[Title 24 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2000 Edition]
[From the U.S. Government Printing Office]
[[Page i]]
24
Parts 200 to 499
Revised as of April 1, 2000
Housing and Urban Development
Containing a Codification of documents of general
applicability and future effect
As of April 1, 2000
With Ancillaries
Published by
the Office of the Federal Register
National Archives and Records
Administration
As a Special Edition of the Federal Register
[[Page ii]]
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2000
For sale by U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
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Table of Contents
Page
Explanation................................................. v
Title 24:
Subtitle B--Regulations Relating to Housing and Urban
Development (Continued)
Chapter II--Office of Assistant Secretary for
Housing--Federal Housing Commissioner, Department of
Housing and Urban Development....................... 5
Chapter III--Government National Mortgage
Association, Department of Housing and Urban
Development......................................... 503
Chapter IV--Office of Housing and Office of
Multifamily Housing Assistance Restructuring,
Department of Housing and Urban Development......... 515
Finding Aids:
Material Approved for Incorporation by Reference........ 559
Table of CFR Titles and Chapters........................ 595
Alphabetical List of Agencies Appearing in the CFR...... 613
List of CFR Sections Affected........................... 623
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 24 CFR 200.1 refers
to title 24, part 200,
section 1.
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[[Page v]]
EXPLANATION
The Code of Federal Regulations is a Codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
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parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
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[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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This material, like any other properly issued regulation, has the force
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What is a proper incorporation by reference? The Director of the
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(a) The incorporation will substantially reduce the volume of
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(b) The matter incorporated is in fact available to the extent
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(c) The incorporating document is drafted and submitted for
publication in accordance with 1 CFR part 51.
Properly approved incorporations by reference in this volume are
listed in the Finding Aids at the end of this volume.
What if the material incorporated by reference cannot be found? If
you have any problem locating or obtaining a copy of material listed in
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the revision dates of the 50 CFR titles.
[[Page vii]]
REPUBLICATION OF MATERIAL
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Raymond A. Mosley,
Director,
Office of the Federal Register.
April 1, 2000.
[[Page ix]]
THIS TITLE
Title 24--Housing and Urban Development is composed of five volumes.
The first four volumes containing parts 0-199, parts 200-499, parts 500-
699, parts 700-1699, represent the regulations of the Department of
Housing and Urban Development. The fifth volume, containing part 1700 to
end continues with regulations of the Department of Housing and Urban
Development and also includes regulations of the Neighborhood
Reinvestment Corporation. The contents of these volumes represent all
current regulations codified under this title of the CFR as of April 1,
2000.
For this volume, Bonnie J. Fritts was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Frances D. McDonald, assisted by Alomha S. Morris.
[[Page x]]
[[Page 1]]
TITLE 24--HOUSING AND URBAN DEVELOPMENT
(This book contains parts 200 to 499)
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Part
SUBTITLE B--Regulations Relating to Housing and Urban Development
(Continued):
Chapter II--Office of Assistant Secretary for Housing--
Federal Housing Commissioner, Department of Housing and
Urban Development......................................... 200
Chapter III--Government National Mortgage Association,
Department of Housing and Urban Development............... 300
Chapter IV--Office of Housing and Office of Multifamily
Housing Assistance Restructuring, Department of Housing
and Urban Development..................................... 401
Cross References: Rural Housing and Community Development Service, Rural
Business and Cooperative Development Service, Rural Utilities Service,
and Consolidated Farm Service Agency, Department of Agriculture: For
Agricultural credit, see 7 CFR chapter XVIII.
Office of Thrift Supervision, Department of the Treasury, 12 CFR
chapter V.
Department of Veterans Affairs regulations on assistance to certain
veterans in acquiring specially adapted housing and guaranty of loans on
homes: See Pensions, Bonuses, and Veteran Relief, 38 CFR part 36.
