24 CFR Part 207, Subpart B

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§ 206.308

24 CFR Ch. II (4–1–10 Edition)

surrendered will be automatically suspended from the Roster until HUD receives evidence demonstrating that the
local- or State-imposed sanction has
been lifted.
(d) Removal procedure. Except as provided in paragraph (c) of this section,
the following procedures apply to removal of a HECM counselor from the
Roster.
(1) HUD will give the HECM counselor written notice of the proposed removal. The notice will state the reasons for and the duration of the proposed removal.
(2) The HECM counselor will have 30
days from the date of receipt of the notice (or such time as described in the
notice, but in no event less than a period of 30 days) to submit a written appeal of the proposed removal, along
with a written request for a conference.
(3) A HUD official will review the appeal and render a response affirming,
modifying, or canceling the removal.
The HUD official will not be a person
who was involved in HUD’s initial removal decision. HUD will respond with
a decision within 30 days after the date
of receiving the appeal or, if the counselor has requested a conference, within 30 days after the conference was
held. HUD may extend the 30-day period by providing written notice to the
counselor.
(4) If the counselor does not submit a
timely written response, the removal
will be effective 31 days after the date
of HUD’s initial removal notice (or
after the period provided in the notice,
if longer than 30 days). If a written response is submitted, and the removal
decision is affirmed or modified, the removal will be effective on the date of
HUD’s notice affirming or modifying
the initial removal decision.
(e) Maximum time period of removal.
The maximum time period for removal
from the Roster is 12 months from the
effective date of removal for all removed counselors. A counselor who has
been removed must apply for reinstatement on the Roster.
(f) Placement on the Roster after removal. A counselor who has been removed from the Roster must apply for
reinstatement on the Roster (in accordance with § 206.304) after the period
of the counselor’s removal from the

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

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

Eligibility requirements.

Subpart B—Contract Rights and
Obligations
207.251

Definitions.
PREMIUMS

207.252 First, second and third premiums.
207.252a Premiums—operating loss loans.
207.252b Premiums—mortgages insured pursuant to section 223(f) of the Act.

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

Responsibility for servicing.

207.499

Effect of amendments.

AMENDMENTS

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

Subpart A—Eligibility
Requirements

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

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

Subpart B—Contract Rights and
Obligations

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§ 207.252

§ 207.251 Definitions.
As used in this subpart:
(a) The term Commissioner means the
Federal Housing Commissioner.
(b) The term act means the National
Housing Act, as amended.
(c) The term mortgage means such a
first lien upon real estate and other

§ 207.252 First, second and third premiums.
The mortgagee, upon the initial endorsement of the mortgage for insurance, shall pay to the Commissioner a
first mortgage insurance premium
equal to not less than one-fourth of one
percent nor more than one percent as
the Secretary shall determine of the
original face amount of the mortgage.
The specific premium to be charged
will be set forth in FEDERAL REGISTER
notice.
(a) If the date of the first principal
payment is more than one year following the date of such initial insurance endorsement, the mortgagee,
upon the anniversary of such insurance
date, shall pay a second premium equal

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§ 207.252

24 CFR Ch. II (4–1–10 Edition)

to not less than one-fourth of one percent nor more than one percent as the
Secretary shall determine of the original face amount of the mortgage. On
the date of the first principal payment,
the mortgagee shall pay a third premium equal to not less than one-fourth
of one percent nor more than one percent of the average outstanding principal obligation of the mortgage for
the following year which shall be adjusted so as to accord with such date
and so that the aggregate of the said
three premiums shall equal the sum of:
(1) One percent of the average outstanding principal obligation of the
mortgage for the year following the
date of initial insurance endorsement;
and
(2) Not less than one-fourth of one
percent nor more than one percent per
annum as the Secretary shall determine of the average outstanding principal obligation of the mortgage for
the period from the first anniversary of
the date of initial insurance endorsement to one year following the date of
the first principal payment.
(b) If the date of the first principal
payment is one year, or less than one
year following the date of such initial
insurance endorsement, the mortgagee,
upon such first principal payment date,
shall pay a second premium equal to
not less than one-fourth of one percent
nor more than one percent as the Secretary shall determine of the average
outstanding principal obligation of the
mortgage for the following year which
shall be adjusted so as to accord with
such date and so that the aggregate of
the said two premiums shall equal the
sum of:
(1) One percent per annum of the average outstanding principal obligation
of the mortgage for the period from the
date of initial insurance endorsement
to the date of first principal payment;
and
(2) Not less than one-fourth of one
percent nor more than one percent as
the Secretary shall determine of the
average outstanding principal obligation of the mortgage for the year following the date of the first principal
payment.
(c) Where the credit instrument is
initially and finally endorsed for insurance pursuant to a Commitment to In-

