periodically amended, which are published and distributed by a home
manufacturer to all retail dealers in a given marketing area, quoting
the actual wholesale (base) prices at the factory for specific models or
series of manufactured homes and itemized options offered for sale to
such dealers during a specified period of time. The wholesale (base)
prices may include the manufacturer's projected costs of providing
volume incentives and special benefits related to sales to dealers
during the period. All such wholesale (base) prices shall exclude any
costs of trade association fees or charges, discounts, bonuses, refunds,
rebates, prizes, loan discount points or other financing charges, or
anything else of more than nominal value which will inure to the benefit
of a dealer and/or home purchaser at any date. Each price list and
amendment shall be retained by the manufacturer for a minimum period of
six years from the date of publication so as to be available to HUD and
other Federal agencies upon request.
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 36263, Aug. 31, 1989;
56 FR 52428, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992; 57 FR 45246,
Sept. 30, 1992; 60 FR 13836, Mar. 14, 1995; 61 FR 5206, Feb. 9, 1996; 61
FR 19795, May 2, 1996; 66 FR 56419, Nov. 7, 2001; 77 FR 51468, Aug. 24,
2012]
Sec. 201.3 Applicability of the regulations.
The regulations in this part may be amended by the Secretary at any
time. Such amendment shall not adversely affect the insurance privileges
of a lender on any loan that has been made or for which a loan
application has been approved before the effective date of the
amendment.
[61 FR 19796, May 2, 1996]
Sec. 201.4 Rules of construction.
As used in this part, and unless the context indicates otherwise,
words in the singular include the plural, and words in the plural
include the singular.
[56 FR 52429, Oct. 18, 1991]
Sec. 201.5 Waivers.
Waiver of lender's noncompliance. The Secretary may waive a lender's
noncompliance with any provision of this part, subject to statutory
limitations, when it is determined that enforcement of the regulations
would impose an injustice upon a lender which has
[[Page 102]]
substantially complied with the regulations in good faith and refunded
or credited any excess charge made, and when such waiver does not
involve an increase in the Secretary's obligation beyond that which
would have been involved if the lender was in full compliance with the
regulations.
[56 FR 52429, Oct. 18, 1991, as amended at 61 FR 5206, Feb. 9, 1996]
Sec. 201.6 Disclosure and verification of Social Security and
Employer Identification Numbers.
To be eligible for loan insurance under this part, the borrower must
meet the requirements for the disclosure and verification of Social
Security and Employer Identification Numbers, as provided by part 200,
subpart U, of this chapter.
(Approved by the Office of Management and Budget under control number
2502-0059)
[54 FR 39692, Sept. 27, 1989, as amended at 55 FR 420, Jan. 5, 1990]
Sec. 201.7 Qualified mortgage.
(a) Qualified mortgage. A mortgage insured under section 2 of title
I of the National Housing Act (12 U.S.C. 1703), except for mortgage
transactions exempted under Sec. 203.19(c)(2), is a safe harbor
qualified mortgage that meets the ability to repay requirements in 15
U.S.C. 1639c(a).
(b) Effect of indemnification on qualified mortgage status. An
indemnification demand or resolution of a demand that relates to whether
the loan satisfied relevant eligibility and underwriting requirements at
the time of consummation may result from facts that could allow a change
to qualified mortgage status, but the existence of an indemnification
does not per se remove qualified mortgage status.
[78 FR 75237, Dec. 11, 2013]
Subpart B_Loan and Note Provisions
Sec. 201.10 Loan amounts.
(a) Property improvement loans. (1) The total principal obligation
for a property improvement loan shall not exceed the actual cost of the
project plus any applicable fees and charges authorized at Sec.
201.25(b), up to the following maximum loan amounts:
(i) Single family property improvement loans--$25,000, except that a
loan for a manufactured home that qualifies as real property shall be
limited to $17,500.
(ii) Multifamily property improvement loans--$60,000 or an average
of $12,000 per dwelling unit, whichever is less.
(iii) Nonresidential property improvement loans--$25,000.
(iv) Manufactured home improvement loans--$7,500.
(v) Historic preservation loans--the lesser of $15,000 per dwelling
unit in a residential structure or $45,000 per residential structure.
(vi) Fire safety equipment loans--$50,000.
(2) No property improvement loan shall be approved where the total
outstanding balance of all title I property improvement loans on the
same property exceeds the maximum loan amount prescribed for that type
of loan. If more than one type of property improvement loan is involved,
the total outstanding balance of such loans on a particular property
shall not exceed the maximum loan amount prescribed for the larger type
of loan.
(b) Manufactured home purchase loans. (1) The total principal
obligation for a loan to purchase a new manufactured home shall not
exceed the sum of the following itemized amounts, up to a maximum of
$48,600:
(i) 130 percent of the sum of the wholesale (base) prices of the
home and any itemized options and the charge for freight, as detailed in
the manufacturer's invoice;
(ii) The charge for any sales taxes to be paid by the dealer, as
detailed in the manufacturer's invoice;
(iii) The actual dealer's cost of transportation to the homesite,
set-up and anchoring, including the rental of wheels and axles (if not
included in the freight charges);
(iv) The actual dealer's cost of skirting;
(v) The actual dealer's cost of a garage, carport, patio or other
comparable appurtenance to the manufactured home, as approved by the
Secretary;
[[Page 103]]
(vi) The actual dealer's cost of purchasing and installing a central
air conditioning system or heat pump, if not installed by the
manufacturer; and
(vii) Any applicable charges authorized at Sec. 201.25(b).
(2) The total principal obligation for a loan to purchase an
existing manufactured home shall not exceed the lesser of the following
amounts, up to a maximum of $48,600:
(i) 95 percent of the appraised value of the home as equipped and
furnished (as determined by a HUD-approved appraisal) and 95 percent of
any itemized amounts allowed under paragraphs (b)(1)(iii) through (vii)
of this section, if incurred; or
(ii) 95 percent of the purchase price of the home.
(3) The purchase price of a manufactured home financed with a
manufactured home purchase loan shall include the retail cost to the
borrower of all items set forth in the purchase contract, including any
applicable charges authorized under Sec. 201.25(b).
(c) Manufactured home lot loans. The total principal obligation for
a loan to purchase and, if necessary, develop a lot suitable for a
manufactured home, including on-site water and utility connections,
sanitary facilities, site improvements and landscaping, shall not exceed
95 percent of either the appraised value of the developed lot (as
determined by a HUD-approved appraisal) or the total of the purchase
price and development costs, whichever is less, up to a maximum of
$16,200.
(d) Combination loans. (1) The total principal obligation for a loan
to purchase a new manufactured home and a lot on which to place the home
shall not exceed the sum of the following itemized amounts, up to a
maximum of $64,800:
(i) 130 percent of the sum of the wholesale (base) prices of the
home and any itemized options and the charge for freight, as detailed in
the manufacturer's invoice;
(ii) The charge for any sales taxes to be paid by the dealer, as
detailed in the manufacturer's invoice;
(iii) The actual dealer's cost of transportation to the homesite,
set-up and anchoring, including the rental of wheels and axles (if not
included in the freight charge);
(iv) The actual dealer's cost of purchasing and installing a central
air conditioning system or heat pump, if not installed by the
manufacturer;
(v) The appraised value of the developed manufactured home lot (as
determined by a HUD-approved appraisal, including on-site water and
utility connections, sanitary facilities, site improvements and
landscaping) or the purchase price, whichever is less;
(vi) The actual dealer's cost of appurtenances to the home such as a
permanent foundation, garage, carport or patio; and
(vii) Any applicable charges authorized at Sec. 201.25(b).
(2) The total principal obligation for a loan to purchase an
existing manufactured home and lot shall not exceed the lesser of the
following amounts, up to a maximum of $64,800:
(i) 95 percent of the total appraised value of the home, the lot,
and any appurtenances (as determined by a HUD-approved appraisal), plus
95 percent of any applicable charges authorized at Sec. 201.25(b); or
(ii) 95 percent of the purchase price of the home, the lot, and any
appurtenances.
(3) The purchase price of a manufactured home and a lot financed
with a combination loan shall include the retail cost to the borrower of
all items set forth in the purchase contract or contracts, including any
applicable charges authorized under Sec. 201.25(b).
(e) Manufactured home loan limits in high-cost areas. (1) The
maximum loan amounts otherwise applicable under paragraphs (b), (c) and
(d) of this section may be increased by an amount not to exceed 40
percent where the manufactured home and/or lot is purchased and located
in Alaska, Guam or Hawaii.
(2) The maximum loan amounts otherwise applicable under paragraphs
(c) and (d) of this section may be increased for any geographical area
except Alaska, Guam or Hawaii to the extent deemed necessary by the
Secretary; however, any increased loan amount may not exceed the lesser
of (i) 185 percent of the dollar amounts specified in paragraphs (c) and
(d) of this section;
[[Page 104]]
or (ii) the dollar amounts specified in paragraphs (c) and (d) of this
section, as increased by the same percentage by which 95 percent of the
median 1-family house price in the area (as determined by the Secretary
for purposes of Sec. 203.18) exceeds $67,500.
(f) Loan refinancing. (1) The total principal obligation of a loan
made to refinance a borrower's existing insured property improvement
loan shall not exceed the maximum loan amount permitted under this
section for the particular type of loan, provided that any amount in
excess of the cost to the borrower of prepaying the existing loan shall
be made available only to finance additional property improvements
meeting the requirements of this part.
(2) The total principal obligation of a loan made to refinance a
borrower's existing insured manufactured home loan shall not exceed the
lesser of the cost to the borrower of prepaying the existing loan or the
maximum loan amount permitted under this section for the particular type
of loan.
(3) The total principal obligation of a loan made to refinance a
borrower's existing uninsured manufactured home loan shall not exceed
the cost to the borrower of prepaying the existing loan or the appraised
value of the property (as determined by a HUD-approved appraisal),
whichever is less, up to the maximum loan amount permitted under this
section for the particular type of loan.
(4) When a borrower's existing manufactured home lot is being
refinanced in connection with the purchase of a manufactured home, the
total principal obligation of the combination loan shall be determined
in accordance with paragraph (d)(1) or (d)(2) of this section.
(5) When a borrower's existing manufactured home is being refinanced
in connection with the purchase of a manufactured home lot, the total
principal obligation of the combination loan shall not exceed the lesser
of the following amounts, up to a maximum of $64,800:
(i) The cost to the borrower of prepaying any existing loan on the
home, plus the purchase price of the lot; or
(ii) The appraised value of the home and lot (as determined by a
HUD-approved appraisal).
(g) Minimum loan amount. A lender may not require, as a condition of
providing a loan insured under this part, that the principal amount of
the loan exceed a minimum amount established by the lender.
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33406, Sept. 3, 1987;
53 FR 8880, Mar. 18, 1988; 54 FR 10537, Mar. 14, 1989; 54 FR 36264, Aug.
31, 1989; 56 FR 52429, Oct. 18, 1991; 57 FR 45246, Sept. 30, 1992; 58 FR
41001, July 30, 1993; 59 FR 9084, Feb. 25, 1994; 61 FR 19796, May 2,
1996; 62 FR 20082, Apr. 24, 1997]
Sec. 201.11 Loan maturities.