[[Page 3]]
Subtitle B--Regulations Relating to Housing and Urban Development
(Continued)
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[[Page 5]]
CHAPTER II--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL
HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
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SUBCHAPTER A--GENERAL
Part Page
200 Introduction to FHA programs................ 7
SUBCHAPTER B--MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL
HOUSING ACT AND OTHER AUTHORITIES
201 Title I property improvement and
manufactured home loans................. 80
202 Approval of lending institutions and
mortgagees.............................. 113
203 Single family mortgage insurance............ 123
204 Coinsurance................................. 230
206 Home equity conversion mortgage insurance... 231
207 Multifamily housing mortgage insurance...... 252
208 Electronic transmission of required data for
certification and recertification and
subsidy billing procedures for
multifamily subsidized projects......... 262
213 Cooperative housing mortgage insurance...... 265
219 Flexible subsidy program for troubled
projects................................ 272
220 Mortgage insurance and insured improvement
loans for urban renewal and concentrated
development areas....................... 272
221 Low cost and moderate income mortgage
insurance............................... 281
231 Housing mortgage insurance for the elderly.. 294
232 Mortgage insurance for nursing homes,
intermediate care facilities, board and
care homes, and assisted living
facilities.............................. 294
234 Condominium ownership mortgage insurance.... 309
235 Mortgage insurance and assistance payments
for home ownership and project
rehabilitation.......................... 316
[[Page 6]]
236 Mortgage insurance and interest reduction
payment for rental projects............. 335
241 Supplementary financing for insured project
mortgages............................... 346
242 Mortgage insurance for hospitals............ 368
244 Mortgage insurance for group practice
facilities [Title XI]................... 369
245 Tenant participation in multifamily housing
projects................................ 369
246 Local rent control.......................... 379
247 Evictions from certain subsidized and HUD-
owned projects.......................... 385
248 Prepayment of low income housing mortgages.. 388
251 Coinsurance for the construction or
substantial rehabilitation of
multifamily housing projects............ 438
252 Coinsurance of mortgages covering nursing
homes, intermediate care facilities, and
board and care homes.................... 440
255 Coinsurance for the purchase or refinancing
of existing multifamily housing projects 442
266 Housing finance agency risk-sharing program
for insured affordable multifamily
project loans........................... 444
SUBCHAPTER C--PLANNING ASSISTANCE TO HOUSING SPONSORS [RESERVED]
SUBCHAPTER D--PUBLICLY FINANCED HOUSING PROGRAMS [RESERVED]
SUBCHAPTER E--GRANT PROGRAMS
280 Nehemiah Housing Opportunity Grants Program. 469
SUBCHAPTERS F-H [RESERVED]
SUBCHAPTER I--HUD-OWNED PROPERTIES
290 Disposition of multifamily projects and sale
of HUD-held multifamily mortgages....... 477
291 Disposition of HUD-acquired single family
property................................ 487
Editorial Note: For nomenclature changes to chapter II see 59 FR
14090, March 25, 1994.
[[Page 7]]
SUBCHAPTER A--GENERAL
PART 200--INTRODUCTION TO FHA PROGRAMS--Table of Contents
Sec.
200.1 Purpose.
Subpart A--Requirements for Application, Commitment, and Endorsement
Generally Applicable to Multifamily and Health Care Facility Mortgage
Insurance Programs; and Continuing Eligibility Requirements for Existing
Projects
200.3 Definitions.
Eligible Mortgagor
200.5 Eligible mortgagor.
200.6 Employer identification and social security numbers.
Eligible Mortgagee
200.10 Lender requirements.
200.11 Audit requirements for State and local governments as
mortgagees.