sure Upon Completion, the mortgagee
on the date of the first principal payment shall pay a second premium equal
to not less than one-fourth of one percent nor more than one percent as the
Secretary shall determine of the average outstanding principal obligation of
the mortgage for the year following
such first principal payment date
which shall be adjusted so as to accord
with such date and so that the aggregate of the said two premiums shall
equal the sum of not less than onefourth of one percent nor more than
one percent per annum as the Secretary shall determine of the average
outstanding principal obligation of the
mortgage for the period from the date
of the insurance endorsement to one
year following the date of the first
principal payment.
(d) Until the mortgage is paid in full,
or until receipt by the Commissioner of
an application for insurance benefits,
or until the contract of insurance is
otherwise terminated with the consent
of the Commissioner, the mortgagee,
on each anniversary of the date of the
first principal payment, shall pay an
annual mortgage insurance premium
equal to not less than one-fourth of one
percent nor more than one percent as
the Secretary shall determine of the
average outstanding principal obligation of the mortgage for the year following the date on which such premium becomes payable.
(e) The premiums payable on and
after the date of the first principal payment shall be calculated in accordance
with the amortization provisions without taking into account delinquent
payments or prepayments.
(f) Premiums shall be payable in cash
or in debentures at par plus accrued interest. All premiums are payable in advance and no refund can he made of
any portion thereof except as hereinafter provided in this subpart.
(g) Any change in mortgage insurance premiums pursuant to this section will apply to new commitments
issued or reissued on or after August 1,
2001 and any notice setting mortgage
insurance premiums issued pursuant to
this section.
[66 FR 35072, July 2, 2001]

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

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

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[40 FR 10177, Mar. 5, 1975]

§ 207.252c Premiums—mortgages
insured pursuant to section 238(c) of
the Act.
All of the provisions of §§ 207.252 and
207.252a governing mortgage insurance
premiums shall apply to mortgages insured under this subpart pursuant to
section 238(c) of the Act except that all
mortgage insurance premiums due on

§ 207.253

such mortgages in accordance with
§§ 207.252 and 207.252a shall be calculated on the basis of one percent.
[42 FR 59674, Nov. 18, 1977]

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

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

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

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§ 207.253a

24 CFR Ch. II (4–1–10 Edition)

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

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[37 FR 8662, Apr. 29, 1972]

§ 207.253a Termination of insurance
contract.
(a) Reason for termination. The happening of any of the following events
shall constitute an additional reason
for terminating the contract of insurance in cases where the mortga- gee
has elected to convey the property to
the Commissioner:
(1) The acquisition by the mortgagee
of the mortgaged property without
conveying it to the Commissioner.
(2) The acquisition of the property at
the foreclosure sale by a party other
than the mortgagee.
(3) The redemption of the property
after foreclosure.
(4) Notice given by the mortgagee
after the foreclosure and during the redemption period that it will not tender
the property to the Commissioner.
(b) Notice of termination. No contract
of insurance shall be terminated until
the mortgagee has given written notice
thereof to the Commissioner within 30
days from the happening of any one of
the events set forth in paragraph (a) of
this section.
(c) Effective termination date. The
Commissioner shall notify the mort-

gagee that the contract of insurance
has been terminated and the effective
termination date. The termination
shall be effective as of the date any one
of the events set forth in paragraph (a)
of this section occur.
(d) Effect of termination. Upon termination of the contract of insurance the
obligation to pay any subsequent MIP
shall cease and all rights of the mortgagor and mortgagee shall be terminated.
[36 FR 24537, Dec. 22, 1971, as amended at 37
FR 8662, Apr. 29, 1972]

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

RIGHTS AND DUTIES OF MORTGAGEE
UNDER THE CONTRACT OF INSURANCE
§ 207.255

Defaults.