(a) Property improvement loans. The term of a property improvement
loan shall be not less than six months and not more than 20 years and 32
days from the date of the loan, except that:
(1) The maximum term for a single family property improvement loan
on a manufactured home that qualifies as real property shall not exceed
15 years and 32 days from the date of the loan;
(2) The maximum term for a manufactured home improvement loan shall
not exceed 12 years and 32 days from the date of the loan; and
(3) The maximum term for an historic preservation loan shall not
exceed 15 years and 32 days from the date of the loan.
(b) Manufactured home loans. The term of a manufactured home loan
shall be not less than six months and not more than 20 years and 32 days
from the date of the loan, except that:
(1) The maximum term for a manufactured home lot loan shall not
exceed 15 years and 32 days from the date of the loan; and
(2) The maximum term for a multi-module manufactured home and lot in
combination shall not exceed 25 years and 32 days from the date of the
loan.
(c) Loan refinancing. A loan to be refinanced under this part may be
refinanced for an extended period.
(1) The term of a loan to refinance a borrower's existing insured
property improvement or manufactured home loan shall not exceed the
maximum term permitted under paragraph (a) or (b) of this section for
the particular type of loan. In addition, the total time
[[Page 105]]
period from the date of the original loan to the final maturity of the
refinanced loan shall not exceed:
(i) In the case of a property improvement loan, the maximum term
permitted under paragraph (a) of this section plus 9 years and 11
months; and
(ii) In the case of manufactured home loan, the maximum term
permitted under paragraph (b) of this section plus 4 years and 11
months.
(2) The term of a loan made to refinance a borrower's existing
uninsured manufactured home loan shall not exceed the maximum term
permitted under paragraph (b) of this section for the particular type of
loan.
(3) When a borrower's existing manufactured home lot is being
refinanced in connection with the purchase of a manufactured home, the
term of the combination loan shall not exceed the maximum term permitted
under paragraph (b) of this section for the particular type of loan.
(4) When a borrower's existing manufactured home is being refinanced
in connection with the purchase of a manufactured home lot, the term of
the combination loan shall not exceed the maximum term permitted under
paragraph (b) of this section for the particular type of loan.
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33406, Sept. 3, 1987;
54 FR 10537, Mar. 14, 1989; 56 FR 52430, Oct. 18, 1991; 57 FR 45246,
Sept. 30, 1992; 61 FR 19796, May 2, 1996]
Sec. 201.12 Requirements for the note.
The note shall bear the genuine signature of each borrower and of
any co-maker or co-signer, be valid and enforceable against the borrower
and any co-maker or co-signer, and be complete and regular on its face.
The borrower and any co-maker or co-signer shall execute the note for
the full amount of the loan obligation. Although the note may be
executed by the borrower on an earlier date, the date of the loan shall
be the date that the loan proceeds are disbursed by the lender. Such
date shall be entered on the note when disbursement occurs. The note
shall separately recite the principal amount and any interest at an
agreed annual rate that comprises the borrower's payment obligation. The
lender shall assure that the note and all other documents evidencing the
loan transaction are in compliance with applicable Federal, State, and
local laws. If the note is executed on behalf of a corporation,
partnership, or trust by an authorized representative, it shall create a
binding obligation on such entity.
[61 FR 19797, May 2, 1996]
Sec. 201.13 Interest and discount points.
The interest rate for any loan shall be negotiated and agreed to by
the borrower and the lender, and such interest rate shall be fixed for
the full term of the loan and recited in the note. Interest on the loan
shall accrue from the date of the loan, and shall be calculated on a
simple interest basis. The lender and the borrower may negotiate the
amount of discount points, if any, to be paid by the borrower as part of
the borrower's initial payment. The lender shall not require or allow
any party other than the borrower to pay any discount points or other
financing charges in connection with the loan transaction.
[61 FR 19797, May 2, 1996]
Sec. 201.14 Payments on the loan.
The note normally shall provide for equal installment payments due
weekly, biweekly, semi-monthly or monthly. The note may provide for
either or both of the first and final payments to vary in amount but not
to exceed 1\1/2\ times the regular installment. Where the borrower has
an irregular flow of income, the note may be payable at quarterly or
semi-annual intervals corresponding with the borrower's flow of income.
The first scheduled payment after the borrower's initial payment shall
be due no later than two months from the date of the loan. Multiple
payment schedules may not be used in connection with any loan.
Sec. 201.15 Late charges to borrowers.
(a) Imposition of late charge. The note may provide for imposition
of a late charge unless precluded by State law. The late charge may be
imposed only for installments of principal and interest which are in
arrears for the greater of 15 calendar days or the number of days
required by applicable State law before such a charge may be imposed.
[[Page 106]]
Late charges must be billed to the borrower or reflected in the payment
coupon, and evidence of any late charges that have been paid must be in
the loan file if an insurance claim is made.
(b) Amount of late charge. The late charge shall not exceed the
lesser of five percent of each installment of principal and interest, up
to a maximum of $10 per installment for any property improvement loan
and $15 per installment for any manufactured home loan, or the maximum
amount permitted by applicable State law.
(c) Method of payment. Payment of any late charge cannot be deducted
from the monthly payment for principal and interest, but must be an
additional charge to the borrower.
(d) Daily interest in lieu of late charges. In lieu of late charges,
the note may provide for interest to accrue on installments in arrears
on a daily basis at the interest rate in the note.
[54 FR 36264, Aug. 31, 1989]
Sec. 201.16 Default provision.
The loan note shall contain a provision for acceleration of
maturity, at the option of the holder, upon a default by the borrower.
Sec. 201.17 Prepayment provision.
The note shall contain a provision permitting full or partial
prepayment of the loan without penalty, except that the borrower may be
assessed reasonable and customary charges for recording a release of the
lender's security interest in the property, if permitted by State law.
[61 FR 19797, May 2, 1996]
Sec. 201.18 Modification agreement or repayment plan.
(a) Modification agreement or repayment plan. A written but
unrecorded modification agreement acceptable to the lender and executed
by the borrower may be used in lieu of refinancing of a delinquent or
defaulted loan to reduce or increase the monthly payment, but not to
increase the term or the interest rate, so as to assure that the
delinquent or defaulted loan is brought current before or by the end of
the loan term. A modification agreement may also be used in lieu of
refinancing in connection with a loan that is current to effect a
reduction in the interest rate, and in the monthly payment, for the
remainder of the loan term. When a modification agreement is used, no
insurance reporting is required under Sec. 201.30.
(b) Repayment plan. The lender may elect to negotiate an informal
repayment plan with the borrower to enable a temporary delinquency to be
cured within a short period of time. The lender may document the terms
of the repayment plan by sending a letter to the borrower reciting the
terms of their agreement. When a repayment plan is used, no insurance
reporting is required under Sec. 201.30.
[52 FR 33406, Sept. 3, 1987, as amended at 54 FR 10537, Mar. 14, 1989]
Sec. 201.19 Refinanced and assumed loans.
(a) Conditions on refinancing. (1) An existing insured property
improvement loan or manufactured home loan may be refinanced without an
advance of funds only under the following conditions:
(i) A loan that is in default may not be refinanced for an amount
greater than the original principal balance of the loan;
(ii) The refinancing of a loan for the original borrower shall be
subject to all of the requirements of this part, except Sec. Sec.
201.20(b) and (c), 201.21(b) through (e), 201.22, 201.23, and 201.26;
(iii) If there are co-makers or co-signers on the original note, the
lender shall require the same co-makers or co-signers on the refinanced
note, unless the lender obtains the Secretary's approval to release a
co-maker or co-signer from liability under the note in accordance with
Sec. 201.24(e); and
(iv) A loan that was assumed in accordance with paragraph (c) of
this section may be refinanced, subject to all of the requirements of
this part except Sec. Sec. 201.20(b) and (c), 201.21(b) through (e),
201.22, 201.23, and 201.26, as long as the original borrower and any
intervening assumptors were released from liability for repayment of the
loan at the time the loan was assumed. A lender may not refinance a
previously assumed loan under any other circumstances, unless the
requirements of
[[Page 107]]
Sec. 201.22 are also met and the Secretary has approved a release of
the original borrower and any intervening assumptors in accordance with
Sec. 201.24(e).
(2) An existing insured property improvement loan may be refinanced
with an advance of funds for additional improvements only under the
following conditions:
(i) The existing insured loan must not be in default; and
(ii) The refinancing shall be subject to all of the requirements of
this part applicable to the particular type of loan and to the
additional improvements being financed.
(3) An existing uninsured manufactured home loan may be refinanced
only for the original borrower and only under the following conditions:
(i) The existing uninsured loan must not be in default;
(ii) Refinancing of an existing uninsured manufactured home purchase
loan or combination loan shall be subject to all the requirements of
this part applicable to the particular type of loan except Sec. Sec.
201.23 and 201.26(b)(4);
(iii) Refinancing of an existing uninsured manufactured home lot
loan in connection with the purchase of a manufactured home shall be
subject to all of the requirements of this part; and
(iv) Refinancing of an existing uninsured manufactured home purchase
loan in connection with the purchase of a manufactured home lot shall be
subject to all of the requirements of this part except Sec.
201.26(b)(4).
(b) Note and security requirements for refinanced loans. (1)
Refinancing of a loan requires the execution of a new note and
cancellation of the old note.
(2) Refinancing of a loan that was secured when originated,
regardless of the principal balance of the note at the time of
refinancing, is required to be secured.
(3) Refinancing of a loan that was not secured when originated is
not required to be secured if no additional funds are advanced.
(4) When a refinanced loan is secured, the lender shall obtain and
record a new security instrument in accordance with Sec. 201.24 and
shall release the original lien, unless State law permits a renewal and
extension of the original lien.
(5) Copies of all documents pertaining to the original loan must be
retained in the loan file for the refinanced loan.
(c) Assumed loans. (1) At the option of the lender, an existing
insured property improvement loan or manufactured home loan may be
assumed, subject to the following conditions:
(i) A determination by the lender that the assumptor is eligible
under Sec. 201.20(a) or 201.21(a) and meets the requirements of Sec.
201.22; and
(ii) The execution of an assumption agreement that is satisfactory
to the lender and is signed by the assumptor and the original borrower
or previous assumptor at the time of assumption.
(2) The lender shall not permit an assumption under any
circumstances other than those contained in this section, and shall
include appropriate provisions in any note or security agreement to
enforce this requirement.
(3) Prior to the execution of the assumption agreement, the lender
shall provide the assumptor with a written notice, to be signed by the
assumptor and retained in the loan file, that:
(i) States that the loan being assumed is insured by HUD, and
describes the actions the Secretary may take to recover the debt if the
assumptor defaults on the loan and an insurance claim is paid; and
(ii) Constitutes the assumptor's agreement to pay penalties and
administrative costs imposed by HUD as authorized by 31 U.S.C. 3717.
(4) If the other requirements of paragraph (c) of this section are
met, the lender at its option may release the original borrower and any
intervening assumptors from liability for the repayment of a loan
obligation insured under this part. The prior approval of the Secretary
under Sec. 201.24(e) is not required. The lender shall retain
documentation of the release in the loan file.
[52 FR 33406, Sept. 3, 1987, as amended at 56 FR 52430, Oct. 18, 1991]
[[Page 108]]
Subpart C_Eligibility and Disbursement Requirements
Sec. 201.20 Property improvement loan eligibility.
(a) Borrower eligibility. (1) To be eligible for a property
improvement loan (other than a manufactured home improvement loan), the
borrower shall have at least a one-half interest in one of the
following:
(i) Fee simple title to the real property;
(ii) Lease of the real property for a fixed term which expires not
less than six calendar months after the final maturity of the loan; or
(iii) A properly recorded land installment contract for the purchase
of the real property.
