24 C.F.R. PART 235—MORTGAGE INSURANCE AND ASSISTANCE PAYMENTS FOR HOME OWNERSHIP AND PROJECT REHABILITATION
Title 24 - Housing and Urban Development
Authority: 12 U.S.C. 1715b and 1715z; 42 U.S.C. 3535(d).
The regulations regarding eligibility requirements (including eligibility requirements for noncitizens) for homes for lower income families in force before December 8, 1995, will continue to govern the rights and obligations of mortgagors, mortgagees, and the Department of Housing and Urban Development with respect to loans insured under section 235(i) of the National Housing Act. [61 FR 13624, Mar. 27, 1996] Source: 41 FR 1176, Jan. 6, 1976, unless otherwise noted.
(a) All of the provisions of subpart B, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to mortgages insured under section 235 of the National Housing Act, except the following provisions:
Sec. 203.258 Substitute mortgagors. 203.259a Scope. 203.260 Amount of Mortgage Insurance Premium (MIP). 203.269 Open-end insurance charge. 203.280 One-time MIP. 203.281 Calculation of one-time MIP. 203.282 Mortgagee's late charge and interest. 203.283 Refund of one-time MIP. 203.357 Deed in lieu of foreclosure. 203.379 Adjustment for damage or neglect. 203.380 Certificate of property condition. 203.389 Waived title objections. 203.400 Method of payment. 203.420 Nature of Mutual Mortgage Insurance Fund. 203.421 Allocation of Mutual Mortgage Insurance Fund income or loss. 203.422 Rights and liability under Mutual Mortgage Insurance Fund. 203.423 Distribution of distributive shares. 203.424 Maximum amount of distributive shares. 203.425 Finality of determination. 203.426 Inapplicability to housing in older, declining urban areas. 203.436 Claim procedure—graduated payment mortgages. 203.439 Mortgages on Hawaiian home lands insured pursuant to section 247 of the National Housing Act. 203.439a Mortgages on property in Allegany Reservation of Seneca Nation of Indians authorized by section 203(q) of the National Housing Act. 203.440 Through 203.495 insured home improvement loans. (b) The term property or each family dwelling unit as used in §§203.251 through 203.435 of this chapter (part 203, subpart B) shall, when used in connection with a family unit in a condominium, be construed to include a “one-family unit and the undivided interest in the common areas and facilities.” [41 FR 1176, Jan. 6, 1976, as amended at 41 FR 42949, Sept. 29, 1976; 42 FR 29306, June 8, 1977; 47 FR 30754, July 15, 1982; 48 FR 28807, June 23, 1983; 52 FR 8070, Mar. 16, 1987; 52 FR 28470, July 30, 1987; 52 FR 48205, Dec. 21, 1987; 53 FR 9869, Mar. 28, 1988; 55 FR 34814, Aug. 24, 1990] (a) With respect to mortgages approved for insurance under this part prior to January 5, 1976, the initial MIP shall be in an amount equal to one-half percent of the average outstanding principal obligation for the first year of amortization under the mortgage, without taking into account delinquent payments or prepayments. (b) With respect to mortgages approved for insurance under this part on and after January 5, 1976, the initial MIP shall be in an amount equal to seven-tenths of one percent of the average outstanding principal obligation for the first year of amortization under the mortgage, without taking into account delinquent payments or prepayments. (a) With respect to mortgages approved for insurance under this part prior to January 5, 1976, after payment of the initial MIP an annual MIP shall be paid in an amount equal to one-half percent of the average outstanding principal obligation for the 12-month period preceding the date on which the premium becomes payable, without taking into account delinquent payments or prepayments. (b) With respect to mortgages approved for insurance under this part on and after January 5, 1976, after payment of the initial MIP an annual MIP shall be paid in an amount equal to seven-tenths of one percent of the average outstanding principal obligation for the 12-month period preceding the date on which the premium becomes payable, without taking into account delinquent payments or prepayments. All of the provisions of §203.357 of this chapter relating to the acceptance of a deed in lieu of foreclosure shall apply to mortgages insured under this part, except that where a family unit in condominium is involved, the deed in lieu of foreclosure may be accepted only if the mortgagee establishes to the satisfaction of the Secretary that there are no unpaid assessments owed to the association or cooperative of owners. (a) Selling mortgagor. The mortgagee may effect the release of a mortgagor from personal liability on the mortgage note only if it obtains the Commissioner's approval of a substitute mortgagor, as provided under this section. The Commissioner may release a mortgagor from personal liability on any second mortgage note it holds in connection with its approval of a substitute mortgagor under this section. (b) Purchasing mortgagor. The Commissioner may approve a substitute mortgagor with respect to any mortgage insured under this part only if the mortgagor is to occupy the dwelling as a principal residence (as defined in §203.18(f)(1) of this chapter) and only if the mortgagor meets all applicable requirements of this part. (c) Applicability—current mortgagor. Paragraph (b) of this section applies to the Commissioner's approval of a substitute mortgagor only if the mortgage executed by the original mortgagor met the conditions of §203.258(c) of this chapter. (d) Applicability—earlier mortgagor. The occupancy and similar requirements set forth in §203.258(d) of this chapter apply to mortgages insured under subpart A of this part. (e) Definition. As used in this section, the term substitute mortgagor includes: (1) Persons who, upon the release by a mortgagee of a previous mortgagor from personal liability on the mortgage note, assume this liability and agree to pay the mortgage debts; and (2) Persons who purchase without assuming liability on the mortgage note, or purchase where no release is given by the mortgagee to the previous mortgagor. [55 FR 34814, Aug. 24, 1990] If the application for insurance benefits is acceptable to the Secretary, the insurance claim shall be paid in cash, unless the mortgagee files a written request with the application for payment in debentures. [59 FR 49817, Sept. 30, 1994] All of the provisions of §203.379 relating to the adjustment of the insurance claim for damage or neglect and all of the provisions of §203.380 of this chapter requiring the mortgagee to certify as to the condition of the property shall apply to mortgages insured under this subpart with the exception of mortgages involving condominium units. Sections 235.230 and 235.235 contain the comparable provisions applicable to mortgages involving condominium units. [41 FR 1176, Jan. 6, 1976, as amended at 42 FR 29306, June 8, 1977] (a) General provisions. All of the provisions of §203.389 of this chapter (relating to the waiver by the Secretary of objections to title) shall apply to mortgages insured under this subpart, with the exception of mortgages involving condominium units. (b) Provisions applicable to condominiums. Where the mortgage involves a condominium unit, the Secretary shall not object to title by reason of the following matters: (1) Violations of a restriction based on race, color or creed, even where such restriction provides for a penalty of reversion or forfeiture of title or a lien for liquidated damage. (2) Easements for public utilities along one or more of the property lines, provided the exercise of the rights thereunder do not interfere with any of the buildings or improvements located on the subject property. (3) Encroachments on the subject property by improvements on adjoining property, provided such encroachments do not interfere with the use of any improvements on the subject property. (4) Variations between the length of the subject property lines as shown on the application for insurance and as shown by the record or possession lines, provided such variations do not interfere with the use of any of the improvements on the subject property. (5) Customary buildings or use restrictions for breach of which there is no reversion and which have not been violated to a material extent. (6) Federal tax liens and rights of redemption arising thereform if the following conditions are observed. If the mortgagee acquired the property by foreclosure the mortgagee shall give notice to the Internal Revenue Service (IRS) of the foreclosure action. The Commissioner will not object to an outstanding right of redemption in IRS if (i) the Federal tax lien was perfected subsequent to the date of the mortgage lien, and (ii) the mortgagee has bid an amount sufficient to make the mortgagee whole if the property is in fact redeemed by the IRS. [41 FR 1176, Jan. 6, 1976, as amended at 42 FR 29306, June 8, 1977] The mortgagee shall notify the Secretary of any change in the plan of apartment ownership and in the administration of the property. Such notification shall be given either at the time of the