(a) The following shall be considered
a default under the terms of a mortgage insured under this subpart:
(1) Failure of the mortgagor to make
any payment due under the mortgage;
or
(2) Failure to perform any other covenant under the provisions of the mortgage, if the mortgagee, because of such
failure, has accelerated the debt.
(b) In the case of an operating loss
loan, the failure of the mortgagor to
make any payment due under such
loan or under the original mortgage
shall be considered a default under
both the loan and original mortgage.

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Office of Assistant Secretary for Housing, HUD
(c) If such defaults as defined in paragraphs (a) and (b) of this section continue for a period of 30 days the mortgagee shall be entitled to receive the
benefits of the insurance hereinafter
provided.
(d) For the purposes of this section
the date of default shall be considered
as:
(1) The date of the first uncorrected
failure to perform a covenant or obligation; or
(2) The date of the first failure to
make a monthly payment which subsequent payments by the mortgagor are
insufficient to cover when applied to
the overdue monthly payments in the
order in which they became due.
§ 207.256

Notice.

(a) If the default as defined in § 207.255
is not cured within the 30 days grace
period, the mortgagee must, within 30
days thereafter, notify the Commissioner of such default, in the manner
prescribed in 24 CFR part 200, subpart
B.
(b) Notwithstanding § 207.255(a)(2),
the mortgagee must give notice to the
Commissioner, in the manner prescribed in 24 CFR part 200, subpart B, of
the failure of the mortgagor to comply
with such covenant, regardless of the
fact the mortgagee may not have elected to accelerate the debt.
[64 FR 4769, Jan. 29, 1999]

§ 207.256a Reinstatement of defaulted
mortgage.
If, after default and prior to the completion of foreclosure proceedings, the
mortgagor cures the default, the insurance shall continue as if a default had
not occurred, provided the mortgagee
gives notice of reinstatement to the
Commissioner, in the manner prescribed in 24 CFR part 200, subpart B.
[64 FR 4770, Jan. 29, 1999]

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§ 207.256b Modification
terms.

of

mortgage

(a) The mortgagor and the mortgagee
may, with the approval of the Commissioner, enter into an agreement which
extends the time for curing a default
under the mortgage or modifies the
payment terms of the mortgage.

§ 207.258

(b) The Commissioner’s approval of
the type of agreement specified in
paragraph (a) of this section shall not
be given unless the mortgagor agrees
in writing that, during such period as
payments to the mortgagee are less
than the amounts required under the
terms of the original mortgage, it will
hold in trust for disposition as directed
by the Commissioner all rents or other
funds derived from the property which
are not required to meet actual and
necessary expenses arising in connection with the operation of such property, including amortization charges
under the mortgage.
(c) The Commissioner may exempt a
mortgagor from the requirement of
paragraph (b) of this section in any
case where the Commissioner determines that such exemption does not
jeopardize the interests of the United
States.
§ 207.257 Commissioner’s right to require acceleration.
Upon receipt of notice of violation of
a convenant, as provided for in
§ 207.256(b), or otherwise being appraised thereof, the Commissioner reserves the right to require the mortgagee to accelerate payment of the
outstanding principal balance due in
order to protect the interests of the
Federal Housing Commissioner.
§ 207.258 Insurance
claim
requirements.
(a) Alternative election by mortgagee.
When the mortgagee becomes eligible
to receive mortgage insurance benefits
pursuant to § 207.255(c), it must, within
45 days thereafter, give the Commissioner notice, in the manner prescribed
in 24 CFR part 200, subpart B, of its intention to file an insurance claim and
of its election either to assign the
mortgage to the Commissioner, as provided in paragraph (b) of this section,
or to acquire and convey title to the
Commissioner, as provided in paragraph (c) of this section.
(b) Assignment of mortgage to Commissioner. If the mortgagee elects to assign
the mortgage to the Commissioner, it
shall, at any time within 30 days after
the date of the notice of the election,
file its application for insurance benefits and assign to the Commissioner, in