(2) To be eligible for a manufactured home improvement loan, the
borrower shall have at least a one-half interest in the manufactured
home, and the home must be the principal residence of the borrower.
(b) Eligible use of the loan proceeds. (1) The loan proceeds shall
be used only for the purposes disclosed in the loan application. If the
borrower plans to use a dealer or contractor to carry out the
improvement work, the lender shall obtain a copy of a proposal or
contract that describes in detail the work to be performed and the
estimated or actual cost. If the borrower plans to carry out the
improvement work without the services of a dealer or contractor, the
borrower shall be required to furnish a detailed written description of
the work to be performed, the materials to be furnished, and their
estimated cost.
(2) The loan proceeds shall be used only to finance property
improvements that substantially protect or improve the basic livability
or utility of the property. The Secretary will establish a list of items
and activities that may not be financed with the proceeds of any
property improvement loan. If a lender has any doubt as to the
eligibility of any item or activity, it shall request a specific ruling
by the Secretary before making a loan.
(3) The loan proceeds shall only be used to finance property
improvements that are started after loan approval, unless:
(i) The prior approval of the Secretary is obtained for an exception
to this requirement; or
(ii) The property is located in a major disaster area declared by
the President, and the lender determines that emergency action is needed
to repair damage resulting from the disaster.
(c) Special pre-application requirements. (1) Where the proceeds are
to be used for an historic preservation loan, the proposed improvements
shall be reviewed and approved by the State Historic Preservation
Officer (or other person authorized by the Secretary of the Interior to
make such reviews) prior to making application for a loan. The purpose
of the review is to determine that (i) the structure is an historic
residential structure listed on the National Register of Historic Places
or certified by the Secretary of the Interior as conforming with
National Register criteria, and (ii) the proposed improvements comply
with criteria set by the Secretary of the Interior for the preservation
of historic structures.
(2) Where the proceeds are to be used for a fire safety equipment
loan, the proposed improvements shall be reviewed and approved by the
State or local agency having primary jurisdiction over the fire safety
requirements of health care facilities prior to making application for a
loan.
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52430, Oct. 18, 1991;
61 FR 19797, May 2, 1996; 62 FR 65181, Dec. 10, 1997]
Sec. 201.21 Manufactured home loan eligibility.
(a) Borrower eligibility. To be eligible for a manufactured home
loan (whether a manufactured home purchase loan, a manufactured home lot
loan, or a combination loan), the borrower must become the owner of the
particular property which is to be financed with such a loan. Where the
loan involves a manufactured home which is classified as realty,
ownership of the home must be in fee simple. Where the loan involves a
manufactured home lot, ownership of the lot must be in fee simple,
except where the lot consists of a share in a cooperative association
which owns and operates a manufactured home park.
[[Page 109]]
(b) Eligible use of loan proceeds. (1) The loan proceeds may be used
for the purchase or refinancing of a manufactured home, a suitably
developed lot on which to place a manufactured home already owned by the
borrower, or a manufactured home and a suitably developed lot for the
home in combination. The loan proceeds may also be used to refinance an
existing manufactured home already owned by the borrower in connection
with the purchase of a manufactured home lot, or to refinance a lot
already owned by the borrower in connection with the purchase of a
manufactured home. Where the proceeds are for a manufactured home
purchase loan or combination loan, the home must be the borrower's
principal residence. Where the proceeds are for a manufactured home lot
loan, the borrower's manufactured home must be placed on the lot and
occupied as the borrower's principal residence within six months after
the date of the loan.
(2) A manufactured home financed with an insured loan under this
part may be either:
(i) A new home, which is one that is purchased by the borrower
within 18 months after the date of manufacture and has not been
previously occupied; or
(ii) An existing home, which is one that does not meet the criteria
for a new home. In order to be eligible for financing with an insured
loan under this part, the manufactured home, its warranty and the site
on which the home is placed must meet the requirements of paragraphs (c)
through (e) of this section.
(3) The proceeds of a loan to purchase a new manufactured home or a
new manufactured home and lot shall not be used to purchase furniture or
wheels and axles, and the cost of these items shall not be included in
the total principal obligation calculated under Sec. 201.10 (b)(1) or
(d)(1).
(4) The proceeds of a manufactured home purchase loan may be used
for the purchase, construction or installation of a garage, carport,
patio or other comparable appurtenance to the manufactured home, as
stated in the retail purchase contract and as approved by the Secretary.
The proceeds of a combination loan may be used for the purchase,
construction or installation of a permanent foundation, garage, carport,
patio or other comparable appurtenance to the manufactured home.
(5) The Secretary will establish a list of items and activities that
may not be financed with the proceeds of any manufactured home loan. If
a lender has any doubt as to the eligibility of any item or activity, it
shall request a specific ruling by the Secretary before making a loan.
(c) Construction, transportation and installation requirements. (1)
The manufactured home shall be certified by the manufacturer under
applicable criminal and civil penalties for fraud and misrepresentation
to have been constructed in compliance with the National Manufactured
Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-
5426, so as to conform to all applicable Federal construction and safety
standards, as evidenced by a label or tag affixed to the manufactured
home in accordance with 24 CFR 3280.8.
(2) During any period of transportation from the factory to the
borrower's homesite, the structural integrity of the manufactured home
shall be maintained so that it will be livable and durable.
(3) The installation or erection of the manufactured home on the
homesite shall comply with the manufacturer's requirements for
anchoring, support, stability and maintenance. Any permanent foundation
shall be constructed in accordance with the current edition of HUD's
Permanent Foundations Guide for Manufactured Housing (HUD Handbook
4930.3).
(4) For any manufactured home purchase loan or combination loan
involving a sale of the manufactured home by a dealer, the dealer shall
inspect the manufactured home, as installed or erected on the homesite,
for structural damage or other defects resulting from the transportation
and installation of the home. The dealer shall also test the performance
of the home's plumbing, mechanical and electrical systems to assure that
they are fully operational.
(d) Manufacturer's warranty requirements. (1) To induce the
Secretary to insure a title I loan under this part for the purchase of a
new manufactured
[[Page 110]]
home and to induce a borrower to purchase such a home, the home
manufacturer shall furnish the borrower with a written warranty, duly
executed by an authorized representative of the manufacturer on a HUD-
approved form. The warranty shall be provided without cost to the
borrower. The effective date of the warranty shall be the date of
delivery of the manufactured home to the borrower, regardless of when
the warranty was executed by the manufacturer or was delivered to the
borrower.
(2) The warranty shall obligate the home manufacturer to take
appropriate action to correct any nonconformity with the standards
prescribed in paragraph (c)(1) of this section or any defects in
materials or workmanship which become evident within one year after the
date of delivery. This warranty shall be in addition to, and not in
derogation of, all other rights and privileges which the borrower may
have under any other law or instrument during such period or thereafter.
A copy of the warranty shall be retained in the lender's loan file.
(3) Prior to making a loan involving a new manufactured home, the
lender shall investigate whether the home manufacturer is substantially
complying with its warranty obligations on other homes financed by the
lender under any program. If the lender knows, because of consumer
complaints, dealer comments or other information concerning the
manufacturer received in the course of business, that consumers have
complained about warranty performance, the lender shall ascertain
whether such complaints have been resolved. The lender's findings shall
be documented in the loan file. Such documentation may reference
information or materials contained in other files of the lender,
provided that the file contains a written certification signed by a
responsible loan officer under applicable criminal and civil penalties
for fraud and misrepresentation that the lender's findings are supported
by such other information or materials.
(4) If the lender concludes under paragraph (d)(3) of this section
that a manufacturer may not be honoring its warranties, the lender shall
immediately notify the Secretary in writing, with documentation of the
facts and circumstances.
(e) Manufactured homesite standards. (1) To assure the suitability
of the homesite, the manufactured home shall be placed on a leased site
in a manufactured home park or on an individual manufactured home lot or
other site owned or leased by the borrower that meets the following
standards. A manufactured home may be placed on a site within Indian
trust or otherwise restricted lands if the borrower owns or leases the
site, or if the borrower obtains written permission acceptable to the
Secretary from the trustee or the tribal authority who controls the use
of the site.
(2) The manufactured homesite shall be served by adequate public or
community water and sewerage systems, unless appropriate local officials
certify that either or both such systems are unavailable to provide an
adequate level of service to the manufactured homesite. If either or
both such systems are not available, the manufactured homesite shall
comply with local or State minimum lot area requirements for the
provision of onsite water supply and/or sewage disposal.
(3) When the manufactured home is to be placed on a leased site in a
manufactured home park, the lender shall obtain certifications from the
appropriate State or local government officials that the park complies
with minimum standards relating to vehicular access, water supply,
sewage disposal, utility connections, and other aspects of park
development. Where minimum State and local standards for park
development are not established or enforced, the lender shall obtain a
certification from a registered civil engineer that the park meets
minimum standards for park development prescribed by the Secretary.
(4) When the manufactured home is to be placed on an individual
manufactured home lot or other site owned or leased by the borrower (or
on an Indian land site under paragraph (e)(1) of this section), the
lender shall obtain certifications from the appropriate local government
officials that:
(i) The site complies with local zoning ordinances and regulations,
if any;
[[Page 111]]
(ii) Adequate vehicular access from a public right-of-way is
available to the site;
(iii) Adequate water supply and sewage disposal facilities are
available to or on the site; and
(iv) Any other minimum local standards and requirements for site
suitability are met. Where minimum local standards for water supply and
sewage disposal are not established or enforced, the lender shall obtain
a certification from a registered civil engineer that the site meets
minimum standards for water supply and sewage disposal prescribed by the
Secretary.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985; 51 FR 1496, Jan. 14, 1986, as amended at 54
FR 36264, Aug. 31, 1989; 56 FR 52431, Oct. 18, 1991; 61 FR 19797, May 2,
1996]
Sec. 201.22 Credit requirements for borrowers.
(a) Credit application and review. (1) Before making a loan insured
under this part, the lender shall exercise prudence and diligence to
determine whether the borrower and any co-maker or co-signer is solvent
and an acceptable credit risk, with a reasonable ability to make
payments on the loan obligation. All documentation supporting this
determination and relating to the lender's review of the credit of the
borrower and of any co-maker or co-signer shall be retained in the loan
file.
(2) The lender shall obtain a separate dated credit application on a
HUD-approved form, executed by the borrower and any co-maker or co-
signer under applicable criminal and civil penalties for fraud and
misrepresentation, for each loan made. The lender shall verify that the
borrower's Social Security Number is valid, through such documentation
as may be prescribed by the Secretary.
(3) The lender shall conduct a credit investigation based on the
credit application, and shall obtain written verification of or
otherwise document the current employment and current income of the
borrower and any co-maker or co-signer. If the borrower or any co-maker
or co-signer has changed employment within the past two years, the
lender shall obtain written verification of or otherwise document the
person's prior employment and prior income during the two-year period.
If the borrower or any co-maker or co-signer was self-employed during
any period of the previous two years, the lender shall obtain
documentation of the person's income during such period of self-
employment.
(4) The lender shall also determine the total amount of the
borrower's existing and proposed title I loans to ensure that the loan
amounts in Sec. 201.10 are not exceeded.