Eligible Mortgage
200.15 Maximum mortgage.
200.16 Project mortgage adjustments and reductions.
200.17 Mortgage coverage.
200.18 Minimum loan prohibition.
Miscellaneous Project Mortgage Insurance
200.20 Refinancing insured mortgages.
200.21 Reinsurance of Commissioner held mortgages.
200.22 Operating loss loans.
200.23 Projects in declining neighborhoods.
200.24 Existing projects.
200.25 Supplemental loans.
Miscellaneous Cross Cutting Regulations
200.30 Nondiscrimination and equal opportunity.
200.31 Debarment and suspension.
200.32 Participation and compliance requirements.
200.33 Labor standards.
200.34 Property and mortgage assessment.
200.35 Appraisal standards--nondiscrimination requirements.
200.36 Financial reporting requirements.
Fees and Charges
200.40 HUD fees.
200.41 Maximum mortgagee fees and charges.
Commitment Applications
200.45 Processing of applications.
200.46 Commitment issuance.
200.47 Firm commitments.
Requirements Incident to Insured Advances
200.50 Building loan agreement.
200.51 Mortgagee certificate.
200.52 Construction contract.
200.53 Initial operating funds.
200.54 Project completion funding.
200.55 Financing fees and charges.
200.56 Assurance of completion for on-site improvements.
General Requirements
200.60 Assurance of completion for offsite facilities.
200.61 Title.
200.62 Certifications.
200.63 Required deposits and letters of credit.
Property Requirements
200.70 Location and fee interest.
200.71 Liens.
200.72 Zoning, deed and building restrictions.
200.73 Property development.
200.74 Minimum property standards.
200.75 Environmental quality determinations and standards.
200.76 Smoke detectors.
200.77 Lead-based paint poisoning prevention.
200.78 Energy conservation.
Mortgage Provisions
200.80 Mortgage form.
200.81 Disbursement of mortgage proceeds.
200.82 Maturity.
200.83 Interest rate.
200.84 Payment requirements.
200.85 Covenant against liens.
200.86 Covenant for fire and other hazard insurance.
200.87 Mortgage prepayment.
200.88 Late charge.
Cost Certification
200.95 Certification of cost requirements.
200.96 Certificates of actual cost.
200.97 Adjustments resulting from cost certification.
Endorsement
200.100 Insurance endorsement.
200.101 Mortgagor lien certificate.
[[Page 8]]
Regulation of Mortgagors
200.105 Mortgagor supervision.
200.106 Low-income housing tax credits and other program assistance.
Subpart B--Electronic Submission of Required Data for Mortgage Defaults
and Mortgage Insurance Claims for Insured Multifamily Mortgages
200.120 Purpose and applicability.
200.121 Requirements and effectiveness.
Subparts C-D [Reserved]
Subpart E--Mortgage Insurance Procedures and Processing
Application for Insurance
200.145 Property and mortgage assessment.
Claims for Losses
200.153 Presentation of claim.
200.156 Settlement of claims.
200.157 Provisions and characteristics of debentures.
200.158 Applicability of Treasury regulations to debenture
transactions.
200.159 Relief on account of lost, stolen, destroyed, mutilated or
defaced debentures.
200.160 Redemption of debentures prior to maturity.
200.161 Administration of debenture transactions.
200.162 Certificates of claim.
Subpart F [Reserved]
Subpart G--Appraiser Roster
200.200 What is the Appraiser Roster?
200.202 How do I apply for placement on the Appraiser Roster?
200.204 [Reserved]
200.206 What are my responsibilities as an appraiser listed on the
Appraiser Roster?
Subpart H--Participation and Compliance Requirements
Previous Participation Review and Clearance Procedure
200.210 Policy.
200.213 Applicability of procedure.
200.215 Definitions.
200.217 Filing of previous participation certificate on prescribed
form.
200.218 Who must certify and sign.
200.219 Content of certification.
200.222 Certification of previous record on basis of a master list.
200.224 Multifamily Participation Review Committee and Participation
Control Officer.
200.225 Approvals by Area Managers for limited partners.
200.226 Determination by the Participation Control Officer.
200.227 Multifamily Participation Review Committee.
200.228 Determination by the Review Committee.
200.229 Withholding approval.
200.230 Standards for disapproval.
200.233 Effect and requirement of approval.
200.236 Modification or withdrawal of certain approvals.
200.239 Notice of determination.
200.241 Request for reconsideration of an adverse determination and
request for a hearing.
200.243 Hearing rules--How and when to apply.
200.245 Hearing Officer determines facts and law: Review Committee
makes final administrative decision.
Subpart I--Nondiscrimination and Fair Housing
200.300 Nondiscrimination and fair housing policy.
Subpart J--Equal Employment Opportunity
200.400 Purpose.
200.405 Notice to public.
200.410 Definition of term ``applicant''.
200.415 Agreement of applicant.
200.420 Equal opportunity clause to be included in contracts and
subcontracts.