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§ 207.258

24 CFR Ch. II (4–1–10 Edition)

such manner as the Commissioner may
require, the credit instrument(s) and
the realty and chattel security instruments. The Commissioner may extend
this 30-day period by written notice
that a partial payment of insurance
claim under § 207.258b is being considered. The extension shall be for such
term, not to exceed 60 days, as the
Commissioner prescribes; however, the
Commissioner’s consideration of a partial payment of claim, or the Commissioner’s request that a mortgagee accept partial payment of a claim in accordance with § 207.258b, shall in no way
prejudice the morgagee’s right to file
its application for full insurance benefits within either the 30-day period or
any extension prescribed by the Commissioner. The following requirements
shall also be met by the morgagee:
(1) Notice of assignment. On the date
the assignment of the mortgage is filed
for record, the mortgagee must notify
the Commissioner, in the manner prescribed in 24 CFR part 200, subpart B, of
such assignment, and must also notify
the FHA Comptroller by telegram of
such recordation.
(2) Warranty of mortgagee. The assignment shall be made without recourse
or warranty, except that the mortgagee shall warrant that:
(i) No act or omission of the mortgagee has impaired the validity and
priority of the mortgage.
(ii) The mortgage is prior to all mechanics’ and materialmen’s liens filed
on record subsequent to the recording
of the mortgage, regardless of whether
such liens attached prior to the recording date.
(iii) The mortgage is prior to all liens
and encumbrances which may have attached or defects which may have arisen subsequent to the recording of the
mortgage, except such liens or other
matters as may be approved by the
Commissioner.
(iv) The amount stated in the instrument of assignment is actually due
under the mortgage and there are no
offsets or counterclaims against such
amount.
(v) The mortgagee has a good right to
assign the mortgage.
(3) Chattel lien warranty. In assigning
its security interest in chattels, including materials, located on the premises

covered by the mortgage, or its security interest in building components
stored either on-site or off-site at the
time of the assignment, the mortgagee
shall warrant that:
(i) No act or omission of the mortgagee has impaired the validity or priority of the lien created by the chattel
security instruments; and
(ii) The mortgagee has a good right
to assign the security instruments; and
(iii) The chattel security instruments
are a first lien on the items covered by
the instruments except for such other
liens or encumbrances as may be approved by the Commissioner.
(4) Items delivered by mortgagee. The
mortgagee shall deliver to the Commissioner, within 45 days after the assignment is filed for record, the items enumerated below:
(i) An assignment of all claims of the
mortgagee against the mortgagor or
others arising out of the mortgage
transaction.
(ii) All policies of title or other insurance or surety bonds or other guaranties, and any and all claims thereunder, including evidence satisfactory
to the Commissioner that the effective
date of the original title coverage has
been extended to include the assignment of the mortgage to the Commissioner.
(iii) All records, ledger cards, documents, books, papers, and accounts relating to the mortgage transaction.
(iv) All property of the mortgagor
held by the mortgagee or to which it is
entitled (other than the cash items
which are to be retained by the mortgagee) pursuant to paragraph (b)(5) of
this section.
(v) Any additional information or
data which the Commissioner may require.
(5) Disposition of cash items. The following cash items shall either be retained by the mortgagee or delivered to
the Commissioner in accordance with
instructions to be issued by the Commissioner at the time the insurance
claim is filed:
(i) Any balance of the mortgage loan
not advanced to the mortgagor.
(ii) Any cash held by the mortgagee
or its agents or to which it is entitled,
including deposits made for the account of the mortgagor, and which