conveyance of the property or at the time of the assignment of the mortgage. Any change in such plan shall require approval by the Secretary. (a) When a family unit is conveyed or a mortgage is assigned to the Secretary, the family unit and the common areas and facilities (including restricted common areas and facilities) designated for the particular unit shall be undamaged by fire, flood, earthquake, tornado, or boiler explosion, or, as to mortgages insured on or after June 8, 1977, due to failure of the mortgagee to take action as required by §203.377. If the property has been damaged, either of the following actions shall be taken: (1) The property may be repaired prior to its conveyance or prior to the assignment of the mortgage to the Secretary. (2) With the prior approval of the Secretary, the property may be conveyed or the mortgage assigned to the Secretary without repairing the damage. In such instances, the Secretary shall deduct from the insurance benefits either his estimate of the decrease in value of the family unit or the amount of any insurance recovery received by the mortgagee, whichever amount is the greater. (b) If the property has been damaged by fire and such property was not covered by fire insurance at the time of the damage, the mortgagee may convey the property or assign the mortgage to the Secretary without deduction from the insurance benefits for any loss occasioned by such fire if the following conditions are met: (1) The property shall have been covered by fire insurance at the time the mortgage was insured. (2) The fire insurance company shall have later canceled or refused to renew the policy. (3) The mortgagee shall have notified the Secretary within 30 days (or within such further time as the Secretary may approve) of the cancellation of the fire insurance or of the refusal of the insuring company to renew the fire insurance. This notification shall have been accompanied by a certification of the mortgagee that diligent efforts were made, but it was unable to obtain fire insurance coverage at reasonably competitive rates and that it will continue its efforts to obtain adequate fire insurance coverage at competitive rates, including coverage under the FAIR Plan. A reasonable rate is a rate not more than 25 percent in excess of the rate or the advisory rate filed or used by the principal rating organization doing business in the state. If the property is located in a state which has no rate or advisory rate as provided in the preceding sentence, the mortgagee shall consult the Director of the local HUD office as to a reasonable rate. When hazard insurance coverage has been cancelled or renewal has been refused after the mortgage is insured, and other hazard insurance coverage cannot be obtained in an amount equal to the unpaid principal balance of the loan but insurance can be obtained in a reduced amount from a FAIR Plan or another insurance carrier, the Commissioner will accept the reduced coverage without reduction of mortgage insurance benefits, if the rates do not exceed the guidelines stated herein. If coverage in any amount is only available at rates in excess of a reasonable rate as defined herein, the mortgagor may but shall not be required to purchase such coverage. If coverage is purchased, the amount of any claim for insurance benefits under this part shall be reduced by the amount of any recovery of hazard insurance benefits by the mortgagee. (c) The mortgagee shall not be liable for damage to the property by waste in connection with mortgage insurance claims paid on or after July 2, 1968. However, the mortgagee shall be responsible for damage to or destruction of security properties on which the loans are in default and which properties are vacant or abandoned due to the mortgagee's failure to take reasonable action to inspect, protect and preserve such properties as required by §203.377, as to all mortgages insured on or after January 1, 1977, but such responsibility shall not exceed the amount of its insurance claim as to a particular property. [41 FR 1176, Jan. 6, 1976, as amended at 42 FR 29306, June 8, 1977] The mortgagee shall either certify that as of the date of the filing of deed for record, or assignment of the mortgage to the Secretary, the property was (a) undamaged by fire, flood, earthquake, tornado, or boiler explosion, and (b) as to mortgages insured or for which commitments to insure are issued on or after June 8, 1977, undamaged due to failure of the mortgagee to take action as required by §203.377 of this chapter, or its claim shall be accompanied by a statement describing any such damage that may still exist together with a copy of the Secretary's authorization to convey the property in damaged condition. In the absence of evidence to the contrary, the mortgagee's certificate or its statement as to damage shall be accepted by the Secretary as establishing the condition of the family unit and the common areas and facilities designated for the particular unit. [42 FR 29306, June 8, 1977] When a family unit is conveyed to the Secretary or a mortgage is assigned to the Secretary, the unit shall be assessed and subject to assessment for taxes pertaining only to that unit. The mortgagee shall certify, as of the date of filing for record of the deed or assignment of the mortgage to the Secretary, that the family unit is assessed and subject to assessment for taxes pertaining to that unit. The provisions of §203.382, relating to the cancellation of hazard insurance upon filing for record of the deed to the Secretary, are incorporated by reference and shall apply to hazard insurance policies carried solely for the family unit. Source: 41 FR 1178, Jan. 6, 1976, unless otherwise noted.
The definitions contained in §235.5 shall apply to this subpart. In addition the term assistance payment means that portion of a homeowner's or cooperative member's monthly mortgage payment which the Secretary becomes obligated to pay under an assistance payment contract. This subpart shall constitute the contract between the mortgagee and the Secretary for assistance payments pursuant to section 235(b) of the National Housing Act. (a) Homeowners. The issuance of a mortgage insurance certificate pursuant to §235.1 et seq. shall also constitute the execution of the assistance payment contract with respect to the mortgage being insured. (b) Cooperative members. The issuance of a certificate approving an application filed on behalf of a cooperative member shall constitute the execution of the assistance payment contract with respect to member named in the certificate. To qualify for assistance payments, the homeowner's income at the time of application for assistance, shall be within the limitations provided in §235.10, and the homeowner shall be a mortgagor under a mortgage insured or to be issued pursuant to subparts A and B to this part. To qualify for assistance payments, the homeowner shall not have paid in connection with the purchase of the property with respect to which assistance payments are to be made more than the Secretary's estimate of value of such property, nor shall the purchase price exceed 120 percent of the mortgage amount established pursuant to §235.25 or §235.30, whichever is applicable. The following cooperative members shall qualify for assistance payments subject to the requirement of this subpart C: (a) A member of a cooperative association which operates a housing project financed with a mortgage insured under §§213.1 through 213.280 or §§221.502 through 221.790 of this chapter pursuant to Section 221(d)(3) of the National Housing Act provided: (1) The housing project has been constructed or substantially rehabilitated not more than two years prior to the filing of the application for assistance payments and the dwelling unit had no previous occupant, or (2) The cooperative member acquired membership and occupancy rights from one who was receiving assistance payments, or (3) The cooperative member meets one of the following qualifications: (i) The member's family is displaced from an urban renewal area, or as a result of a governmental action, or as a result of a major disaster as determined by the President. (ii) The member's family shall include five or more minor persons. (iii) The member's family shall have been occupying low-rent public housing at the time the application for assistance payments is filed, or (4) That, without such assistance, the cooperative member would be likely to be involuntarily displaced from a dwelling in the project in connection with its conversion from rental to cooperative housing. Provided, That any family (i) which, by virtue of threatened displacement from a unit in a housing project to be operated by a cooperative association would be eligible for assistance under this provision in order to occupy a one-family unit in the resulting housing project, and (ii) which is precluded from such occupancy and membership in the cooperative association because of a rule of the association, may be entitled to assistance under this section in connection