(5) As part of its credit investigation, the lender shall obtain a
consumer credit report stating the credit accounts and payment history
of the borrower and of any co-maker or co-signer. Subject to state or
local law, the lender shall check with the inquirers concerning all
credit inquiries reported within the previous 90 days to determine
whether the borrower or the co-maker or co-signer has incurred debts not
listed on the credit application. If a consumer credit report is not
available or is incomplete, the loan file shall contain other
documentation of the lender's diligent investigation of the credit of
the borrower or of the co-maker or co-signer.
(6) If the consumer credit report does not contain the necessary
information, the lender shall obtain written verification that the
borrower is not over 30 days delinquent on any senior mortgages or deeds
of trust on the property being improved with a property improvement
loan.
(7) The lender shall verify, in such manner as the Secretary may
prescribe, whether the borrower is in default or a claim has been paid
in connection with any loan obligation owed to or insured or guaranteed
by the Federal Government.
(8) For any loan with a total principal balance in excess of $5,000,
the lender shall obtain written verification of the source of all funds
of the borrower required for the borrower's initial payment, if such
payment will be in excess of five percent of the loan.
(9) Before making a final determination on the creditworthiness of
the borrower, the lender shall conduct a face-to-face or telephone
interview with the
[[Page 112]]
borrower and any co-maker or co-signer to resolve any discrepancies in
the information on the credit application and to assure that the
information is accurate and complete.
(10) After a thorough credit investigation and in the absence of
information to the contrary, the lender may rely upon all statements of
fact made by the borrower or any co-maker or co-signer in a credit
application.
(b) Income requirements. (1) For any Title I loan, the credit
application and review must establish that the borrower's income will be
adequate to meet the periodic payments required by the loan, as well as
the borrower's other housing expenses and recurring charges. For a
borrower's income to be considered adequate, housing expenses and total
fixed expenses generally may not exceed maximum percentages of effective
gross income established by the Secretary. If these expense-to-income
ratios are exceeded, the borrower's income may be considered adequate
only if the lender determines and documents in the loan file the
existence of compensating factors concerning the borrower's
creditworthiness that support approval of the loan.
(2) In determining whether the borrower's income is adequate, the
following definitions are applicable:
(i) Effective gross income is defined as continuing income from all
sources that is reasonably expected to be available during the first two
years of the loan obligation, without any deduction for income taxes or
other items.
(ii) Total fixed expenses is the sum of the borrower's housing
expenses and other recurring charges.
(iii) Housing expenses includes all payments for principal,
interest, loan or mortgage insurance charges, ground rent or leasehold
charges, real estate taxes, hazard insurance, and homeowners association
or condominium fees, but does not include utility costs.
(iv) Other recurring charges include all payments on automobile
loans, furniture loans, student loans, installment loans, revolving
charge accounts, alimony or child support, and any other debt for which
the obligation is expected to continue for six months or more.
(c) Evidence of delinquency, default or misrepresentation. Except
with the prior approval of the Secretary the lender shall not approve a
loan if the lender has knowledge of any of the following circumstances:
(1) The borrower is past due more than 30 days as to the payment of
principal or interest under the original terms of a loan obligation owed
to or insured or guaranteed by the Federal Government, unless the debt
has since been discharged or satisfied; or
(2) The borrower has previously made material misstatements of fact
on applications for loans or other assistance.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
54 FR 10537, Mar. 14, 1989; 56 FR 52431, Oct. 18, 1991; 57 FR 6480, Feb.
25, 1992; 61 FR 19797, May 2, 1996]
Sec. 201.23 Borrower's initial payment.
(a) General requirement. The borrower shall be responsible for the
payment in cash of any costs that will not be paid, or are not eligible
to be paid, from the proceeds of the loan. Such costs payable by the
borrower may include any required downpayment, any discount points to be
paid by the borrower to the lender, any other fees and charges that may
not be financed, and any other costs in excess of the loan amount. No
part of such costs payable by the borrower may be loaned, advanced, or
paid to or for the benefit of the borrower by the dealer, the
manufacturer, or any other party to the loan transaction. If the
borrower obtains all or any part of such costs through a gift or a loan
from some other source, the borrower must disclose the source of such
gift or loan on the credit application. Any such loan must be secured by
property or collateral owned by the borrower independently of the
property securing repayment of the Title I loan, unless the prior
approval of the Secretary is obtained for an exception to this
requirement. The lender shall consider any such loan obligation in
performing the credit investigation. Documentation of any initial
payment shall be retained by the lender in the loan file.
(b) Manufactured home purchase loans. In the case of a manufactured
home
[[Page 113]]
purchase loan, the borrower shall make a minimum cash downpayment of at
least five percent of the purchase price of the home. The borrower's
equity in an existing manufactured home and any movable appurtenances
may be traded-in on a new home and accepted in lieu of full or partial
cash downpayment, but without any cash payment to the borrower. The
existing manufactured home being traded-in shall be clearly identified,
and the borrower's equity in the home shall be based upon the retail
value of the home and appurtenances (as determined by a HUD-approved
appraisal), less the total of all loans outstanding on the home and
appurtenances.
(c) Manufactured home lot loans. In the case of a manufactured home
lot loan, the borrower shall make a minimum cash downpayment of at least
five percent of the total of the purchase price and development costs
for the lot.
(d) Combination loans. In the case of a combination loan, the
borrower shall make a minimum cash downpayment of at least five percent
of the purchase price of the manufactured home and lot. If the borrower
already owns a manufactured home or a lot on which a manufactured home
is to be placed, the borrower's equity in such home or lot may be
accepted in lieu of full or partial cash downpayment on a combination
loan, but without any cash payment to the borrower.
[61 FR 19798, May 2, 1996]
Sec. 201.24 Security requirements.
(a) Property improvement loans--(1) Property improvement loans in
excess of $7,500. (i) Any property improvement loan in excess of $7,500
shall be secured by a recorded lien on the improved property. The lien
shall be evidenced by a mortgage or deed of trust, executed by the
borrower and all other owners in fee simple.
(ii) If the borrower is a lessee, the borrower and all owners in fee
simple must execute the mortgage or deed of trust. If the borrower is
purchasing the property under a land installment contract, the borrower,
all owners in fee simple, and all intervening contract sellers must
execute the mortgage or deed of trust.
(iii) The lien need not be a first lien on the property; however,
the lien securing the Title I loan must hold no less than the second
lien position. This requirement shall not apply where the first and
second mortgages were made at the same time or the second mortgage was
provided by a state or local government agency in conjunction with a
downpayment assistance program.
(2) Property improvement loans of $7,500 or less. Any property
improvement loan for $7,500 or less (other than a manufactured home
improvement loan) shall be similarly secured if, including any such
additional loans, the total amount of all Title I loans on the improved
property is more than $7,500.
(3) Manufactured home improvement loans. Manufactured home
improvement loans need not be secured.
(b) Manufactured home loans. Any manufactured home loan shall be
secured by a recorded lien on the home (or lot or home and lot, as
appropriate), its furnishings, equipment, accessories, and
appurtenances. The lien shall be a first lien, superior to any other
lien on that property, and shall be evidenced by a properly recorded
financing statement, a properly recorded security instrument executed by
the borrower and any other owner of the property, or another acceptable
instrument, such as a certificate of title issued by the State and
containing a recitation of the lender's lien interest in the
manufactured home.
(c) Recording and perfection of security. The lender shall assure
that the legal description of the property as recited in the security
instrument is accurate, and that the security instrument creates a valid
and enforceable lien on the property in the jurisdiction in which the
property is located. The security instrument shall be recorded and
perfected in the manner specified by applicable State law in the State
where the property is located.
(d) Substitution or subordination of security. The Secretary may
approve substitution or subordination of security where the security
value will not be impaired or reduced.
(e) Release of liability or lien. The lender shall not release the
borrower or any
[[Page 114]]
co-maker or co-signer from any liability under a note or from any lien
securing a loan insured under this part without the prior approval of
the Secretary.
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
54 FR 36265, Aug. 31, 1989; 61 FR 19798, May 2, 1996; 66 FR 56419, Nov.
7, 2001]
Sec. 201.25 Charges to borrower to obtain loan.
(a) Fees and charges that may be financed in a property improvement
loan. The Secretary will establish a list of fees and charges that may
be included in a property improvement loan. Such fees and charges shall
have been incurred in connection with the origination of the loan, and
their inclusion shall not increase the total principal obligation beyond
the maximum loan amounts in Sec. 201.10.
(b) Fees and charges that may be financed in a manufactured home
loan. The Secretary will establish a list of fees and charges that may
be included in a manufactured home loan. Such fees and charges shall
have been incurred in connection with the origination of the loan, and
their inclusion shall not increase the total principal obligation beyond
the maximum loan amounts in Sec. 201.10.
(c) Fees and charges that may not be financed. The Secretary will
establish a list of fees and charges incurred by the lender that may be
collected from the borrower in the initial payment, but may not be
included in the loan amount or otherwise financed or advanced by the
dealer, the manufacturer, or any other party to the loan transaction.
(d) Fees and charges that may not be paid. Neither the lender nor
the borrower may pay a referral fee to any dealer, home manufacturer,
contractor, supplier, real estate broker, loan broker, or any other
party in connection with the origination of a loan insured under this
part.
[61 FR 19798, May 2, 1996]
Sec. 201.26 Conditions for loan disbursement.
(a) Property improvement loans. The lender shall comply with the
following applicable requirements before disbursing the proceeds of a
property improvement loan.
(1) The lender shall ensure that the following conditions are met:
(i) The borrower is eligible for a property improvement loan in
accordance with Sec. 201.20(a) (1) or (2); and
(ii) The interest of the borrower in the property is valid, through
such title or other evidence as are generally acceptable to prudent
lending institutions and leading attorneys in the community in which the
property is situated.
(2) The proposed use of the loan proceeds shall be documented in
accordance with the requirements of Sec. 201.20(b)(1).
(3) Where the proceeds are to be used for an historic preservation
loan, the lender shall ensure that the proposed improvements have been
approved by the State Historic Preservation Officer in accordance with
Sec. 201.20(c).
(4) Where the proceeds are to be used for a fire safety equipment
loan, the lender shall ensure that the proposed improvements have been
approved by the State or local agency having jurisdiction over the fire
safety requirements of health care facilities in accordance with Sec.
201.20(c).
(5) In the case of a dealer loan, the lender shall obtain a
completion certificate, on a HUD-approved form and signed by the
borrower and the dealer under applicable criminal and civil penalties
for fraud and misrepresentation, certifying that
(i) the improvements are eligible and have been completed in general
accordance with the contract or cost estimate furnished to the lender,
and
(ii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, sales commission, or
anything of more than nominal value from the dealer as an inducement for
the consummation of the transaction.
(6) In the case of a dealer loan made on or after December 7, 2001,
the lender may disburse the loan proceeds solely to the borrower, or
jointly to the borrower and the dealer or other parties to the
transaction.
[[Page 115]]
(7) In the case of a dealer loan, the lender must conduct a
telephone interview with the borrower before the disbursement of the
loan proceeds. The lender, at minimum, must obtain an oral affirmation
from the borrower to release funds to the dealer. The lender shall
document the borrower's oral affirmation.
(8) For any property improvement loan, the lender shall provide the
borrower with a written notice, to be signed by the borrower and
retained in the loan file, that:
(i) States that the loan will be insured by HUD and describes the
actions the Secretary may take to recover the debt if the borrower
defaults on the loan and an insurance claim is paid;
(ii) Constitutes the borrower's agreement to pay penalties and
administrative costs imposed by HUD as authorized by 31 U.S.C. 3717; and
(iii) In the case of a direct loan, constitutes an acknowledgement
of the borrower's postdisbursement obligation to furnish a completion
certificate and to permit an on-site inspection by the lender or its
agent in accordance with Sec. Sec. 201.40(b) and (c).