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Office of Assistant Secretary for Housing, HUD
have not been applied in reduction of
the principal of the mortgage indebtedness.
(iii) All funds held by the mortgagee
for the account of the mortgagor received pursuant to any other agreement.
(iv) The amount of any undrawn balance under a letter of credit used in
lieu of a cash deposit.
(c) Conveyance of title to Commissioner.
If the mortgagee elects to acquire and
convey title to the Commissioner, the
following requirements shall be met:
(1) Alternative actions by mortgagee. At
any time within a period of 30 days
after the date of the notice of such
election, the mortgagee shall take one
of the alternative actions in paragraph
(c) (2) or (3) of this section.
(2) Foreclosure of mortgage. The mortgagee may elect to commence foreclosure proceedings. If the laws of the
State where the property is located do
not permit institution of foreclosure
within such 30-day period, foreclosure
shall be commenced not less than 30
days after such action can be taken.
Under such proceedings, the mortgagee
shall take one of the following actions:
(i) Obtain possession of the mortgaged property and the income therefrom through the voluntary surrender
thereof by the mortgagor.
(ii) Institute and prosecute with reasonable diligence, proceedings for the
appointment of a receiver to manage
the mortgaged property and collect income therefrom.
(iii) Proceed to exercise such other
rights and remedies as may be available to it for the protection and preservation of the mortgaged property and
to obtain the income therefrom under
the mortgage and the law of the particular jurisdiction.
(iv) With the prior approval of the
Commissioner, exercise the power of
sale under a deed of trust.
(3) Acquisition of title and possession.
The mortgagee, with the approval of
the Commissioner, may elect to acquire possession of, and title to, the
mortgaged property by means other
than foreclosure. With the prior approval of the Commissioner, title may
be transferred directly to the Commissioner.

§ 207.258

(4) Notice of foreclosure. The mortgagee shall given written notice to the
Commissioner within 30 days after the
institution of foreclosure proceedings
and shall exercise reasonable diligence
in prosecuting such proceedings to
completion. Any developments which
might delay the consummation of such
proceedings shall be promptly reported
to the Commissioner.
(5) Transfer by mortgagee. After acquiring title to and possession of the
property, the mortgagee shall (within
30 days of such acquisition) transfer
title and possession of the property to
the Commissioner. The transfer shall
be made in such manner as the Commissioner may require. On the date the
deed is filed for record, the mortgagee
shall notify the Commissioner on a
form prescribed by him of the filing of
such conveyance, and shall also notify
the FHA Assistant CommissionerComptroller by telegram of such recordation.
(6) Filing of deed and application. The
mortgagee shall file its application for
insurance benefits at the time of filing
for record of the deed conveying the
property to the Commissioner.
(7) Deed covenants and documents. The
deed conveying the property to the
Commissioner shall contain covenants
satisfactory to the Commissioner. The
original deed shall be forwarded to the
Commissioner as soon as received from
the recording authority. The following
documents shall be forwarded with the
deed:
(i) A bill of sale covering any personal property to which the mortgagee
is entitled by reason of the mortgage
transaction or by the acceptance of a
deed in lieu of foreclosure.
(ii) An assignment of all claims of
the mortgagee against the mortgagor
or others arising out of the mortgage
transaction and out of the foreclosure
proceedings or other means by which
the property was acquired.
(iii) An assignment of any claims on
account of title insurance and fire or
other hazard insurance, except claims
which have been released with the
prior approval of the Commissioner.
(8) Title evidence. Evidence of title,
satisfactory to the Commissioner and
meeting the requirements of § 207.258a
shall be furnished to the Commissioner