with a single family dwelling or a one-family unit in another housing project to be operated by a cooperative association, which otherwise meets the standards of this subsection and which is located in the same market area. (b) A member of a cooperative association which operates a housing project which is financed under a State or local program providing assistance through loans, loan insurance or tax abatements, and which prior to completion of construction or rehabilitation is approved for receiving the benefits of this section. (c) Eligibility as a cooperative member under this subpart also requires eligible status with respect to citizenship or eligible immigration status determined in accordance with 24 CFR part 200, subpart G. (See §235.13.) [45 FR 62796, Sept. 22, 1980, as amended at 46 FR 56422, Nov. 17, 1981; 46 FR 61455, Dec. 17, 1981; 51 FR 11219, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 60 FR 14833, Mar. 20, 1995] (a) With respect to mortgages insured pursuant to conditional commitments issued or preliminary reservations approved before July 13, 1981, the maximum amount of the mortgage attributed to the dwelling unit of the cooperative member shall not exceed $32,000, except that such amount may be increased to $38,000 in the case of a family of five or more persons where the conditions set forth in §235.25(a)(2) are met. These amounts may be increased to $38,000 and $44,000, respectively, in any geographical area where the Secretary finds cost levels so require. (b) With respect to mortgages insured pursuant to conditional commitments issued or preliminary reservations approved on or after July 13, 1981, the maximum amount of the mortgage attributed to the dwelling unit of the cooperative member shall not exceed $40,000, except that such amount may be increased to $47,500 in the case of a family of five or more persons where the conditions set forth in §235.25(a)(2) are met. These amounts may be increased to $47,500 and $55,000, respectively, in any geographical area where the Secretary finds cost levels so require. [46 FR 29259, June 1, 1981] If the mortgage relates to a dwelling unit to be occupied by a handicapped person as defined in §235.5(c)(2), the otherwise applicable dollar amount limitation under §235.330 may be increased in such amount as may be necessary to reflect the cost of making the dwelling unit accessible to and usable by such person, but not to exceed 10 percent of such limitation. [49 FR 21320, May 21, 1984] (a) The assistance payment on behalf of a mortgagor shall be the lesser of the following: (1) The difference between 20 percent of the homeowner's or cooperative member's adjusted monthly income and the required monthly payment under the mortgage for principal, interest, taxes, insurance, and mortgage insurance premium. (2)(i) With respect to mortgages approved for insurance under this part by the Secretary before January 5, 1976, the difference between the required monthly payment under the mortgage for principal, interest, and mortgage insurance premium and the monthly payment which would be required for principal and interest if the mortgage bore an interest rate of 1 percent. (ii) With respect to mortgages approved for insurance under this part by the Secretary on or after January 5, 1976, but before March 7, 1978, the difference between the required monthly payment under the mortgage for principal, interest, and mortgage insurance premium and the monthly payment which would be required for principal and interest if the mortgage bore an interest rate of 5 percent. (iii) With respect to mortgages approved for insurance under this part by the Secretary on or after March 7, 1978, the difference between the required monthly payment under the mortgage for principal, interest, and mortgage insurance premium and the monthly payment which would be required for principal and interest if the mortgage bore an interest rate of 4 percent. (b) The assistance payment on behalf of a cooperative member shall be in an amount computed by using the formula prescribed in paragraph (a) of this section and applying the cooperative member's proportionate share of the obligation under the project mortgage to the items set forth in the formula. (c) In addition to the assistance payment referred to in paragraphs (a) and (b) of this section, the mortgagee shall be entitled to the monthly payment of an amount the Secretary deems sufficient to reimburse the mortgagee for its expense in handling the mortgage. (d) Special assessments levied by a governmental body are to be included under the term taxes as a part of the total monthly payment. However, ground rents, assessments of a homeowners' association, and special assessments levied by persons or private organizations are not to be included. [41 FR 1178, Jan. 6, 1976, as amended at 44 FR 25837, May 3, 1979] The assistance payment shall be due on the first day of each month and shall be paid upon the receipt of a billing, on a form prescribed by the Secretary, from the mortgagee or its authorized agent. (a) Homeowners. The term of the assistance payment contract shall begin on the date of disbursement of mortgage proceeds as shown on the commitment for insurance and shall continue until the contract is terminated pursuant to §235.375. (b) Cooperative members. The term of the assistance payment contract shall begin on the date of issuance of a certificate approving an application filed on behalf of a cooperative member and shall continue until the contract is terminated pursuant to §235.375. (a) The mortgagee shall obtain from the homeowner (or from the cooperative association on behalf of the cooperative member), on a form prescribed by the Secretary a recertification as to occupancy, employment, family composition and income whenever one of the following events takes place: (1) Annually, no earlier than 60 days before and no later than 30 days after the anniversary date of the mortgage or at such other anniversary date as set by the Secretary; (2) No more than 30 days after the mortgagee is notified by the mortgagor or learns from any identifiable source: (i) That the mortgagor or any adult (21 years or older) member of the family residing in the household changes or begins employment which results in an increase in the family income reported in the original application for assistance or the most recent recertification. (ii) That the family income (excluding earnings of minors) has increased at least $50 per month (except in the case of a mortgagor under a mortgage insured before January 5, 1976). (iii) A new member is added to the family who is not born in the United States (except for a mortgagor described in 235.13(a) (1) or (2)). (3) At such other times as the Secretary may require. (b) With respect to mortgages insured under this part after January 5, 1976, the mortgagee shall obtain from the applicant-homeowner at the time application is made for assistance and at the time of annual recertification required under paragraph (a)(1) of this section, on a form provided by the Secretary, a statement of the aggregate amounts of total income prior to adjustments reported for all family members (other than minors) by the applicant-homeowner in his most recent federal income tax return, if he is required to file such a return. If separate returns are filed by separate members of the family, the total income prior to adjustments included in all such returns (except returns of minors) shall be reported. If the income so reported is more than 25 percent above the income reported on the recertification the mortgagee shall obtain from the homeowner a new recertification or a written explanation of the difference in income reported on the two forms. (c) Mortgagors who fail to disclose their actual income in accordance with the requirements of this part will be required to reimburse the Secretary for all overpayments made on their behalf. (d) The homeowner must meet the disclosure and verification requirements for Social Security Numbers in connection with any recertification under this section, as provided by part 200, subpart T, of this chapter. For requirements regarding the signing and submitting of consent forms by homeowners for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 200, subpart V, of this chapter. [41 FR 1178, Jan. 6, 1976, as amended at 43 FR 60156, Dec. 26, 1978; 54 FR 39695, Sept. 27, 1989; 55 FR 11905, Mar. 30, 1990; 56 FR 7530, Feb. 22, 1991; 60 FR 14833, Mar. 20, 1995] Upon request of the mortgagor or cooperative member, the mortgagee must accept recertification whenever the mortgagor, his or her spouse, or an adult (21 years or older) member of the family changes or loses employment which results in a decrease in the family income reported in the most recent certification or recertification. This recertification must be on a form prescribed by the Secretary. See 24 CFR 200.1015(d)(2)(i) for the requirements for the disclosure and verification of Social Security Numbers for recertifications involving new family members. [54 FR 39595, Sept. 