(9) The lender shall assure that the loan file is complete and
contains the note, security instrument, and copies of all other
documents relating to the property improvement loan transaction.
(b) Manufactured home loans. The lender shall comply with the
following applicable requirements before disbursing the proceeds of a
manufactured home loan.
(1) The lender shall ensure that the borrower is eligible for a
manufactured home loan in accordance with Sec. 201.21(a).
(2) The lender shall assure that the loan file is complete, and
shall obtain the following documents for retention in the loan file:
(i) A signed copy of the purchase contract between the borrower and
the dealer or seller;
(ii) A copy of the manufacturer's invoice, where the loan involves
the purchase of a new manufactured home;
(iii) Copies of itemized statements of other costs, fees and
charges, whether paid by the borrower or financed with the loan
proceeds; and
(iv) The note and security instrument and copies of all other
documents relating to the loan transaction.
(v) The note, security instrument and copies of all other documents
relating to the loan transaction.
(3) The lender shall obtain certifications from the borrower under
applicable criminal and civil penalties for fraud and misrepresentation
that:
(i) The manufactured home being financed with a manufactured home
purchase loan or combination loan will be occupied as the borrower's
principal residence;
(ii) Where the proceeds are for a manufactured home lot loan, the
borrower's manufactured home will be placed on the lot and will be
occupied as the borrower's principal residence within six months after
the date of the loan;
(iii) The initial payment required under Sec. 201.23 was made, and
no part of the initial payment was borrowed from or otherwise advanced
or paid to or for the benefit of the borrower by the dealer or seller,
the manufacturer, or any other party to the transaction, and if any part
of the initial payment was obtained through a gift or loan, the source
of the gift or loan and the security for any such loan was disclosed on
the credit application;
(iv) While any portion of the loan obligation on a manufactured home
purchase loan is unpaid, the manufactured home may be moved only to a
new site in compliance with Sec. 201.21 (c) and (e), and only with the
lender's prior approval;
(v) While any portion of the loan obligation on a combination loan
is unpaid, the manufactured home will not be moved to a new site;
(vi) The borrower has paid the remaining unpaid balance on any other
manufactured home loan secured by a different property, unless the prior
approval of the Secretary is obtained for an exception to this
requirement; and
(vii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, or anything of more than
nominal value from the manufacturer or dealer as an inducement for the
consummation of the transaction.
[[Page 116]]
(4) For any manufactured home purchase loan or combination loan
involving the sale of a manufactured home by a dealer, the lender shall
obtain a placement certificate, on a HUD-approved form and signed by the
dealer under applicable criminal and civil penalties for fraud and
misrepresentation, certifying that:
(i) The manufactured homesite meets the requirements of Sec.
201.21(e);
(ii) The structural integrity of the manufactured home was
maintained during the process of transporting the home to the borrower's
homesite;
(iii) The manufactured home has been installed or erected on the
homesite in accordance with the manufacturer's requirements for
anchoring, support, stability and maintenance;
(iv) If the manufactured home is placed on a permanent foundation,
such foundation has been constructed in accordance with the requirements
of Sec. 201.21(c)(3);
(v) The dealer has performed the inspection and tests required under
Sec. 201.21(c)(4) and has determined that the manufactured home has
sustained no structural damage or other defects resulting from its
transportation or installation, and all plumbing, mechanical and
electrical systems are fully operational;
(vi) Any initial payment required under Sec. 201.23 was made by the
borrower, and no part of the initial payment was loaned, advanced, or
paid to or for the benefit of the borrower by the manufacturer, dealer,
or any other party to the loan transaction; and
(vii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, or anything of more than
nominal value from the manufacturer or dealer as an inducement for the
consummation of the transaction.
(5) The lender shall obtain and file the certifications by local
officials or a civil engineer which are required under Sec. 201.21(e)
to document the suitability of the manufactured homesite.
(6) For any direct manufactured home purchase loan or combination
loan involving the relocation of the manufactured home to a new homesite
owned or leased by the borrower, the lender (or an agent of the lender
that is not a manufactured home dealer) shall conduct a site-of-
placement inspection to verify that:
(i) States that the loan will be insured by HUD and describes the
actions the Secretary may take to recover the debt if the borrower
defaults on the loan and an insurance claim is paid;
(ii) The manufactured home and any itemized options and
appurtenances included in the purchase price of the home or to be
financed with the loan proceeds have been delivered and installed; and
(iii) The manufactured home has been properly erected or installed
on the homesite without any apparent structural damage or other serious
defects resulting from its transportation or installation, and all
plumbing, mechanical and electrical systems are fully operational.
(7) The lender shall provide the borrower with a written notice, to
be signed by the borrower and retained in the loan file, that:
(i) States that the loan will be insured by the HUD and describes
the actions the Secretary may take to recover the debt if the borrower
defaults on the loan and an insurance claim is paid; and
(ii) Constitutes the borrower's agreement to pay penalties and
administrative costs imposed by HUD as authorized by 31 U.S.C. 3717.
(8) Where a manufactured home purchase loan involves a manufactured
home which is to be located on Indian trust or otherwise restricted
lands, the lender shall obtain written permission from the trustee or
the tribal authority who controls the site for the lender to repossess
the home in the event of default by the borrower and acceleration of the
loan.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
54 FR 36265, Aug. 31, 1989; 56 FR 52432, Oct. 18, 1991, 57 FR 6480, Feb.
25, 1992; 61 FR 19798, May 2, 1996; 62 FR 65181, Dec. 10, 1997; 66 FR
56420, Nov. 7, 2001]
Sec. 201.27 Requirements for dealer loans.
(a) Dealer approval and supervision. (1) The lender shall approve
only those
[[Page 117]]
dealers which, on the basis of experience and information, the lender
considers to be reliable, financially responsible, and qualified to
satisfactorily perform their contractual obligations to borrowers and to
comply with the requirements of this part. However, in no case shall the
lender approve a dealer that is unable to meet the following minimum
qualifications:
(i) Net worth. All property improvement and manufactured home
dealers shall have and maintain a net worth of not less than $32,000 and
$63,000, respectively. The required net worth must be maintained in
assets acceptable to the Secretary.
(ii) Business experience. All property improvement loan and
manufactured home dealers must have demonstrated business experience as
a property improvement contractor or supplier, or in manufactured home
retail sales, as applicable.
(2) The lender's approval of a dealer shall be documented on a HUD-
approved form, signed and dated by the dealer and the lender under
applicable criminal and civil penalties for fraud and misrepresentation,
and containing information supplied by the dealer on its trade name,
places of business, type of ownership, type of business, and names and
employment history of the owners, principals, officers, and
salespersons. The dealer shall furnish a current financial statement
prepared by someone who is independent of the dealer and is qualified by
education and experience to prepare such statements, together with such
other documentation as the lender deems necessary to support its
approval of the dealer. The lender shall obtain a commercial credit
report on the dealer and consumer credit reports on the owners,
principals, and officers of the dealership.
(3) The lender shall require each dealer to apply annually for
reapproval. The dealer shall furnish the same documentation as is
required under paragraph (a)(2) of this section to support its
application for reapproval. In no case shall the lender reapprove a
dealer that is unable to meet the minimum net worth requirements in
paragraph (a)(1) of this section.
(4) The lender shall supervise and monitor each approved dealer's
activities with respect to loans insured under this part. The lender
shall visit each approved dealer's places of business at least once in
every six months to review its Title I performance and compliance. The
lender shall maintain a file on each approved dealer which contains the
executed dealer approval form and supporting documentation required
under paragraph (a)(2) of this section, together with information on the
lender's experience with Title I loans involving the dealer. Each dealer
file shall contain information about borrower defaults on Title I loans
over time, records of completion or site-of-placement inspections
conducted by the lender or its agent, copies of letters concerning
borrower complaints and their resolution, and records of the lender's
periodic review visits to the dealer's premises. The lender may also
require that the dealer furnish records on individual loan transactions,
if needed to enable the lender to review the dealer's Title I
performance and compliance.
(5) If a dealer does not satisfactorily perform its contractual
obligations to borrowers, does not comply with Title I program
requirements, or is unresponsive to the lender's supervision and
monitoring requirements, the lender shall terminate the dealer's
approval and immediately notify the Secretary with written documentation
of the facts. A dealer whose approval is terminated under these
circumstances shall not be reapproved without prior written approval
from the Secretary. The lender may in its discretion terminate the
approval of a dealer for other reasons at any time.
(6) The lender shall require each approved (or reapproved) dealer to
provide written notification of any material change in its trade
name(s), place(s) of business, type of ownership, type of business, or
principal individuals who control or manage the business. The dealer
shall furnish such notification to the lender within 30 days after the
date of any material change.
(7) As a condition of manufactured home dealer approval (or
reapproval), the lender may require a manufactured home dealer to
execute a written
[[Page 118]]
agreement that, if requested by the lender, the dealer will resell any
manufactured home repossessed by the lender under a title I insured
manufactured home purchase loan approved by the lender as a dealer loan
involving that dealer.
(b) Provision for full or partial recourse. In the case of a dealer-
originated manufactured home purchase loan or combination loan, the
lender and the dealer may agree to a provision in the loan documents for
partial or full recourse against the dealer, to reduce or eliminate the
lender's loss in the event of foreclosure or repossession. Such recourse
provision shall specify that, for a default occurring within a period of
not more than three years from the date of the loan, the dealer shall
reimburse the lender for a fixed percentage of the unpaid amount of the
loan obligation, after deducting the proceeds from the sale of the
property and any amounts received or retained by the lender after the
date of default. However, the extent of the dealer's liability may not
exceed 100 percent of the unpaid amount of the loan obligation prior to
such deductions. When a claim is filed, the lender shall notify the
Secretary if the loan was subject to a recourse agreement and whether
the recourse agreement has been honored. If without the lender's
approval a dealer has failed to honor its recourse obligation, the
lender shall notify the Secretary and shall assign the recourse
obligation to the Secretary in filing an insurance claim.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52433, Oct. 18, 1991;
61 FR 19799, May 2, 1996; 66 FR 56420, Nov. 7, 2001]
Sec. 201.28 Flood and hazard insurance, and Coastal Barriers properties.
(a) Flood insurance. No property improvement loan or manufactured
home loan shall be eligible for insurance under this part if the
property securing repayment of the loan is located in a special flood
hazard area identified by the Federal Emergency Management Agency
(FEMA), unless flood insurance on the property is obtained by the
borrower in compliance with section 102 of the Flood Disaster Protection
Act of 1973 (42 U.S.C. 4012a). Such insurance shall be obtained at any
time during the term of the loan that the lender determines that the
secured property is located in a special flood hazard area identified by
FEMA, and shall be maintained by the borrower for the remaining term of
the loan, or until the lender determines that the property is no longer
in a special flood hazard area, or until the property is repossessed or
foreclosed upon by the lender. The amount of such insurance shall be at
least equal to the unpaid balance of the Title I loan, and the lender
shall be named as the loss payee for flood insurance benefits.