200.425 Exemptions.
200.430 Sanctions.
Subparts K-L [Reserved]
Subpart M--Affirmative Fair Housing Marketing Regulations
200.600 Purpose.
200.605 Authority.
200.610 Policy.
200.615 Applicability.
200.620 Requirements.
200.625 Affirmative fair housing marketing plan.
200.630 Notice of housing opportunities.
200.635 Compliance.
200.640 Effect on other requirements.
Appendix to Subpart M to Part 200--Equal Housing Opportunity Insignia
Subpart N [Reserved]
Subpart O--Lead-Based Paint Poisoning Prevention
200.800 Lead-based paint.
200.805 Definitions.
200.810 Single family insurance and coinsurance.
Subparts P-R [Reserved]
[[Page 9]]
Subpart S--Minimum Property Standards
200.925 Applicability of minimum property standards.
200.925a Multifamily and care-type minimum property standards.
200.925b Residential and institutional building code comparison items.
200.925c Model codes.
200.926 Minimum property standards for one and two family dwellings.
200.926a Residential building code comparison items.
200.926b Model codes.
200.926c Model code provisions for use in partially accepted code
jurisdictions.
200.926d Construction requirements.
200.926e Supplemental information for use with the CABO One and Two
Family Dwelling Code.
200.927 Incorporation by reference of minimum property standards.
200.929 Description and identification of minimum property standards.
200.929a Fair Housing Accessibility Guidelines.
200.931 Statement of availability.
200.933 Changes in minimum property standards.
200.934 User fee system for the technical suitability of products
program.
200.935 Administrator qualifications and procedures for HUD building
products certification programs.
200.936 Supplementary specific procedural requirements under HUD
building products certification program for solid fuel type
room heaters and fireplace stoves.
200.937 Supplementary specific procedural requirements under HUD
building product standards and certification program for
plastic bathtub units, plastic shower receptors and stalls,
plastic lavatories, plastic water closet bowls and tanks.
200.940 Supplementary specific requirements under the HUD building
product standards and certification program for sealed
insulating glass units.
200.942 Supplementary specific procedural requirements under HUD
building product standards and certification program for
carpet and carpet with attached cushion.
200.943 Supplementary specific requirements under the HUD building
product standards and certification program for the
grademarking of lumber.
200.944 Supplementary specific requirements under the HUD building
product standards and certification program for plywood and
other performance rated wood-based structural-use panels.
200.945 Supplementary specific requirements under the HUD building
product standards and certification program for carpet.
200.946 Building product standards and certification program for
exterior finish and insulation systems, use of Materials
Bulletin UM 101.
200.947 Building product standards and certification program for
polystyrene foam insulation board.
200.948 Building product standards and certification program for carpet
cushion.
200.949 Building product standards and certification program for
exterior insulated steel door systems.
200.950 Building product standards and certification program for solar
water heating system.
200.952 Supplementary specific requirements under the HUD building
product standards and certification program for particleboard
interior stair treads.
200.954 Supplementary specific requirements under the HUD building
product standard and certification program for construction
adhesives for wood floor systems.
200.955 Supplementary specific requirements under the HUD building
product standard and certification program for fenestration
products (windows and doors).
Subpart T--Social Security Numbers and Employer Identification Numbers;
Assistance Applicants and Participants
200.1001 Cross-reference.
Subpart U--Social Security Numbers and Employer Identification Numbers;
Applicants in Unassisted Programs
200.1101 Cross-reference.
Subpart V--Income Information; Assistance Applicants and Participants
200.1201 Cross-reference.
Subpart W--Administrative Matters
200.1301 Expiring Programs--Savings Clause.
200.1302 Additional expiring programs--savings clause.
200.1303 Annual income exclusions for the rent supplement program.
Appendix A to Part 200--Standards Incorporated by Reference in the
Minimum Property Standards for Housing (HUD Handbook 4910.1)
Authority: 12 U.S.C. 1701-1715z-18; 42 U.S.C. 3535(d).
Source: 36 FR 24467, Dec. 22, 1971, unless otherwise noted.
[[Page 10]]
Sec. 200.1 Purpose.