27, 1989, as amended at 55 FR 11905, Mar. 30, 1990] The mortgagee shall make appropriate adjustments in the amount of the requested assistance payments to reflect changes in family income reported in any required or optional recertification of the homeowner or cooperative member. The adjustment shall not be retroactive except at the discretion of the Secretary. The adjustment shall apply only to assistance payments beginning with the payment due no earlier than the first day of the month following and no later than the first day of the second month following the date the mortgagor's recertification is received by the mortgagee. (a) The mortgagee shall refund to the Secretary all overpaid assistance payments except where the mortgagee has filed a claim for mortgage insurance benefits or the mortgage has been paid in full or the mortgagor has sold the property to an assumptor, and the overpayment did not result from the fraud, misrepresentation or failure to meet contractual obligations, on the part of the mortgagee. (b) The mortgagee shall refund to the Secretary all overpaid assistance payments, together with the handling charges paid for each month of overpayment and interest on the amount refunded at the rate of 7% per annum, in any case where the overpayment resulted from fraud, misrepresentation or failure to meet contractual obligations, on the part of the mortgagee. (c) The mortgagee may increase the mortgagor's required monthly payments in an amount which will reimburse the mortgagee (except handling charges and interest) within a reasonable time without causing undue hardship to the mortgagor, except where the overpayment resulted from fraud or misrepresentation on the part of the mortgagee. (d) For purposes of this section overpaid assistance payments means assistance payments which the Secretary paid to the mortgagee on behalf of a mortgagor in excess of the amount of benefits to which the mortgagor was entitled and failure to meet contractual obligations means failure to request a required recertification or failure to act on a recertification as required in this part. [43 FR 60156, Dec. 26, 1978] The mortgagee shall maintain such records as the Secretary may require with respect to the mortgagor's payments, the mortgage assistance payments received from the Secretary, and the annual recertifications of financial status from the homeowner or mortgagor. Such records shall be kept on file for a period of time and in a manner prescribed by the Secretary and shall be available, when requested, for review and inspection by the Secretary or the Comptroller General of the United States. Where a mortgage covered by an assistance payment contract is sold to another approved mortgagee, the buyer shall succeed to all the rights and become bound by all the obligations of the seller under such contract. (a) Termination. The assistance payments contract shall be terminated when any of the following events occur: (1) The contract of mortgage insurance is terminated, except when the mortgage has been assigned to the Secretary. (2) The property is purchased by a homeowner not qualified to receive assistance payments. (3) The cooperative member transfers his membership and occupancy rights to a new cooperative member not qualified to receive assistance payments. (4) When the assistance payments contract has been suspended for a period of three years without reinstatement. (b) Suspension. The assistance payments contract shall be suspended when any one of the following events occur: (1) The homeowner or cooperative member ceases to occupy the property, except in the following instances: (i) The property is purchased by a homeowner who immediately assumes the mortgage obligation with respect to which assistance payments have been made on behalf of the previous owner, and who meets the income and asset requirements prescribed by the Secretary. (ii) The cooperative member transfers his membership and occupancy rights to a new member who assumes the mortgage obligation and who meets the income and asset requirements prescribed by the Secretary. (2) The mortgagee determines that the mortgagor or cooperative member ceases to qualify for the benefits of assistance payments by reason of his income increasing to an amount enabling him to pay the full monthly mortgage payment by using 20 percent of the family income. (3) Foreclosure is instituted. (4) The mortgagee is unable to obtain from the homeowner (or from the cooperative association on behalf of the cooperative member) a required recertification of occupancy, employment, income, and family composition, and (if required) disclosure and verification of Social Security Numbers, as prescribed in §235.350, and (if required) signed consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as prescribed in §235.350. (5) At such other times as the Secretary may require. (6) Failure to provide evidence of citizenship or eligible immigration status in accordance with 24 CFR part 5: (i) For a new member of the family, except with respect to a mortgagor described under §235.1. (ii) At the first recertification of an assistance contract, except with respect to a mortgagor described under §235.1; or (iii) Upon modification of an existing assistance contract. (c) Effect of termination or suspension. Upon termination or suspension of the assistance payments contract, the payment due on the first day of the month in which the termination or suspension occurs shall be the last payment to which the mortgagee shall be entitled; except that, in the case of a suspended contract, payment may be resumed after the contract is reinstated pursuant to paragraph (e) of this section. (d) Noneffect on mortgage insurance contract. The termination or suspension of the assistance payments contract, where the mortgage insurance contract is not simultaneously terminated, shall have no effect on the mortgage insurance contract. (e) Reinstatement. Where the assistance payments contract is suspended, it may be reinstated by the Secretary at the Secretary's discretion and on such conditions as the Secretary may prescribe. To be eligible for reinstatement under this section, the mortgagor or cooperative member must meet the requirements for the disclosure and verification of Social Security Numbers, as provided by part 200, subpart T, of this chapter, and the requirements for the signing and submitting of consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 200, subpart V of this chapter. [41 FR 1178, Jan. 6, 1976, as amended at 43 FR 60157, Dec. 26, 1978; 46 FR 56422, Nov. 17, 1981; 51 FR 11219, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 54 FR 39695, Sept. 27, 1989; 55 FR 11905, Mar. 30, 1990; 56 FR 7530, Feb. 22, 1991; 61 FR 13624, Mar. 27, 1996] The regulations in this subpart may be amended by the Secretary at any time and from time to time, in whole or in part, but such amendment shall not adversely affect the interest of a mortgagee under an existing contract for assistance payments. The effective date of these regulations is January 5, 1976. The regulations regarding eligibility requirements, contract rights and obligations, and assistance payments for rehabilitation sales projects in force before December 8, 1995, will continue to govern the rights and obligations of mortgagors, mortgagees, and the Department of Housing and Urban Development with respect to loans insured under section 235(j) of the National Housing Act. [60 FR 56500, Nov. 8, 1995] All of the provisions of subpart C, part 203 of this chapter covering mortgages insured under section 203 of the National Housing Act apply to mortgages insured under section 235 of the National Housing Act. [42 FR 29306, June 8, 1977] The statement of interest paid and taxes disbursed furnished by the mortgagee to the mortgagor pursuant to §203.508(c) of this chapter shall include, or be accompanied by, an accounting of the total amount of assistance payments paid by the Secretary and applied to the mortgagor's account during the preceding year. Such accounting will be provided in a manner which indicates (or permits the mortgagor readily to compute) the excess of the total amount of interest payments made during the year over the amount of the assistance payments made by the Secretary. The foregoing accounting shall contain, or be accompanied by, notification regarding the deductibility of interest payments made by the mortgagor in substantially the following language: “If you itemize deductions on your income tax returns, please read this notice. Under §1.163–1(d) of Federal Income Tax Regulations, you, as the borrower, may deduct for Federal income tax purposes only that part, if any, of mortgage interest payments made during the year which exceeded the amount of assistance payments made by HUD during the year. You are urged to contact your tax advisor or State and local tax offices for guidance regarding the deductibility of payments on your State or local income tax returns.” [48 FR 28986, June 24, 1983] Source: 57 FR 62453, Dec. 30, 1992, unless otherwise noted.