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§ 207.258a

24 CFR Ch. II (4–1–10 Edition)

(without expense to him) within 45
days of the filing for record of the deed
conveying the property to him.
(9) Disposition of cash items. The provisions of paragraph (b)(4) of this section,
relating to the retention or delivery of
cash items, shall be applicable to cases
involving the conveyance of property
to the Commissioner.
(Information collection requirements in
paragraph (b) were approved by the Office of
Management and Budget under control number 2535–0061)
[36 FR 24537, Dec. 22, 1971, as amended at 44
FR 8195, Feb. 8, 1979; 50 FR 38786, Sept. 25,
1985; 51 FR 27838, Aug. 4, 1986; 64 FR 4770, Jan.
29, 1999]

cprice-sewell on DSK8KYBLC1PROD with CFR

§ 207.258a Title requirements.
(a) Form of title evidence. The title
evidence submitted with a conveyance
of the property to the Commissioner
shall be in the form of an owner’s policy of title insurance, except that, if an
abstract and attorney’s opinion were
accepted by the Commissioner at the
time of insurance, the title evidence
may be in such form. The title evidence
shall be effective on or after the date of
the recording of the conveyance to the
Commissioner.
(b) Content of title evidence. To be satisfactory to the Commissioner, the
title evidence covering the property
conveyed to him shall show the same
title vested in the Commissioner as
was vested in the mortgagor as of the
date of the mortgage was filed for
record, with the exception of such liens
or other matters affecting the title as
may be approved by the Commissioner.
§ 207.258b Partial payment of claim.
(a) Whenever the Commissioner receives notice under § 207.258 of a mortgagee’s intention to file an insurance
claim and to assign the mortgage to
the Commissioner, the Commissioner
may request the mortgagee, in lieu of
assignment, to accept partial payment
of the claim under the mortgage insurance contract and to recast the mortgage, under such terms and conditions
as the Commissioner may determine.
(b) The Commissioner may request
the mortgagee to participate in a partial payment of claim in lieu of assignment only after a determination that
partial payment would be less costy to

the Federal government than other
reasonable alternatives for maintaining the low- and moderate-income
character of the project. This determination shall be based upon the findings listed below and such other findings as the Commissioner deems appropriate:
(1) The mortgagee is entitled, under
§ 207.255, to assign the mortgage in exchange for the payment of insurance
benefits;
(2) The relief resulting from partial
payment, when considered with other
resources available to the project,
would be sufficient to restore the financial viability of the project;
(3) The project is, or can at reasonable cost be made, structurally sound;
(4) The management of the project is
satisfactory to the Commissioner; and
(5) The default under the insured
mortgage was beyond the control of
the mortgagor.
(c) Partial payment of a claim under
this section shall be made only when:
(1) The project is, or potentially
could serve as, a low- and moderate-income housing resource;
(2) The property covered by the mortgage is free and clear of all liens other
than the insured first mortgage and
such other liens as the Commissioner
may have approved;
(3) The mortgagee has voluntarily
agreed to accept partial payment of the
insurance claim under the mortgage insurance contract and to recast the remaining mortgage amount under terms
and conditions prescribed by the Commissioner; and
(4) The mortgagor has agreed to
repay to the Commissioner an amount
equal to the partial payment, with the
obligation secured by a second mortgage on the project containing terms
and conditions prescribed by the Commissioner. The terms of the second
mortgage will be determined on a caseby-case basis to assure that the estimated project income will be sufficient
to cover estimated operating expenses
and debt service on the recast insured
mortgage. The Commissioner may provide for postponed amortization of the
second mortgage.
(d) Payment of insurance benefits
under this section shall be in cash. The

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Office of Assistant Secretary for Housing, HUD
Commissioner shall waive the deduction of one percent of the mortgage
funds advanced to the mortgagor, provided for in § 207.259(b)(2)(iv), with respect to a partial payment of a claim
under this section. The items referred
to in § 207.258(b)(4) shall either be retained by the mortgagee or delivered to
the Commissioner in accordance with
instructions to be issued by the Commissioner with respect to a partial payment of claim under this section.
(e) Lenders receiving a partial payment of claim following the Commissioner’s endorsement of the Mortgage
for full insurance under parts 251, 252,
or 255 of this chapter, will pay HUD a
fee in an amount set forth through
FEDERAL REGISTER notice. HUD, in its
discretion, may collect this fee or deduct the fee from any payment it
makes in the claim process.
[50 FR 38786, Sept. 25, 1985, as amended at 61
FR 49037, Sept. 17, 1996]

cprice-sewell on DSK8KYBLC1PROD with CFR

§ 207.259

Insurance benefits.