(b) Hazard insurance. No manufactured home purchase loan or
combination loan shall be eligible for insurance under this part unless
hazard insurance on the manufactured home is obtained by the borrower
and the lender is named as a loss payee of insurance benefits. Such
insurance shall be maintained by the borrower for the full term of the
loan or until the property is repossessed or foreclosed by the lender,
and in an amount at least equal to the unpaid balance of the loan,
except that the amount of insurance coverage shall be not less that the
actual cash value of the home where State law precludes a higher amount.
If the borrower fails to maintain such insurance, the lender shall
obtain it at the borrower's expense. If the home is not insured against
hazards and sustains damage which would normally be covered by such
insurance during the borrower's ownership, the appraised value of the
home for claim purposes will be adjusted in accordance with Sec.
201.51(b)(3). Upon acquiring title to the property through repossession
or foreclosure, the lender shall maintain hazard insurance upon the
property in the amount prescribed above until its disposition and sale.
(c) Coastal barriers properties. No title I insurance shall be made
available under this part for any property improvement loan or
manufactured home loan except pursuant to a loan application approved
before October 18, 1982, with respect to any property within the Coastal
Barriers Resources System
[[Page 119]]
established by the Coastal Barriers Resources Act (16 U.S.C. 3501).
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
53 FR 10537, Mar. 14, 1989; 54 FR 36265, Aug. 31, 1989; 61 FR 19799, May
2, 1996]
Sec. 201.29 Ineligible participants.
No loan may be insured under this part where the lender has been
advised in writing by HUD or otherwise knows that any participant in the
transaction as a dealer, home manufacturer, contractor, supplier, or
broker, or as its agent or representative, has been suspended or
debarred, or has otherwise been determined by HUD to be ineligible to
participate in the title I program.
Subpart D_Insurance of Loans
Sec. 201.30 Reporting of loans for insurance.
(a) Date of reports. The lender shall transmit a loan report on each
loan reported for insurance within 31 days from the date of the loan's
origination or purchase from a dealer or another lender. The loan report
must be submitted on the form prescribed by the Secretary, and must
contain the data prescribed by HUD. Any loan refinanced under this part
shall similarly be reported on the prescribed form within 31 days from
the date of refinancing. When a loan insured under this part is
transferred to another lender without recourse, guaranty, guarantee, or
repurchase agreement, a report on the prescribed form shall be
transmitted to the Secretary within 31 days from the date of the
transfer. No transfer of loan report is required when a loan insured
under this part is transferred with recourse or under a guaranty,
guarantee, or repurchase agreement.
(b) Late reports. The Secretary may accept a late report on a loan
where the lender certifies that the obligation is not in default.
(c) Electronic loan reporting. With the prior approval of the
Secretary, the lender may use electronic transmission to report loans
for insurance in accordance with paragraph (a) of this section.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52434, Oct. 18, 1991;
66 FR 56420, Nov. 7, 2001]
Sec. 201.31 Insurance charge.
(a) Insurance charge. For each eligible property improvement loan
and manufactured home loan reported and acknowledged for insurance, the
lender shall pay to the Secretary an insurance charge equal to 1.00
percent of the loan amount, multiplied by the number of years of the
loan term. The insurance charge shall be paid in the manner prescribed
in paragraph (b) of this section; however, no charge shall be made for a
period of 14 days or less, and a charge for a full month shall be made
for a period of more than 14 days. There shall be no abatement or refund
of an insurance charge except as provided in paragraph (e) of this
section.
(b) Payment of insurance charge. (1) For any loan having a maturity
of 25 months or less, payment of the entire insurance charge prescribed
in paragraph (a) of this section is due on the 25th calendar day after
the date the Secretary acknowledges the loan report.
(2)(i) For any loan having a maturity in excess of 25 months,
payment of the insurance charge shall be made in annual installments,
with the first installment due on the 25th calendar day after the date
the Secretary acknowledges the loan report, and the second and
successive installments due on the 25th calendar day after the date of
billing by the Secretary.
(ii) For any loan having a maturity in excess of 25 months, payment
shall be made in annual installments of 1.00 percent of the loan amount
until the insurance charge is paid.
(3) All insurance charges are considered earned when paid.
(4) The Secretary may require that loan insurance charges be
remitted electronically. Instructions implementing this requirement
shall be communicated to all affected lenders.
(c) Penalty charge and interest. Insurance charges not received from
the lender by the due date specified in
[[Page 120]]
paragraph (b) of this section shall be assessed a penalty charge of four
percent of the amount of the payment. Insurance charges received from
the lender more than 30 days after the due date specified in paragraph
(b) of this section shall also be assessed daily interest at the current
United States Treasury value of funds rate, as published periodically in
the Federal Register. However, no penalty charge or daily interest shall
be assessed if the Secretary fails to acknowledge receipt of the loan
report or fails to issue a proper billing to the lender for the
insurance charges.
(d) Adjustment on notes transferred. Where there is a transfer of
loan obligations between lenders and the insurance charges on such
obligations have already been paid, any adjustment of such charges shall
be made by the lenders involved. Any unpaid installments of the
insurance charge shall be paid by the purchasing lender.
(e) Refund or abatement of insurance charges. A lender shall be
entitled to a refund or abatement of insurance charges only in the
following instances:
(1) Where the loan obligation has been refinanced, the unearned
portion of the charge on the original obligation shall be credited to
the charge on the refinanced loan.
(2) Where the loan obligation is prepaid in full or an insurance
claim is filed, charges falling due after such prepayment or claim shall
be abated.
(3) When a loan (or portion thereof) is found to be ineligible for
insurance, charges paid on the ineligible portion shall be refunded,
except where the Secretary determines that there was fraud or
misrepresentation by the lender in the loan transaction. Such refund
shall be made only if a claim is denied by the Secretary or the
ineligibility is reported by the lender promptly upon discovery and
confirmed by the Secretary. In no event shall a charge be refunded on
the basis of loan ineligibility where the application for refund is made
after the loan is paid in full. If a loan or claim has been denied and
is subsequently resubmitted, the refunded amount of the insurance charge
plus any accrued insurance charge shall be repaid.
(f) Lender passing insurance charge on to borrower. The insurance
charge may be passed on to the borrower, provided that such charge is
fully disclosed to the borrower.
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 36265, Aug. 31, 1989;
60 FR 13855, Mar. 14, 1995; 66 FR 56420, Nov. 7, 2001]
Sec. 201.32 Insurance coverage reserve account.
(a) Establishment. The Secretary shall establish an insurance
coverage reserve account for each lender. The amount of insurance
coverage in each reserve account shall equal 10 percent of the amount
disbursed, advanced, or expended by the lender in originating or
purchasing eligible loans registered for insurance under this part, less
the amount of all insurance claims approved for payment in connection
with losses on such loans.
(b) Transfer of insured loans. The lender shall not sell, assign or
otherwise transfer any insured loan or loan reported for insurance to a
transferee lender not approved to originate and purchase title I loans
under a valid title I contract of insurance. Nothing contained herein
shall be construed to prevent the pledging of such a loan as collateral
security under a trust agreement, or otherwise, in connection with a
bona fide loan transaction.
(c) Transfer of insurance coverage. Not more than $5,000 in
insurance coverage shall be transferred to or from a lender's reserve
account during any fiscal year (October 1 through September 30) without
the prior approval of the Secretary. Except in cases involving the sale,
assignment or transfer of loans sold with recourse or under a guaranty,
guarantee or repurchase agreement, the Secretary shall transfer
insurance coverage to or from a lender's reserve account to accompany
the loan transfers reported by lenders under Sec. 201.30.
(1) In all cases involving the sale, assignment or transfer of loans
sold without recourse, guaranty, guarantee, or repurchase agreement, the
Secretary shall transfer insurance coverage to the reserve account
established for the transferee lender in an amount equal to 10 percent
of the actual purchase
[[Page 121]]
price or the net unpaid principal balance, whichever is lesser, but not
to exceed the amount of insurance coverage in the transferor lender's
reserve account prior to the transfer. Insurance coverage shall be added
to the existing amount of insurance coverage in the transferee lender's
reserve account. The Secretary may transfer insurance coverage with
earmarking when a determination is made that it is in the Secretary's
interest to do so.
(2) In cases involving the transfer of loans sold with recourse or
under a guaranty, guarantee or repurchase agreement, no insurance
coverage will be transferred and no reports will be required.
(3) An existing insured property improvement loan or manufactured
home loan may not be refinanced by a lender different from the
originating or purchasing lender of record, unless the loan has been
sold, assigned, or transferred to the new lender under paragraph (c) of
this section and the Secretary has transferred insurance coverage for
the loan under the applicable requirements of this paragraph.
(d) Recovery shall not affect insurance coverage reserve account.
Amounts which may be recovered by the Secretary after payment of an
insurance claim shall not be added to the amount of insurance coverage
remaining in a lender's reserve account.
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33407, Sept. 3, 1987;
54 FR 10537, Mar. 14, 1989; 56 FR 52434, Oct. 18, 1991; 61 FR 19799, May
2, 1996]
Subpart E_Loan Administration
Sec. 201.40 Post-disbursement loan requirements.
(a) Discovery of misstatements of fact. If, after a loan has been
made, the lender discovers any material misstatement of fact or that the
loan proceeds have been misused by the borrower, dealer or any other
party, it shall promptly report this to the Secretary. In such case, the
insurance of the loan shall not be affected unless such material
misstatement of fact or misuse of loan proceeds was caused by or was
knowingly sanctioned by the lender or its employees (see Sec.
201.31(e)(3)), provided that the validity of any lien on the property
has not been impaired.
(b) Requirements on property improvement loans. (1) After receiving
the proceeds of a direct property improvement loan, and after the work
is completed to the borrower's satisfaction, the borrower shall submit a
completion certificate to the lender, on a HUD-approved form and signed
by the borrower under applicable criminal and civil penalties for fraud
and misrepresentation, certifying that:
(i) The improvements have been completed,
(ii) the amount borrowed has been spent on improvements eligible
under Sec. 201.20(b) and in accordance with the contract or cost
estimate furnished to the lender prior to disbursement of the loan
proceeds, and
(iii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, sales commission, or
anything of more than nominal value from any contractor or supplier as
an inducement for the consummation of the loan transaction.
(2) The borrower shall submit the completion certificate promptly
upon the work's completion, but not later than six months after the
disbursement of the loan proceeds, with one six-month extension if
necessary. If the borrower fails to submit the completion certificate
within these time limits, an on-site inspection shall be conducted in
accordance with paragraph (c) of this section.
(3) The borrower is not required to submit a completion certificate
when the property improvement loan is made by or on behalf of a State or
local government agency or a nonprofit organization, the loan proceeds
are held in an escrow account pending completion of the improvements,
and the loan proceeds are disbursed from the escrow account in stages,
with the written approval of the borrower and based upon the percentage
of work completed.
(c) Inspection requirement on property improvement loans. The lender
or its agent shall conduct an on-site inspection on any property
improvement loan where the principal obligation is $7,500 or more, and
on any direct property improvement loan where the borrower fails to
submit a completion certificate
[[Page 122]]
as required under paragraph (b) of this section. On a dealer loan, the
inspection shall be completed within 60 days after the date of
disbursement. On a direct loan, the inspection shall be completed within
60 days after receipt of the completion certificate, or as soon as the
lender determines that the borrower is unwilling to cooperate in
submitting the completion certificate. The purpose of the inspection is
to verify the eligibility of the improvements and whether the work has
been completed. If the borrower will not cooperate in permitting an on-
site inspection, the lender shall report this fact to the Secretary.