This part sets forth requirements that are applicable to several of
the programs of the Federal Housing Administration, an organizational
unit within the Department of Housing and Urban Development. Program
requirements applicable to FHA programs and other HUD programs also can
be found in 24 CFR part 5. The specific program regulations should be
consulted to determine which requirements in this part 200 or 24 CFR
part 5 are applicable.
[61 FR 14398, Apr. 1, 1996]
Subpart A--Requirements for Application, Commitment, and Endorsement
Generally Applicable to Multifamily and Health Care Facility Mortgage
Insurance Programs; and Continuing Eligibility Requirements for Existing
Projects
Source: 61 FR 14399, Apr. 1, 1996, unless otherwise noted.
Sec. 200.3 Definitions.
(a) The definitions ``Department'', ``Elderly person'', ``HUD'', and
``Secretary'', as used in this subpart A shall have the meanings given
these definitions in 24 CFR part 5.
(b) The terms ``first mortgage'', ``hospital'', ``maturity date'',
``mortgage'', ``mortgagee'', and ``state'', as used in this subpart A
shall have the meaning given in the section of the National Housing Act
(12 U.S.C. 1701), as amended, under which the project mortgage is
insured.
(c) As used in this subpart A:
Act means the National Housing Act, (12 U.S.C. 1701) as amended.
Commissioner means the Federal Housing Commissioner.
FHA means the Federal Housing Administration.
Insured mortgage means a mortgage which has been insured by the
endorsement of the credit instrument by the Commissioner, or the
Commissioner's duly authorized representative.
Project means a property consisting of site, improvements and, where
permitted, equipment meeting the provisions of the applicable section of
the Act, other applicable statutes and regulations, and terms,
conditions and standards established by the Commissioner.
Eligible Mortgagor
Sec. 200.5 Eligible mortgagor.
The mortgagor shall be a natural person or entity acceptable to the
Commissioner, as limited by the applicable section of the Act, and shall
possess the powers necessary and incidental to operating the project.
Sec. 200.6 Employer identification and social security numbers.
The requirements set forth in 24 CFR part 5, regarding the
disclosure and verification of social security numbers and employer
identification numbers by applicants and participants in assisted
mortgage and loan insurance and related programs, apply to these
programs.
Eligible Mortgagee
Sec. 200.10 Lender requirements.
The requirements set forth in part 202 of this chapter regarding
approval, recertification, withdrawal of approval, approval for
servicing, report requirements and conditions for supervised mortgagees,
nonsupervised mortgagees, investing mortgagees, and governmental and
similar institutions, apply to these programs.
[62 FR 20081, Apr. 24, 1997]
Sec. 200.11 Audit requirements for State and local governments as mortgagees.
Requirements set forth in 24 CFR part 44, Non-Federal Governmental
Audit Requirements, apply to State and local governments (as defined in
24 CFR part 44) that receive mortgage insurance as mortgagees.
Eligible Mortgage
Sec. 200.15 Maximum mortgage.
Mortgages must not exceed either the statutory dollar amount or loan
ratio limitations established by the section of the Act under which the
mortgage is insured, except that the
[[Page 11]]
Commissioner may increase the dollar amount limitations:
(a) By not to exceed 110 percent in any geographical area in which
the Commissioner finds that cost levels so require; and
(b) By not to exceed 140 percent where the Commissioner determines
it necessary on a project-by-project basis.
Sec. 200.16 Project mortgage adjustments and reductions.
The principal amount computed in accordance with the applicable
section of the Act for the insured mortgage shall be subject to
additional adjustments and reductions in accordance with terms and
conditions established by the Commissioner.
Sec. 200.17 Mortgage coverage.
The mortgage shall cover the entire property included in the
project.
Sec. 200.18 Minimum loan prohibition.
A mortgagee may not require that the mortgage exceed a minimum
amount established by the mortgagee, as a condition of providing a loan
secured by a mortgage insured under this part.
Miscellaneous Project Mortgage Insurance
Sec. 200.20 Refinancing insured mortgages.
An existing insured mortgage may be refinanced pursuant to
provisions of section 223(a)(7) of the Act and such terms and conditions
established by the Commissioner.
Sec. 200.21 Reinsurance of Commissioner held mortgages.