In accordance with the authority contained in section 235(r) of the National Housing Act, the Secretary may insure a mortgage given to refinance an existing mortgage which is insured under section 235 of the National Housing Act. [57 FR 62453, Dec. 30, 1992, as amended at 60 FR 56500, Nov. 8, 1995] (a) All of the provisions of subpart A, part 203 of this chapter concerning eligibility requirements of mortgages covering one- to four-family dwellings under section 203 of the National Housing Act apply to mortgages insured under section 235(r) of the National Housing Act, except the following provisions:
Sec. 203.16 Certificate and contract regarding use of dwelling for transient or hotel purposes. 203.17 Mortgage provisions. 203.18 Maximum mortgage amount. 203.18a Solar energy systems. 203.18b Increased mortgage amount. 203.19 Mortgagor's minimum investment. 203.20 Agreed interest rate. 203.25 Late charge. 203.28 Economic soundness of project. 203.29 Eligible mortgages in Alaska, Guam or Hawaii. 203.32 Mortgage lien. 203.33 Relationship of income to mortgage payments. 203.35 Disclosure and verification of Social Security and Employer Identification Numbers. 203.36 Certificate and contract regarding use of dwelling for transient or hotel purposes. 203.38 Location of dwelling. 203.42 Rental properties. 203.43 Eligibility of miscellaneous type mortgages. 203.43i Eligibility of mortgages on Hawaiian home lands pursuant to section 247 of the National Housing Act. 203.43j Eligibility of mortgages on Allegany Reservation of Seneca Nation of Indians. 203.44 Eligibility of open-end advances. 203.45 Eligibility of graduated payment mortgages. 203.46 Eligibility of modified graduated payment mortgages. 203.47 Eligiblity of growing equity mortgages. 203.49 Eligibility of adjustable rates mortgages. 203.50 Eligibility of rehabilitation loans. 203.51 Applicability. (b) For the purposes of this subpart, all references in part 203 of this chapter to section 203 of the Act shall be construed to refer to section 235 of the Act. [41 FR 1172, Jan. 6, 1976] Editorial Note: For As used in this subpart, the following terms shall have the meaning indicated: (a) Adjusted annual income means the annual family income remaining after making certain exclusions from gross annual income. The following items shall be excluded, in the order listed, from family gross annual income: (1) 5 percent of such gross annual income, in lieu of amounts to be withheld (social security, retirement, health insurance, etc.) regardless of the actual amount of such withholdings; (2) Any unusual income or temporary income, such as overtime pay which will be discontinued, income of a secondary wage earner which will terminate, unemployment compensation which does not occur regularly, or other income of a temporary nature which will be or has been discontinued. (3) The earnings of each minor in the family who is living with such family, plus the sum of $300 for each such minor. (b) [Reserved] (c) Family means: (1) Two or more persons related by blood, marriage, or operation of law, who occupy the same unit; (2) A handicapped person who has a physical impairment which is expected to be of a continued duration and which impedes his ability to live independently unless suitable housing is available; or (3) A single person, 62 years of age or older. (d) Gross annual income means the total income, before taxes and other deductions, received by all members of the mortgagor's household. There shall be included in this total income all wages, social security payments, retirement benefits, military and veteran's disability payments, unemployment benefits, welfare benefits, interest and dividend payments, and such other income items as the Secretary considers appropriate. (e) Minor means a person under the age of 21. As used in this subpart, minor shall not include a mortgagor or his or her spouse. (f) Substantial rehabilitation means the improvement of a unit in substandard condition to a decent, safe and sanitary level, meeting FHA's standards for mortgage insurance. Units are in substandard condition when, while they may be structurally sound, they do not provide safe and adequate shelter, and in their present condition endanger the health, safety, or well-being of the occupants. Such housing has one or more defects, or a combination of potential defects in sufficient number or extent to require considerable repair or rebuilding, or is of inadequate original construction. The defects are either so critical or so widespread that the structure should be extensively repaired. The estimated cost of the rehabilitation should normally not be less than 25 percent of the value of the property (including land) after rehabilitation. The rehabilitation should be of such scope that, when completed, all the components in the house are operable and should not be anticipated to require any work or major expense over and above normal maintenance for the first one-fourth to one-third of the mortgage term. [41 FR 1172, Jan. 6, 1976, as amended at 43 FR 60156, Dec. 26, 1978; 45 FR 62796, Sept. 22, 1980; 46 FR 56422, Nov. 17, 1981; 51 FR 11218, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988. Redesignated at 60 FR 56500, Nov. 8, 1995] (a) The mortgagor shall agree to recertify, on a form prescribed by the Secretary, as to occupancy, employment, family composition and income whenever one of the following events takes place: (1) Annually, no earlier than 60 days before and no later than 30 days after the anniversary date of the mortgage or at such other anniversary date as set by the Secretary; (2) No more than 30 days after; (i) The mortgagor or any adult (21 years or older) member of the family residing in the household changes or begins employment which results in an increase in the family income reported in the original application for assistance or the most recent recertification. (ii) The family income (except earnings of minors) increases at least $50 per month. (iii) A new member is added to the family in which case evidence of citizenship or eligible immigration status also shall be submitted, in accordance with part 200, subpart G, of this chapter. (3) At such other times as the Secretary may require. (b) Assistance payments may be used to assist a family owning a standard home to purchase a new home, but a family already owning a home must sell its present property and may not rent that property out to another and occupy the subsidized unit. (c) To be eligible under this part, the mortgagor or cooperative member must meet the requirements for the disclosure and verification of Social Security Numbers, as provided by part 200, subpart T, of this chapter. For requirements regarding the signing and submitting of consent forms by mortgagors and cooperative members for the obtaining of wage and claim information from State Wage Information Collection Agencies, see part 200, subpart V, of this chapter. Eligibility for assistance under this subpart also requires citizenship or eligible immigration status, as determined in accordance with part 200, subpart G, of this chapter, except that citizenship or eligible immigration status shall not be required of a mortgagor whose assistance contract was executed before June 19, 1995 and remains unchanged after that date. [41 FR 1172, Jan. 6, 1976, as amended at 41 FR 51011, Nov. 19, 1976; 43 FR 60156, Dec. 26, 1978; 46 FR 56422, Nov. 17, 1981; 51 FR 11218, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 54 FR 39695, Sept. 27, 1989; 56 FR 7530, Feb. 22, 1991; 60 FR 14832, Mar. 20, 1995. Redesignated and amended at 60 FR 56500, Nov. 8, 1995] (a) With respect to any mortgage insured under this part pursuant to a firm commitment issued on or after May 27, 1981, the mortgagor shall repay to the Secretary any assistance received under this part in the amount provided in paragraph (b) of this section when the mortgagor: (1) Disposes of the property or a homeowner not qualified to receive assistance payments, or (2) Has rented the property (or rented the owner's unit in the case of a two- to four-family property) for more than one year, or (3) Requests a release of the Secretary's lien on the property. (b) The amount of assistance to be repaid by the mortgagor shall be the lesser of the amount of assistance actually received under this part (other than handling charges) or 50 percent of the net appreciation of the property. (c) The term net appreciation of the property as used in this section means any increase in the value of the property over the purchase price, as of the time the mortgage is accepted for insurance, less the reasonable costs of sale and the reasonable costs of improvements made to the property. (d) The mortgagor shall execute such documents as the Secretary shall require to assure repayment to the Secretary of the amounts provided in this paragraph. [48 FR 40714, Sept. 19, 1983. Redesignated at 60 FR 56500, Nov. 8, 1995] (a) Mortgage form. (1) The term mortgage as used in this part has the same meaning as defined in either §203.17(a)(1) of this chapter, §203.43c(b)(1) of this chapter, or §234.1(d) of this chapter, as applicable, and may refer both to a security instrument creating a lien, whether called a mortgage, deed of trusts, security deed or other term common in a jurisdiction, as well as the credit instrument, or note, secured thereby. (2) The mortgage shall be in a form meeting the requirements of the Commissioner. For each case in which the Commissioner does not prescribe complete mortgage instruments, the Commissioner shall require specific language in the mortgage which shall be uniform for every mortgage, and may also prescribe the language or substance of additional provisions for all mortgages as well as the language or substance of additional provisions for use only in particular jurisdictions or for particular programs. Each mortgage shall also contain any provisions necessary to create a valid and enforceable secured debt under the laws of the jurisdiction