(a) Method of payment. Upon either an
assignment of the mortgage to the
Commissioner or a conveyance of the
property to him in accordance with requirements in § 207.258, payment of an
insurance claim shall be made in cash,
in debentures, or in a combination of
both, as determined by the Commissioner either at, or prior to, the time of
payment, except where the mortgage is
insured pursuant to:
(1) Section 223(e) of the National
Housing Act, or
(2) Section 223(f) of the Act and at
the time of the insurance endorsement,
(i) the mortgage met the special eligibility
requirements
contained
in
§ 207.32a(k) or (ii) the mortgage covered
a property to be rehabilitated under
part 511 or part 850 of this title, such
claim shall be paid in cash, unless the
mortgagee files a written request, with
the application, for payment in debentures. A claim paid in cash on a mortgage insured under section 223(e) shall
be paid from the Special Risk Insurance Fund. If the mortgagee files an
application for payment in debentures
on a claim on a mortgage insured
under section 223(e) or 223(f), the claim
shall be paid by issuing debentures and
by paying any balance in cash.

§ 207.259

(b) Amount of payment; assignment of
mortgage. If the mortgage is assigned to
the Commissioner, the insurance benefits shall be paid in an amount determined as follows:
(1) By adding to the unpaid principal
amount of the mortgage, computed as
of the date of default, the following
items:
(i) The amount of all payments made
by the mortgagee for taxes, special assessments and water rates which are
liens prior to the mortgage; for insurance on the property; and for any
mortgage insurance premiums paid
after default.
(ii) An allowance for reasonable payments made by the mortgagee, with
the approval of the Commissioner, for
the completion and preservation of the
property.
(iii) An amount equivalent to the debenture interest which would have
been earned on the portion of the insurance benefits paid in cash, as of the
date such cash payment is made, except that when the mortgagee fails to
meet any one of the applicable requirements of §§ 207.256 and 207.258 within
the specified time and in a manner satisfactory to the Commissioner (or
within such further time as the Commissioner may approve in writing), the
interest allowance in such cash payment shall be computed only to the
date on which the particular required
action should have been taken or to
which it was extended.
(2) By deducting from the total of the
items computed under paragraph (b)(1)
of this section, the following items:
(i) Any amount received by the mortgagee on account of the mortgage after
the date of default.
(ii) Any net income received by the
mortgagee from the property covered
by the mortgage after the date of default.
(iii) The sum of the cash items retained by the mortgagee pursuant to
§ 207.258(b)(5), except the balance of the
mortgage loan not advanced to the
mortgagor.
(iv) An amount equivalent to 1 percent of the mortgage funds advanced to
the mortgagor and not repaid as of the
date of default, except that all or part
of the 1 percent may be waived by the
Commissioner if, at his request and in

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cprice-sewell on DSK8KYBLC1PROD with CFR

§ 207.259

24 CFR Ch. II (4–1–10 Edition)

lieu of foreclosure, the mortgage is assigned to the Secretary.
(v) In the case of a lender receiving
insurance benefits for the full Mortgage amount upon the Commissioner’s
endorsement of the Mortgage for full
insurance pursuant to 24 CFR parts 251,
252, or 255, the amount of the fee set
forth through FEDERAL REGISTER notice. HUD may, in its discretion, collect this fee rather than deducting the
fee from the total of the items computed under paragraph (b)(1) of this
section.
(c) Amount of payment; conveyance of
property. If the property is conveyed to
the Commissioner, the insurance benefits shall be paid in an amount determined in accordance with paragraph (b)
of this section, except that the item set
forth in paragraph (b)(2)(iv) of this section shall not be deducted.
(d) Issuance of certificate of claim. In
addition to the insurance benefits paid
under paragraph (b) or (c) of this section, a certificate of claim shall be
issued to the mortgagee.
(1) In the case of an assignment of
the mortgage, the certificate shall be
for an amount which the Commissioner
determines to be sufficient, when added
to the amount of the insurance benefits
to equal the amount the mortgagee
would have received if, on the date of
assignment to the Commissioner, the
mortgagor had paid in full all obligations under the mortgage. Where a conveyance is involved, there shall also be
included in the certificate an allowance in a reasonable amount for any
necessary expenses incurred by the
mortgagee in connection with the foreclosure proceedings or the acquisition
of the mortgaged property otherwise
and in connection with the conveyance
of the property to the Commissioner.
(2) The certificate of claim shall provide for an uncompounded annual interest increment of 3 percent to begin
as of the date of either assignment or
conveyance.
(e) Issuance of debentures. Where debentures are issued, they shall meet
the following requirements:
(1) Be issued as of the date of default.
(2) Be registered as to principal and
interest.
(3) At the option of the Commissioner
and with the approval of the Secretary