Any mortgage assigned to the Commissioner in connection with payment
under a contract of mortgage insurance, or executed in connection with a
sale by the Commissioner of any property acquired under any section or
title of the Act, may be insured pursuant to provisions of section
223(c) of the Act and such terms and conditions established by the
Commissioner.
Sec. 200.22 Operating loss loans.
An insured loan to cover the operating losses of a project with an
existing Commissioner insured mortgage may be made in accordance with
provisions of section 223(d) of the Act and such terms and conditions
established by the Commissioner.
Sec. 200.23 Projects in declining neighborhoods.
A Mortgage financing the repair, rehabilitation or construction of a
project located in an older declining urban area shall be eligible for
insurance pursuant to provisions of section 223(e) of the Act and such
terms and conditions established by the Commissioner.
Sec. 200.24 Existing projects.
A mortgage financing the purchase or refinance of an existing rental
housing project under section 207 of the Act, or for refinancing the
existing debt of an existing nursing home, intermediate care facility,
assisted living facility or board and care home, or any combination
thereof, under section 232 of the Act, or hospital under section 242 of
the Act may be insured pursuant to provisions of section 223(f) of the
Act and such terms and conditions established by the Commissioner.
Sec. 200.25 Supplemental loans.
A loan, advance of credit or purchase of an obligation representing
a loan or advance of credit made for the purpose of financing
improvements or additions to a project covered by a mortgage insured
under any section of the Act or Commissioner held mortgage, or equipment
for a nursing home, intermediate care facility, board and care home,
assisted living facility, hospital or group practices facility, may be
insured pursuant to the provisions of section 241 of the Act and such
terms and conditions established by the Commissioner.
Miscellaneous Cross Cutting Regulations
Sec. 200.30 Nondiscrimination and equal opportunity.
The requirements set forth in 24 CFR part 5, and subparts I, J, and
M of this part pertaining to nondiscrimination and equal opportunity,
apply to these programs.
[[Page 12]]
Sec. 200.31 Debarment and suspension.
The requirements set forth in 24 CFR part 24, except subpart F,
apply to these programs.
Sec. 200.32 Participation and compliance requirements.
The requirements set forth in 24 CFR part 200, subpart H, apply to
these programs.
Sec. 200.33 Labor standards
(a) The requirements set forth in 29 CFR parts 1, 3 and 5 for
compliance with labor standards laws apply to projects under these
programs to the extent that labor standards apply as provided in section
212 of the Act, provided that:
(1) The labor standards provisions do not apply to projects insured
under sections 207 or 232 pursuant to section 223(f) of the Act; and
(2) Supplemental loans under section 241 of the Act are subject to
the provisions of section 212 applicable to the section or title
pursuant to which the mortgage covering the project is insured or
pursuant to which the original mortgage was insured.
(b) The requirements set forth in 24 CFR part 70 apply to those
programs with respect to which there is a statutory provision allowing
HUD waiver of Davis-Bacon prevailing wage rates for volunteers.
(c) Project commitments, contracts and agreements, as determined by
the Commissioner, and construction contracts and subcontracts, shall
include terms, conditions and standards for compliance with applicable
requirements set forth in 29 CFR parts 1, 3 and 5 and section 212 of the
Act.
(d) No advance under a loan or mortgage that is subject to the
requirements of section 212 shall be eligible for insurance unless there
is filed with the application for the advance a certificate as required
by the Commissioner certifying that the laborers and mechanics employed
in construction of the project have been paid not less than the wage
rates required under section 212.
Sec. 200.34 Property and mortgage assessment.
The requirements set forth in 24 CFR part 200, subpart E, regarding
the mortgagor's responsibility for making those investigations, analysis
and inspections it deems necessary for protecting its interests in the
property apply to these programs.
Sec. 200.35 Appraisal standards--nondiscrimination requirements.
(a) Nondiscrimination in the selection of appraiser. In the
selection of an appraiser, there shall be no discrimination on the basis
of race, color, religion, national origin, sex, age, or disability.
(b) Nondiscrimination in appraisal determination. The certification
required by the Uniform Standards of Professional Appraisal Practice
must include a statement that the racial/ethnic composition of the
neighborhood surrounding the property in no way affected the appraisal
determination.
Sec. 200.36 Financial reporting requirements.