(d) Inspection requirement on dealer manufactured home loans. For
any manufactured home purchase loan or combination loan involving the
sale of a manufactured home by a dealer, the lender (or an agent of the
lender that is not a manufactured home dealer) shall conduct a site-of-
placement inspection within 60 days after the date of disbursement to
verify that:
(1) The terms and conditions of the purchase contract have been met;
(2) The manufactured home and any itemized options and appurtenances
included in the purchase price of the home or financed with the loan
proceeds have been delivered and installed; and
(3) The placement certificate executed by the borrower and the
dealer is in order.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52434, Oct. 18, 1991;
61 FR 19799, May 2, 1996]
Sec. 201.41 Loan servicing.
(a) Generally. The lender shall service loans in accordance with
accepted practices of prudent lending institutions. It shall have
adequate facilities for contacting the borrower in the event of default,
and shall otherwise exercise diligence in collecting the amount due. The
lender shall remain responsible to the Secretary for proper collection
efforts, even though actual loan servicing and collection may be
performed by an agent of the lender. The lender shall have an organized
means of identifying, on a periodic basis, the payment status of
delinquent loans to enable collection personnel to initiate and follow-
up on collection activities, and shall document its records to reflect
its collection activities on delinquent loans.
(b) Partial payments. The lender shall accept any partial payment
(inclusive of late charges) under an executed modification agreement or
an acceptable repayment plan, and either apply it to the borrower's
account or hold it in a trust account pending disposition. When partial
payments held for disposition aggregate a full monthly installment, they
shall be applied to the borrower's account, thus advancing the date of
the oldest unpaid installment. If a partial payment is received more
than 60 days after the date of default and was not submitted under a
repayment plan or a modification agreement, the partial payment may be
returned to the borrower, with a letter of explanation.
Sec. 201.42 Bankruptcy, insolvency or death of borrower.
(a) Bankruptcy or insolvency. The lender shall file a proof of claim
with the court having jurisdiction when the lender has timely
information that a borrower is involved in bankruptcy or insolvency
proceedings, except that a proof of claim need not be filed if the court
notifies the lender that the borrower has no assets and a proof of claim
should not be filed. The notice of bankruptcy and a copy of the proof of
claim (or the notice from the court that a proof of claim is not
required) shall be retained in the loan file.
(b) Death of a borrower. The lender shall file a proof of claim with
the court having jurisdiction when the lender has timely information
that a borrower is deceased, unless the lender determines that there
will not be a probate proceeding. A copy of the proof of claim (or
documentation as to why a proof of claim was not filed) shall be
retained in the loan file.
(c) Responsibility of the lender after insurance claim is filed.
After the Secretary pays an insurance claim, the Secretary will notify
the bankruptcy or probate court, as appropriate, that the loan has been
assigned to the
[[Page 123]]
United States and will request substitution as the party to whom the
claim is owed. Until the insurance claim is paid, the lender shall take
all steps necessary to protect the interests of the holder of the note
in any bankruptcy or probate proceeding.
[54 FR 36266, Aug. 31, 1989]
Sec. 201.43 Administrative reports and examinations.
The Secretary may call upon a lender for any reports deemed
necessary in connection with the regulations in this part and may
inspect the loan files, records, books and accounts of the lender as
they pertain to the loans reported for insurance.
Subpart F_Default Under the Loan Obligation
Sec. 201.50 Lender efforts to cure the default.
(a) Personal contact with the borrower before acceleration and
foreclosure or repossession. The lender shall undertake foreclosure or
repossession of the property securing a Title I loan that is in default
only after the lender has serviced the loan in a timely manner and with
diligence in accordance with the requirements of this part, and has
taken all reasonable and prudent measures to induce the borrower to
bring the loan account current. Before taking action to accelerate the
maturity of the loan, the lender or its agent shall contact the borrower
and any co-maker or co-signer, either in a face-to-face meeting or by
telephone, to discuss the reasons for the default and to seek its cure.
If the borrower and the co-makers or co-signers cannot be located, will
not discuss the default, or will not agree to its cure, the lender may
proceed to take action under paragraph (b) of this section. The lender
shall document the results of its efforts to contact the borrower and
any co-maker or co-signer, and shall place in the loan file a copy of
any modification agreement or repayment plan that has been offered.
(b) Notice of default and acceleration. Unless the borrower cures
the default or agrees to a modification agreement or repayment plan, the
lender shall provide the borrower with written notice that the loan is
in default and that the loan maturity is to be accelerated. In addition
to complying with applicable State or local notice requirements, the
notice shall be sent by certified mail and shall contain:
(1) A description of the obligation or security interest held by the
lender;
(2) A statement of the nature of the default and of the amount due
to the lender as unpaid principal and earned interest on the note as of
the date 30 days from the date of the notice;
(3) A demand upon the borrower either to cure the default (by
bringing the loan current or by refinancing the loan) or to agree to a
modification agreement or a repayment plan, by not later than the date
30 days from the date of the notice;
(4) A statement that if the borrower fails either to cure the
default or to agree to a modification agreement or a repayment plan by
the date 30 days from the date of the notice, then, as of the date 30
days from the date of the notice, the maturity of the loan is
accelerated and full payment of all amounts due under the loan is
required;
(5) A statement that if the default persists the lender will report
the default to an appropriate credit reporting agency; and
(6) Any other requirements prescribed by the Secretary.
(c) Reinstatement of the loan. The lender may rescind the
acceleration of maturity after full payment is due and reinstate the
loan only if the borrower brings the loan current, executes a
modification agreement, or agrees to an acceptable repayment plan.
(d) Notice to credit reporting agency. If the loan maturity is
accelerated and the loan is not reinstated, the lender shall report the
default to an appropriate credit reporting agency.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33407, Sept. 3, 1987;
56 FR 52434, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992]
[[Page 124]]
Sec. 201.51 Proceeding against the loan security.
(a) Property improvement loans. (1) After acceleration of maturity
on a secured property improvement loan, the lender may either proceed
against the loan security under its title I security instrument or make
claim under its contract of insurance. If the lender proceeds against
the loan security, it may submit an insurance claim only if it complies
with the requirements of paragraph (a)(2) of this section.
(2) The lender may proceed against the secured property under its
Title I security instrument and later submit a claim under its contract
of insurance only with the prior approval of the Secretary. The
Secretary's decision will be based upon all relevant factors, including
but not limited to the appraised value and the amount of all outstanding
loan obligations on the property, the estimated costs of foreclosure and
disposition, and the anticipated time to dispose of the property. In
proceeding against the secured property, the lender shall comply with
all applicable State and local laws, and shall take all actions
necessary to preserve its rights, if any, to obtain a valid and
enforceable deficiency judgment against the borrower.
(3) After acceleration of maturity on a defaulted unsecured property
improvement loan, the lender may submit a claim under its contract of
insurance.
(b) Manufactured home loans. (1) After acceleration of maturity on a
defaulted manufactured home loan, the lender shall proceed against the
loan security by foreclosure or repossession, as appropriate, in
compliance with all applicable State and local laws, and shall acquire
good, marketable title to the property securing the loan. The lender
shall also take all actions necessary under State and local law to
preserve its rights, if any, to obtain a valid and enforceable
deficiency judgment against the borrower.
(2) Prior to foreclosure or repossession, the lender or its agent
shall make a visual inspection of the property and prepare a report on
its condition for placement in the loan file. If the lender determines
that the property has been abandoned, the lender shall take such steps
as are permitted under State or local law to repossess or foreclose upon
the property, without waiting for the notice period under Sec.
201.50(b) to run.
(3) The lender shall obtain a HUD-approved appraisal of the property
as soon after repossession as possible, or earlier with the permission
of the borrower. This appraisal shall be performed on the homesite,
unless the site owner requires that the home be removed before the
appraisal can be performed, and it should reflect the retail value of
comparable manufactured homes in similar condition and in the same
geographic area where the repossession occurred. When the manufactured
home is without hazard insurance and has sustained, at any time prior to
the sale or disposition of the home, damage which would normally be
covered by such insurance, the lender shall report this situation in
submitting an insurance claim, and the appraised value shall be based
upon the retail value of comparable homes in good condition and in the
same geographic area, without any deduction for such damage.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 10537, Mar. 14, 1989;
54 FR 36266, Aug. 31, 1989; 56 FR 52435, Oct. 18, 1991]
Sec. 201.52 Acquisition by voluntary conveyance or surrender.
The lender may accept a voluntary conveyance of title to or
ownership of the property securing a manufactured home loan which is in
default, provided that (a) the lender accepts the conveyance in full
satisfaction of the borrower's obligation, and (b) no claim is submitted
under its contract of insurance. The lender may accept voluntary
surrender of the property without satisfaction of the borrower's
obligation, provided that if the lender intends thereafter to submit a
claim under its contract of insurance, the lender shall acquire title to
or ownership of the property and then dispose of and sell the property
in compliance with State and local law, so as to assure that it can
assign a valid and enforceable obligation, including any deficiency
against the borrower, to the Secretary when submitting its claim. If the
lender accepts a voluntary conveyance of
[[Page 125]]
title or a voluntary surrender of the property, the notice of default
and acceleration under Sec. 201.50(b) shall not be required.
[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19799, May 2, 1996]
Sec. 201.53 Disposition of manufactured home loan property.
Where the lender obtains title to property securing a manufactured
home loan by repossession or foreclosure, the property shall be sold for
the best price obtainable before making an insurance claim. In the case
of a combination loan, the manufactured home and lot shall be sold in a
single transaction and the manufactured home may not be removed from the
lot, unless the prior approval of the Secretary is obtained for a
different procedure. The best price obtainable shall be the greater of:
(a) The actual sales price of the property, after deducting the cost
of repairs, furnishings, and equipment needed to make the property
marketable, and after deducting the cost of transportation, set-up, and
anchoring if the manufactured home is moved to a new homesite; or
(b) The appraised value of the property before repairs (as
determined by a HUD-approved appraisal obtained in accordance with Sec.
201.51(b)(3)).
[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19799, May 2, 1996]
Sec. 201.54 Insurance claim procedure.
(a) Claim application. A claim for reimbursement for loss on any
eligible loan shall be made on a HUD-approved form, executed by a duly
qualified officer of the lender under applicable criminal and civil
penalties for fraud and misrepresentation. The insurance claim shall be
fully documented and itemized, and shall be accompanied by all documents
and materials required by the Secretary for claim review. The claim
submission shall contain original copies of all notes, security
instruments, assumption agreements, releases of liability for repayment
of the loan, judgments obtained by the lender against the borrower, and
any related documents and forms, except where State or local law
requires their retention by the lender or a governmental body such as a
court. As appropriate, the claim application shall be supported by the
following:
(1) Documentation of the lender's efforts to effect recourse against
any dealer in accordance with any recourse agreement under Sec.
201.27(b) between the lender and the dealer and contained in the loan
documents;
(2) Certification under applicable criminal and civil penalties for
fraud and misrepresentation that the lender has complied with all
applicable State and local laws in carrying out any foreclosure or
repossession, including copies of all notices served upon the borrower
or published in connection with such foreclosure or repossession; and
(3) Where a borrower has declared bankruptcy or insolvency or is
deceased, copies of the documentation required to be retained in the
loan file under Sec. 201.42.
(b) Maximum claim period. (1) An insurance claim shall be filed not
later than the following dates:
(i) For property improvement loans--nine months after the date of
default.