in which the property is located. (b) Mortgage multiples. The mortgage shall involve a principal obligation in multiples of $50. (c) Payments. The mortgage shall: (1) Come due on the first of the month. (2) Contain complete amortization provisions satisfactory to the Secretary and an amortization period not in excess of the term of the mortgage. (d) Maturity. The mortgage shall provide for complete amortization not to exceed 30 years from the date of the beginning of amortization of the mortgage. (e) Property standards. The mortgage must be a first lien upon the property that conforms with property standards prescribed by the Commissioner. (f) Disbursement. The entire principal amount of the mortgage must have been disbursed to the mortgagor or to his or her creditors for his or her account and with his or her consent. [41 FR 1172, Jan. 6, 1976, as amended at 45 FR 29278, May 2, 1980; 48 FR 12085, Mar. 23, 1983; 49 FR 21320, May 21, 1984; 53 FR 34284, Sept. 6, 1988. Redesignated at 60 FR 56500, Nov. 8, 1995] (a) Except as provided in paragraph (b) of this section, a mortgagor must establish that after the mortgage offered for insurance has been recorded, the mortgaged property will be free and clear of all liens other than such mortgage, and that there will not be outstanding any other unpaid obligations contracted in connection with the mortgage transaction or the purchase of the mortgaged property, except obligations that are secured by property or collateral owned by the mortgagor independently of the mortgaged property. (b) With the prior approval of the Commissioner, the mortgaged property may be subject to a second mortgage made or insured, or other secondary lien held, by a Federal, State or local governmental agency or instrumentality. However, the required monthly payments under the insured mortgage and the second mortgage or lien shall not exceed the mortgagor's reasonable ability to pay, as determined by the Commissioner. [50 FR 20908, May 21, 1985; 50 FR 26696, June 28, 1985. Redesignated at 60 FR 56500, Nov. 8, 1995] The mortgage may provide for the collection by the mortgagee of a late charge, not to exceed four percent of the mortgagor's share of each payment more than 15 days in arrears, to cover servicing and other costs attributable to the receipt of payments from the mortgagors after the date upon which payment is due. Such charge shall not be included in the assistance payment. [42 FR 29306, June 8, 1977. Redesignated at 60 FR 56500, Nov. 8, 1995] (a) Mortgage amount. It must be in an amount not exceeding the lesser of: (1) The unpaid principal balance due on the mortgage being refinanced, including any advances properly made by the mortgagee under the terms of the mortgage and any current interest due and delinquent interest not to exceed two months; and (2) The original principal amount of the mortgage being refinanced. (b) Maturity date. It must have a maturity not to exceed the remaining term of the section 235 mortgage being refinanced. In the event that the remaining term is measured in years and months, the terms for the refinancing mortgage shall be rounded down to the next whole year. (c) Interest rate. (1) The 235(r) interest rate is the rate negotiated between the parties. Such rate shall not exceed the GNMA coupon rate plus a margin to be determined by the Secretary. The GNMA coupon rate is based on the closing price for three-month forward delivery contracts closest to par but not exceeding par on one of the following dates, whichever rate is higher: (i) The date the Direct Endorsement mortgagee's underwriter signs the Mortgage Credit Analysis Worksheet (form HUD–92900 WS); or (ii) The date the mortgage is closed. (2) The Secretary will pay the mortgagee a discount as part of the refinancing costs. The maximum discount points will be determined by the Secretary. (3) For a mortgage to be insurable under this subpart, the interest rate on the mortgage must be less than the interest rate shown on the mortgage being refinanced. The Secretary shall determine how much less the interest rate on the mortgage shall be in order for it to be insured. (d) Mortgagors' Incentive and Refinancing Costs. The incentive to the mortgagors and the refinancing costs that the Secretary will pay for mortgages insured under this subpart are as follows: (1) An amount determined by the Secretary to be an incentive to the mortgagor to refinance a mortgage insured under section 235; and (2) Amounts as determined by the Secretary for discounts, loan origination fees, closing costs, and other costs incurred in connection with the refinancing. (e) Eligible mortgagees. The Secretary shall determine whether this program will be open to all approved Direct Endorsement mortgagees, or only to those approved Direct Endorsement mortgagees that meet certain specified requirements. The Secretary may limit the program to a designated number of Direct Endorsement approved mortgagees if such a limitation will facilitate the most expeditious handling of these refinancing mortgages. (f) Eligible mortgagor. (1) It must be executed by a mortgagor who is eligible for, and receiving, assistance payments with respect to the mortgage being refinanced and from whom a recertification was obtained within the preceding twelve months prior to the application for the 235(r) mortgage, or a new recertification was required prior to the execution of the mortgage credit worksheet by the direct endorsement lender, or the firm commitment was issued by HUD. (2) The mortgagor must be an occupant of the property securing the mortgage. (3) The mortgagor has not received payments for the costs of refinancing or the mortgagor's incentive, nor have such payments been made on his behalf, as described in paragraph (d) of this section, for a period of 60 months from the date of the first payment of principal and interest on the mortgage to be refinanced; provided, however, that if the mortgagor pays its own cost to refinance, then this prohibition will not apply. (4) The mortgagor is eligible to continue to receive assistance in connection with the 235(r) mortgage, or the mortgagee has executed a HUD Notice of Suspension form that suspends the assistance payment contract from the date of disbursement of the mortgage loan. (5) The mortgagor has agreed to recertify, on a form prescribed by the Secretary, as to occupancy, employment, family composition and income in accordance with 24 CFR 235.350. (6) If the property is subject to a recapture mortgage securing the payment to the Secretary of assistance payments made on behalf of the mortgagor, the mortgagor must agree to modify and subordinate such mortgage to the mortgage to be insured under section 235(r) in accordance with instructions of the Secretary. (7) If the mortgage submitted for insurance requires an increase in the mortgagor's portion of the monthly payments due under the mortgage by more than $50.00 over the amount the mortgagor was paying on the mortgage being refinanced, then a mortgage credit analysis must be performed on the mortgagor to establish that his income is or will be adequate to meet his portion of the periodic payment due under the new mortgage and that the mortgagor has a general credit standing satisfactory to the Secretary as required by 24 CFR 203.34. (8) Cooperative members, who are receiving assistance payments, which in all cases are based on the cooperative member's proportionate share of the obligation under the project mortgage, are not eligible for section 235(r) mortgages. (g) Monthly Payments. The mortgage must have monthly principal and interest payments at the 235(r) interest rate that are less than the monthly payments of principal and interest on the mortgage being refinanced. [60 FR 56500, Nov. 8, 1995] The regulations containing the requirements which a mortgage must meet for the direct endorsement program are contained in 24 CFR 203.5 and 203.255. Under those sections, mortgages to be insured under section 235(r) must be originated through direct endorsement processing. There are several provisions of 24 CFR 203.5 and 203.255 which do not apply to section 235(r) mortgages and there are several additional requirements which are specific to section 235(r) mortgages which are contained in paragraph (b) of this section. Other than those provisions which have been specified in paragraph (a) of this section, the provisions contained in 24 CFR 203.5 and 203.255 apply to mortgages insured under section 235(r). (a) Inapplicable Provisions. (1) The properties, which are to be security for the section 235(r) mortgages, are currently security for mortgages insured under section 235, and are existing properties with no requirement for appraisals. The requirements for an appraisal in 24 CFR 203.5(e) and 203.255(b)(1) and for a review of an appraisal in 24 CFR 203.255(b)(5) shall not apply to a mortgage to be insured under section 235(r) of the National Housing Act. (2) There is no requirement that the mortgagee perform the mortgage credit analysis described in 24 CFR 203.5(d) for a mortgage insured under section 235(r) unless the mortgagor's portion of the monthly payments due under the mortgage to be insured increase by more than $50.00 over the amount the mortgagor was paying on the mortgage being refinanced as provided in §235.1202(b)(6). If the mortgagor's portion of the payment does not increase by more than $50.00, then the mortgagee shall perform the underwriting requirements in accordance with the instructions contained in a handbook or other similar publication which is provided to all mortgagees approved for the direct endorsement procedure. (3) Since there are special eligibility requirements for mortgages insured under section 235(r), paragraphs (c)(2) and (c)(3) of 24 CFR 203.255 do not apply to such mortgages, and in lieu thereof specific provisions for section 235(r) mortgages have been substituted as contained in paragraph (b) of this section. (b) Special Provisions. In addition to the review