of the Treasury, be redeemable at par
plus accrued interest on any semiannual interest payment date on 3
months’ notice of redemption given in
such manner as the Commissioner shall
prescribe. The debenture interest on
the debentures called for redemption
shall cease on the semiannual interest
payment date designated in the call notice. The Commissioner may include
with the notice of redemption an offer
to purchase the debentures at par plus
accrued interest at any time during the
period between the notice of redemption and the redemption date. If the debentures are purchased by the Commissioner after such call and prior to the
named redemption date, the debenture
interest shall cease on the date of purchase.
(4) Mature 20 years from the date
thereof.
(5) Be issued in such forms and
amounts; and be subject to such terms
and conditions; and include such provisions for redemption, if any, as may be
prescribed by the Secretary, with the
approval of the Secretary of the Treasury; and may be in book entry or certificated registered form, or such other
form as the Secretary by regulation
may prescribe.
(6) Bear interest from the date of
issue, payable semiannually on the
first day of January and the first day
of July of each year at the rate in effect as of the date the commitment was
issued, or as of the date of initial insurance endorsement of the mortgage,
whichever rate is higher. The applicable rates of interest will be published
twice each year as a notice in the FEDERAL REGISTER.
(7) Debentures representing the portion of the claim applicable to an operating loss loan shall bear interest at
the rate in effect as of the date the
commitment to insure such loan was
issued, or as of the date of endorsement
for insurance of such loan, whichever
rate is the higher, although debentures
representing the portion of the claim
applicable to the original mortgage
may bear interest at a different rate.
(f) Mortgagee Time Limits for Supplemental Claims for Additional Insurance
Benefits. A mortgagee may not file for
any additional payments of its mortgage insurance claim more than six

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

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

RIGHTS IN HOUSING FUND

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§ 207.263

Responsibility for servicing.

After January 10, 1994, servicing of
insured mortgages must be performed
by a mortgagee which is approved by
HUD to service insured mortgages.
[57 FR 58350, Dec. 9, 1992]

§ 208.101
AMENDMENTS

§ 207.499

Effect of amendments.

The regulations in this subpart may
be amended by the Commissioner at
any time and from time to time, in
whole or in part, but such amendment
shall not adversely affect the interests
of a mortgagee or lender under the contract of insurance on any mortgage or
loan already insured and shall not adversely affect the interests of a mortgagee or lender on any mortgage or
loan to be insured on which the Commissioner has made a commitment to
insure.

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

Purpose.
Applicability.
Requirements.
Cost.

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

§ 208.101

Purpose.

The purpose of this part is to require
owners
of
subsidized
multifamily
projects to electronically submit certain data to HUD for the programs listed in § 208.104. This electronically submitted data is required by HUD Forms,
Owner’s Certification of Compliance
with Tenant’s Eligibility and Rent Procedure, Worksheets to Compute Tenant
Payment/Rent (Form HUD–50059 and
50059 Worksheets), and the Monthly
Subsidy Billing Forms, Housing Owner’s Certification and Application for
Housing Assistance Payments (HUD–
52670), Schedule of Tenant Assistance
Payments Due (HUD–52670A, Part 1),
Schedule of section 8 Special Claims
(HUD–52670A, Part 2), and Special
Claims
Worksheets,
HUD–52671
A
through D), as applicable.

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