(ii) For manufactured home loans--three months after the date of
sale of the property securing the loan, but not to exceed 18 months
after the date of default.
(2) The Secretary may extend the claim filing period in a particular
case, but only if the lender shows clear evidence that the delay in
claim filing was in the interest of the Secretary or was caused by one
of the following:
(i) Litigation related to the loan;
(ii) Management control of the lender or the Title I loan portfolio
was assumed by a Federal or State agency; or
(iii) The borrower had experienced a loss of income or other
financial difficulties directly attributable to a major disaster
declared by the President, and additional time was needed to provide
forbearance on a property improvement loan.
(3) If a borrower is a ``person in military service'' as that term
is defined in the Soldiers' and Sailors' Civil Relief Act of 1940 and is
in default on a loan insured under this part, any period of military
service after the date of default shall be excluded in computing
[[Page 126]]
the maximum time period for filing an insurance claim.
(c) Resubmitted and supplemental claims. (1) Any insurance claim
which is resubmitted with an appeal of a claim denial or a request for a
waiver of the regulations in accordance with Sec. 201.5(b) shall be
filed within six months after the date of the claim denial.
(2) Any supplemental insurance claim shall be filed within six
months after the date of payment on the initial claim. A reprocessing
fee, in an amount prescribed by the Secretary, will be charged for any
supplemental claim.
(d) Assignment of lender's rights to the United States. Upon the
filing of the insurance claim, the lender shall assign its entire
interest in the loan note (or in a judgment in lieu of the note), in any
security held, and in any claim filed in probate, bankruptcy or
insolvency proceedings, to the United States of America. The assignment
shall be made in the form provided in paragraph (f) of this section,
provided that if this form is not valid or generally acceptable in the
jurisdiction involved, a form which is valid and generally acceptable in
the jurisdiction where the judgment or security was taken shall be used.
If the security interest has been assigned to the United States, the
assignment shall be recorded in that jurisdiction prior to filing the
insurance claim, unless the Secretary determines that recordation by the
lender in that jurisdiction is impractical.
(e) Valid and enforceable obligation when assigned. The loan
obligation evidenced by the note must be both valid and enforceable
against the debtor at the time the note is assigned to the United States
of America. If the Secretary has reason to believe that the obligation
may not be either valid or enforceable against the borrower, the
Secretary may either deny the claim and reassign the loan note to the
lender, or require the lender to repurchase the paid claim and accept
reassignment of the note. The lender will be notified of the reasons for
the claim denial or repurchase. If the lender subsequently obtains a
valid and enforceable judgment against the borrower for the unpaid
balance of the loan, the lender may resubmit the claim with an
assignment of the judgment.
(f) Form of assignment. A lender shall use the following form of
assignment, or one generally acceptable in the jurisdiction involved,
properly dated, to assign the lender's entire interest in a loan note,
judgment, real estate mortgage, deed of trust, conditional sales
contract, chattel mortgage, mechanic's lien, or any security, in making
an insurance claim:
All right, title, and interest of the undersigned is hereby assigned
(without warranty, except that the loan qualifies for insurance) to the
United States of America (HUD).
(Financial Institution)_________________________________________________
By:_____________________________________________________________________
Title:__________________________________________________________________
Date:___________________________________________________________________
If the assignment does not appear on the note or other instrument that
is assigned, it shall be duly executed on an allonge which is attached
to such note or other instrument.
(g) Denial of insurance claim. The Secretary may deny a claim for
insurance in whole or in part based upon a violation of these
regulations, unless a waiver of compliance with the regulations is
granted under Sec. 201.5.
(h) Incontestability of insurance claim payment. Any insurance claim
payment on a title I loan shall be final and incontestable after two
years from the date the claim was certified for payment by the
Secretary, in the absence of fraud or misrepresentation on the part of
the lender, unless a demand for repurchase of the loan obligation is
made on behalf of the United States prior to the expiration of the two-
year period.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985; 51 FR 5068, Feb. 11, 1986, as amended at 51
FR 32060, Sept. 9, 1986; 56 FR 52435, Oct. 18, 1991; 57 FR 6480, Feb.
25, 1992; 61 FR 19800, May 2, 1996]
Sec. 201.55 Calculation of insurance claim payment.
The lender will be reimbursed in an amount not to exceed 90 percent
of its loss on any eligible loan up to the amount of insurance coverage
in the lender's insurance coverage reserve account established by the
Secretary under Sec. 201.32, if the insurance claim is
[[Page 127]]
made in accordance with the requirements of this part. The amount of the
insurance claim payment shall be computed as follows:
(a) Property improvement loans. For property improvement loans, the
insurance claim payment shall be 90 percent of the following amounts:
(1) The unpaid amount of the loan obligation (net unpaid principal
and the uncollected interest earned to the date of default, calculated
according to the terms of the note executed for any loan application
that is approved prior to the effective date of these regulations, and
calculated according to the actuarial method for all loans for which
loan applications are approved on or after the effective date of these
regulations). Where the lender has proceeded against the secured
property under Sec. 201.51(a)(2), the unpaid amount of the loan
obligation shall be reduced by the proceeds received from the property's
sale or disposition, after deducting the following:
(i) The balances due on any obligations senior to the Title I loan
obligation; and
(ii) Customary and reasonable expenses for foreclosure and
disposition, as determined by the Secretary.
(2) Interest on the unpaid amount of the loan obligation from the
date of default to the date of the claim's initial submission for
payment plus 15 calendar days, calculated at the rate of seven percent
per annum. However, interest shall not be paid for any period greater
than nine months from the date of default.
(3) The amount of uncollected court costs, including fees paid for
issuing, serving, and filing a summons.
(4) The amount of attorney's fees on an hourly or other basis for
time actually expended and billed, not to exceed $500.
(5) The amount of expenses for recording the assignment of the
security to the United States.
(b) Manufactured home loans. For manufactured home loans, the
insurance claim payment shall be 90 percent of the sum of the following
amounts:
(1) The unpaid amount of the loan obligation (net unpaid principal
and the uncollected interest earned to the date of default, calculated
according to the actuarial method), after deducting the following
amounts:
(i) The best price obtainable for the property after lawful
repossession or foreclosure, as determined in accordance with Sec.
201.53;
(ii) All amounts to which the lender is entitled after the date of
default from any source relating to the property, including but not
limited to such items as rent, other income, recourse recovery against
the dealer, hazard insurance benefits, secured interest protection
insurance benefits, and rebates on prepaid insurance premiums; and
(iii) Amounts retained by the lender after the date of default,
including amounts held or deposited to the account of the borrower or to
which the lender is entitled under the loan transaction, and which have
not been applied in reduction of the borrower's indebtedness.
(2) Interest on the unpaid amount of the loan obligation from the
date of default to the date of the claim's initial submission for
payment plus 15 calendar days, calculated at the rate of seven percent
per annum. However, interest shall not be paid for any period greater
than nine months from the date of default.
(3) For manufactured home purchase loans, the amount of costs paid
to a dealer or other third party to repossess and preserve the
manufactured home and other property securing repayment of the loan
(including the costs of site inspection, property appraisal, hazard
insurance premiums, personal property taxes, and site rental, as
appropriate), plus actual costs not to exceed $1,000 per module for
removing and transporting the home to a dealer's lot or other off-site
location.
(4) The amount of a sales commission paid to a dealer, real estate
agent or other third party for the resale of the repossessed or
foreclosed manufactured home and/or lot. Where the home is resold on-
site, the commission shall not exceed 10 percent of the sales price.
Where the home is resold off-site, the commission shall not exceed seven
percent of the sales price.
(5) For manufactured home lot loans, and for combination loans where
both the foreclosed manufactured home and
[[Page 128]]
lot are classified as realty, the amount of:
(i) State or local real estate taxes, ground rents, and municipal
water and sewer fees or liens, prorated to the date of disposition of
the property;
(ii) Special assessments which are noted on the loan application or
which become liens after the insurance is issued, prorated to the date
of disposition of the property;
(iii) Premiums for hazard insurance on the manufactured home,
prorated to the date of disposition of the property; and
(iv) Transfer taxes imposed upon any deeds or other instruments by
which the property was acquired by the lender.
(6) The amount of uncollected court costs, including fees paid for
issuing, serving, and filing a summons.
(7) The amount of attorney's fees on an hourly or other basis for
time actually expended and billed, not to exceed $1,000.
(8) The amount of expenses for recording the assignment of the
security to the United States, and for costs of repossession or
foreclosure other than attorney's fees and those incurred under
paragraph (b)(3), but not to exceed costs which are customary and
reasonable in the jurisdiction where the repossession or foreclosure
takes place, as determined by the Secretary.
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 10537, Mar. 14, 1989;
54 FR 36266, Aug. 31, 1989; 56 FR 52435, Oct. 18, 1991; 57 FR 30395,
July 9, 1992; 61 FR 19800, May 2, 1996]
Subpart G_Debts Owed to the United States Under Title I
Source: 58 FR 47379, Sept. 9, 1993, unless otherwise noted.
Sec. 201.60 General.
(a) Applicability. The provisions in this subpart apply to the
collection of debts owed to the United States arising out of the Title I
program. These debts include, but are not limited to:
(1) Amounts owed on loans assigned to the United States by insured
lenders as the result of defaults by borrowers;
(2) Unpaid insurance charges owed by lenders; and
(3) Unpaid obligations of lenders arising from repurchase demands.
(b) Departmental debt collection regulations. Except as modified by
this subpart, collection of debts arising out of the Title I program is
subject to the Department's debt collection regulations in subpart C of
24 CFR part 17.
Sec. 201.61 Claims against debtors--principal amount of debt.
(a) Liability. A debtor is liable to the Secretary for the principal
amount of the debt, as described in paragraphs (b), (c), or (d) of this
section, as appropriate.
(b) Property improvement notes. In the case of an assigned note for
a property improvement loan, the principal amount of the debt is the
unpaid amount of the loan obligation, as defined in Sec. 201.55(a)(1)
of this part, plus amounts described in Sec. Sec. 201.55(a) (3), (4),
(5).
(c) Manufactured home notes. In the case of an assigned note for a
manufactured home loan, the principal amount of the debt is the unpaid
amount of the loan obligation, as defined in Sec. 201.55(b)(1) of this
part, plus amounts described in Sec. Sec. 201.55(b) (3) through (8).
(d) Assigned judgments. In the case of a judgment obtained by the
lender on a property improvement loan or a manufactured home loan and
assigned to the Secretary, the principal amount of the debt is the
amount of the judgment.
Sec. 201.62 Claims against debtors--interest, penalties, and
administrative costs.
(a) Interest. In addition to the principal amount of the debt, the
debtor is liable for the payment of interest. Interest accrues on the
principal amount of the debt as of the date of default, as defined in
Sec. 201.2(h) of this part, as follows:
(1) In the case of a debt based upon the assignment of a defaulted
note, interest is assessed at the lesser of the rate specified in the
note or the United States Treasury's current value of funds rate in
effect on the date the Title I insurance claim was paid.
(2) In the case of a debt based upon the assignment of a judgment,
interest is assessed at the lesser of the rate specified in the judgment
or the United
[[Page 129]]
States Treasury's current value of funds rate in effect on the date the
Title I insurance claim was paid.
(b) Penalties and administrative costs. The Secretary shall assess
reasonable administrative costs and penalties as authorized in 31 U.S.C.
3717, unless there is no provision in the note providing for such
charges and the debtor has not otherwise consented to liability for such
charges.