and determinations which must be made of the documents submitted by the mortgagee to the Secretary in accordance with 24 CFR 203.255(c), as revised for mortgages insured under section 235(r) by paragraph (a) of this section, the Secretary shall make the following specific determinations for section 235(r) mortgages: (1) That the term of the mortgage meets the requirements of 24 CFR 235.120(b)(2). (2) That the stated mortgage amount does not exceed the maximum dollar limitation under 24 CFR 235.1202(b)(1). (3) That the interest rate on the mortgage meets the requirements of 24 CFR 235.1202(b)(3). (c) Authority to sign. The mortgagees that have the authority to originate and close mortgages in accordance with §235.1218(e) shall have the authority to sign for and on behalf of the Secretary, in accordance with procedures established by the Secretary, without further specific approval, the following documents: (1) Approval of amount of assistance payments. The Form HUD 93100, “Application for Homeownership Assistance under section 235 of the National Housing Act,” which evidences a review of the information obtained from the mortgagor on the application, a determination of eligibility or ineligibility for assistance payments, and the amount of the assistance payments to which the mortgagor is entitled. (2) Subordination and modification agreement. An agreement, which subordinates a recapture second mortgage or deed of trust (recapture mortgage) held by HUD in accordance with 24 CFR 235.12, to the lien of the mortgage being submitted for insurance so that the recapture mortgage will remain a second lien. If the recapture mortgage is a third lien following a second lien made, held or insured by a Federal, State or local governmental agency, and approved by the Secretary, the direct endorsement mortgagee may sign an agreement subordinating the recapture mortgage to third lien place. The agreement shall also contain a modification of the recapture mortgage to include a new note to be signed by the mortgagor securing repayment of the assistance to be paid under the mortgage to be insured under section 235(r). [57 FR 62453, Dec. 30, 1992. Redesignated and amended at 60 FR 56499, 56501, Nov. 8, 1995] The provisions of subpart B of title 24 of part 235 shall be applicable to mortgages insured in accordance with section 235(r) of the National Housing Act. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] (a) Title 24, part 235, subpart C, as modified and supplemented by this subpart, shall constitute the contract between the mortgagee and the Secretary for assistance payments in connection with a mortgage insured under section 235(r) of the National Housing Act. (b) The sections of subpart C of this part which apply in connection with a mortgage insured under section 235(r) are the following:
Sec. 235.301 Definitions. 235.340 Time of payments. 235.350 Mortgagor's required recertification. 235.355 Mortgagor's optional recertification. 235.360 Adjustment in assistance payments. 235.361 Recovery of assistance payments. 235.365 Mortgagee records. 235.370 Effect of assignment of mortgage with an assistance payment contract. 235.375 Termination, suspension or reinstatement of the assistance payments contract. 235.499 Effect of amendments. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] (a) Assistance payments and handling charges. The assistance payments on behalf of the mortgagor shall be the lesser of the following: (1) The difference between 20 percent (or 28 percent in the case of contracts entered into for a ten-year term (ten year contracts) pursuant to the authority under section 235(c)(1) of the National Housing Act, as amended by the Housing and Urban-Rural Recovery Act of 1983 (Pub. L. 98–181)) of the homeowner's adjusted monthly income and the required monthly payment under the mortgage for principal, interest, taxes, insurance, and mortgage insurance premium. (2) The difference between the required monthly payment under the mortgage for principal, interest, and mortgage insurance premium and the monthly payment which would be required for principal and interest if the mortgage bore the lower interest rate established by the Secretary and in effect at the time of the closing of the mortgage being refinanced and which is referred to as the “floor rate.” (b) Floor rates. The floor rates are determined by the date of the closing of the mortgage being refinanced. As an example, the following chart contains floor rates. However, mortgagees must check the HUD Form 93100 for the mortgage being refinanced to obtain the floor rate for the mortgage, which rate is to be used to compute the formula contained in paragraph (a) of this section. (c) Handling charges. In addition to the assistance payments referred to in paragraph (a) of this section, the mortgagee shall be entitled to the monthly payment of an amount the Secretary deems sufficient to reimburse the mortgagee for its expense in handling the mortgage. (d) Taxes in monthly payment. Special assessments levied by a governmental body are to be included under the term “taxes” as part of the monthly payment. However, ground rents, assessments of a homeowners' association or condominium association, and special assessments levied by persons or private organizations are not to be included. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] The assistance payments contract for the mortgage being refinanced shall be terminated on the day before the disbursement of the proceeds of the mortgage to be insured, and no further assistance payments shall be made under such contract. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] The issuance of a mortgage insurance certificate pursuant to §235.1 et seq. shall also constitute the execution of the assistance payments contract with respect to the mortgage being insured. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] (a) To be eligible for assistance payments, a homeowner must: (1) Be a mortgagor on a mortgage insured under section 235(r); (2) Have been entitled to, and receiving, assistance payments under the mortgage being refinanced; and (3) According to the formula contained under §235.1210(a), continue to be eligible for such payments under the 235(r) mortgage. (b) The mortgagee, holding the mortgage being refinanced, must certify that the mortgagor is eligible for, and receiving, assistance payments under the mortgage being refinanced and that the last recertification by the mortgagor was within the preceding twelve months prior to the application for the section 235(r) mortgage. If the last recertification was not within that period, then the mortgagee will have to obtain a current recertification from the mortgagor for the purpose of determining whether the mortgagor remains eligible to continue receiving assistance payments under the mortgage being refinanced. (c) In addition, the mortgagee originating the 235(r) mortgage must obtain a new certification from the mortgagor for eligibility for assistance payments under the 235(r) mortgage. (d) For purposes of determining eligibility under the 235(r) mortgage, the mortgagor must certify as to occupancy, employment, family composition and income on a form prescribed by the Secretary. (e) The mortgagor shall agree to recertify, on a form prescribed by the Secretary, as to occupancy, employment, family composition and income in accordance with 24 CFR 235.350. (f) Homeowners, who are cooperative members and have been receiving assistance payments under section 235, are not eligible for assistance payments in connection with section 235(r) since they are not eligible for a mortgage insured under that section. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] (a) Existing contracts with original terms in excess of ten years. In cases where the existing contract has an original term in excess of ten years, the term of the new assistance payments contract in connection with section 235(r) shall commence on the date of disbursement of the mortgage proceeds as certified by the mortgagee and shall continue until the contract is terminated pursuant to 24 CFR 235.375. (b) Existing ten year contracts. (1) In cases of existing ten year contracts, the term of the new assistance payments contract in connection with section 235(r) shall commence on the date of the disbursement of the mortgage proceeds as certified by the mortgagee and shall continue for the unexpired term of the existing ten year contract, or until such earlier time as the contract is otherwise terminated pursuant to 24 CFR 235.375. The mortgagor will acknowledge receipt of a notice containing the expiration date of the new assistance payments contract. (2) If the Secretary determines that the mortgagor is unable, by reason of the new contract having reached its maturity, to resume full payments due under the mortgage insured under section 235(r) of the National Housing Act, the Secretary will, to the extent of funds available pursuant to section 235(c)(3) of the Act, contract to make, and make, continued assistance payments on behalf of the mortgagor for such period as the Secretary determines to be appropriate. [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] The mortgagor shall execute an agreement subordinating the recapture mortgage, if any, to the section 235(r) mortgage. The mortgagor shall also execute a new note for recapture of assistance payments, and amend the recapture mortgage to include in the principal balance the assistance payments made in connection with the mortgage insured under section 235(r). [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995] The provisions of subpart G of 24 CFR part 235 shall be applicable to mortgages insured under section 235(r). [57 FR 62453, Dec. 30, 1992. Redesignated at 60 FR 56499, Nov. 8, 1995]
Title 24: Housing and Urban Development
PART 235—MORTGAGE INSURANCE AND ASSISTANCE PAYMENTS FOR HOME OWNERSHIP AND PROJECT REHABILITATION
Section Contents
§ 235.1 Applicability of regulations.
§ 235.201 Cross-reference.
§ 235.202 Amount of initial MIP.
§ 235.204 Amount of annual MIP.
§ 235.205 Deed in lieu of foreclosure.
§ 235.206 Substitute mortgagors.
§ 235.215 Method of paying insurance benefits.
§ 235.220 Condition of property.
Special Provisions Applicable Only to Mortgages Involving Condominium Units
§ 235.221 Waived title objections.
§ 235.225 Changes in plan of apartment ownership.
§ 235.230 Condition of multifamily structure.
§ 235.235 Certificate or statement of condition.
§ 235.240 Assessment of taxes.
§ 235.245 Certificate of tax assessment.
§ 235.250 Cancellation of property insurance.
§ 235.301 Definitions.
§ 235.305 Contract for assistance payments.
§ 235.310 Execution of assistance payment contract.
§ 235.315 Qualified homeowners.
§ 235.320 Limitation of sales price.
§ 235.325 Qualified cooperative members.
§ 235.330 Cooperative unit eligible for assistance payments.
§ 235.331 Increased maximum mortgage amount for physically handicapped persons.
§ 235.335 Assistance payments and handling charges.
§ 235.340 Time of payments.
§ 235.345 Term of assistance contract.
§ 235.350 Mortgagor's required recertification.
§ 235.355 Mortgagor's optional recertification.
§ 235.360 Adjustment in assistance payments.
§ 235.361 Recovery of assistance payments.
§ 235.365 Mortgagee records.
§ 235.370 Effect of assignment of mortgage with an assistance payment contract.
§ 235.375 Termination, suspension, or reinstatement of the assistance payments contract.
§ 235.499 Effect of amendments.
§ 235.501 Applicability of regulations.
§ 235.1000 Cross-reference.
§ 235.1001 Providing information.
Eligibility Requirements; Direct Endorsement
§ 235.1200 Authority.
§ 235.1202 Cross-reference.
§ 235.1206 Definitions used in this subpart.
§ 235.1208 Eligible mortgagors.
§ 235.1210 Recapture of assistance payments.
§ 235.1212 Mortgage provisions.
§ 235.1214 Mortgage lien.
§ 235.1216 Late charge.
§ 235.1218 Additional eligibility requirements.
§ 235.1220 Processing section 235(r) mortgages under the direct endorsement program.
Contract Rights and Obligations
§ 235.1222 Cross-reference.
Contract for Assistance Payments
§ 235.1224 Cross-reference.
§ 235.1226 Additional provisions of the assistance payment contracts for section 235(r).
§ 235.1228 Termination of assistance payments contracts on mortgages to be refinanced.
§ 235.1230 Execution of assistance payment contract.
§ 235.1232 Eligibility for assistance payments.
§ 235.1234 Term of assistance payment contract in connection with mortgages insured under section 235(r) of the Act.
§ 235.1236 Recapture of assistance payments.
Servicing Responsibilities
§ 235.1238 Cross-reference.
Subpart A—Eligibility Requirements—Homes for Lower Income Families
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§ 235.1 Applicability of regulations.
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Subpart B—Contract Rights and Obligations—Homes for Lower Income Families
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§ 235.201 Cross-reference.
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§ 235.202 Amount of initial MIP.
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§ 235.204 Amount of annual MIP.
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§ 235.205 Deed in lieu of foreclosure.
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§ 235.206 Substitute mortgagors.
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§ 235.215 Method of paying insurance benefits.
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§ 235.220 Condition of property.
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Special Provisions Applicable Only to Mortgages Involving Condominium Units
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§ 235.221 Waived title objections.
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§ 235.225 Changes in plan of apartment ownership.
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§ 235.230 Condition of multifamily structure.
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§ 235.235 Certificate or statement of condition.
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§ 235.240 Assessment of taxes.
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§ 235.245 Certificate of tax assessment.
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§ 235.250 Cancellation of property insurance.
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Subpart C—Assistance Payments—Homes for Lower Income Families
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§ 235.301 Definitions.
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§ 235.305 Contract for assistance payments.
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§ 235.310 Execution of assistance payment contract.
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§ 235.315 Qualified homeowners.
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§ 235.320 Limitation of sales price.
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§ 235.325 Qualified cooperative members.
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§ 235.330 Cooperative unit eligible for assistance payments.
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§ 235.331 Increased maximum mortgage amount for physically handicapped persons.
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§ 235.335 Assistance payments and handling charges.
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§ 235.340 Time of payments.
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§ 235.345 Term of assistance contract.
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§ 235.350 Mortgagor's required recertification.
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§ 235.355 Mortgagor's optional recertification.
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§ 235.360 Adjustment in assistance payments.
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§ 235.361 Recovery of assistance payments.
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§ 235.365 Mortgagee records.
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§ 235.370 Effect of assignment of mortgage with an assistance payment contract.
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§ 235.375 Termination, suspension, or reinstatement of the assistance payments contract.
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§ 235.499 Effect of amendments.
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Subpart D—Rehabilitation Sales Projects
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§ 235.501 Applicability of regulations.
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Subparts E–F [Reserved]
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Subpart G—Servicing Responsibilities—Homes for Lower Income Families
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§ 235.1000 Cross-reference.
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§ 235.1001 Providing information.
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Subpart H—Eligibility Requirements: Contract Rights and Obligations; Assistance Payments Contracts; Servicing Responsibilities—Refinancing Mortgages Under Section 235(r) of the National Housing Act
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Eligibility Requirements; Direct Endorsement
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§ 235.1200 Authority.
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§ 235.1202 Cross-reference.
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§ 235.1206 Definitions used in this subpart.
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§ 235.1208 Eligible mortgagors.
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§ 235.1210 Recapture of assistance payments.
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§ 235.1212 Mortgage provisions.
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§ 235.1214 Mortgage lien.
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§ 235.1216 Late charge.
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§ 235.1218 Additional eligibility requirements.
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§ 235.1220 Processing section 235(r) mortgages under the direct endorsement program.
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Contract Rights and Obligations
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§ 235.1222 Cross-reference.
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Contract for Assistance Payments
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§ 235.1224 Cross-reference.
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§ 235.1226 Additional provisions of the assistance payment contracts for section 235(r).
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Table------------------------------------------------------------------------ Interest rate ---------------------------------------- To compute second Date of closing element of Note rate (percent) subsection (a)(2) (percent)------------------------------------------------------------------------8/9/68-1/4/76.................. N/A................ 11/5/76-3/6/78.................. N/A................ 53/7/78-3/8/81.................. N/A/............... 4On or after 3/9/81............. 13.50 or below..... 4 13.75-14.00........ 4\3/4\ 14.25-14.50........ 5\1/2\ 15.00.............. 6 15.50.............. 6\3/4\ 16................. 7\1/4\ 16.50.............. 8 17.50.............. 8------------------------------------------------------------------------
§ 235.1228 Termination of assistance payments contracts on mortgages to be refinanced.
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§ 235.1230 Execution of assistance payment contract.
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§ 235.1232 Eligibility for assistance payments.
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§ 235.1234 Term of assistance payment contract in connection with mortgages insured under section 235(r) of the Act.
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§ 235.1236 Recapture of assistance payments.
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Servicing Responsibilities
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§ 235.1238 Cross-reference.
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