The mortgagor must comply with the financial reporting requirements
in 24 CFR part 5, subpart H.
[63 FR 46592, Sept. 1, 1998]
Fees and Charges
Sec. 200.40 HUD fees.
The following fees apply to mortgages to be insured under this part.
(a) Application fee--SAMA letter (for new construction). An
application fee of $1 per thousand dollars of the requested mortgage
shall accompany the application for a SAMA letter. An additional fee of
$1 per thousand dollars of the requested mortgage amount shall be
charged for the review of plans and specifications.
(b) Application fee--feasibility letter (for substantial
rehabilitation). An application fee of $3 per thousand dollars of the
requested mortgage amount shall accompany the application for a
feasibility letter.
(c) Application fee--conditional commitment. For a mortgage being
insured under section 223(f) of the Act (12 U.S.C. 1715n), an
application-commitment fee of $3 per thousand dollars of
[[Page 13]]
the requested mortgage amount shall accompany an application for
conditional commitment. For a mortgage being insured under section 242
of the Act (12 U.S.C. 1715z-7), an application fee of $1.50 per thousand
dollars of the amount loaned shall be paid to the Commissioner at the
time the hospital proposal is submitted to the Secretary of Health and
Human Services for approval.
(d) Application fee--firm commitment: General. (1) Except as
provided in paragraph (d)(2) of this section, an application for firm
commitment shall be accompanied by an application-commitment fee which,
when added to any prior fees received in connection with applications
for a SAMA letter or a feasibility letter will aggregate $5 per thousand
dollars of the requested mortgage amount to be insured. The payment of
an application-commitment fee shall not be required in connection with
an insured mortgage involving the sale by the government of housing or
property acquired, held or contracted pursuant to the Atomic Energy
Community Act of 1955 (42 U.S.C. 2301 et seq.).
(2) Application fee--firm commitment: Hospitals. A firm-commitment
fee which, when added to the application fee, shall aggregate $3 per
thousand dollars of the amount of the loan set forth in the firm
commitment shall be paid within 30 days after the date of the
commitment. If the payment of a commitment fee is not received by the
Commissioner within 30 days after the date of issuance of the
commitment, the commitment shall expire on the 30th day.
(e) Inspection fee--(1) In general. The firm commitment may provide
for the payment of an inspection fee in an amount not to exceed $5 per
thousand dollars of the commitment. If an inspection fee is required, it
shall be paid as follows:
(i) If the case involves insurance of advances, at the time of
initial endorsement; or
(ii) If the case involves insurance upon completion, before the date
construction is begun.
(2) Existing projects. For a mortgage being insured under section
223(f) of the Act, if the application provides for the completion of
repairs, replacements and/or improvements (repairs), the Commissioner
will charge an inspection fee equal to one percent (1%) of the cost of
the repairs. However, where the Commissioner determines the cost of
repairs is minimal, the Commissioner may establish a minimum inspection
fee that exceeds one percent of the cost of repairs and can periodically
increase or decrease this minimum fee.
(f) Fees on increases--(1) In general. Paragraph (f)(1) of this
section applies to all applications except applications involving
hospitals.
(i) Increase in firm commitment before endorsement. An application,
filed before initial endorsement (or before endorsement in a case
involving insurance upon completion), for an increase in the amount of
an outstanding firm commitment shall be accompanied by a combined
additional application and commitment fee. This combined additional fee
shall be in an amount which will aggregate $5 per thousand dollars of
the amount of the requested increase. If an inspection fee was required
in the original commitment, an additional inspection fee shall be paid
in an amount computed at the same dollar rate per thousand dollars of
the amount of increase in commitment as was used for the inspection fee
required in the original commitment. When insurance of advances is
involved, the additional inspection fee shall be paid at the time of
initial endorsement. When insurance upon completion is involved, the
additional inspection fee shall be paid before the date construction is
begun or if construction has begun, it shall be paid with the
application for increase.
(ii) Increase in mortgage between initial and final endorsement.
Upon an application, filed between initial and final endorsement, for an
increase in the amount of the mortgage, either by amendment or by
substitution of a new mortgage, a combined additional application and
commitment fee shall accompany the application. This combined additional
fee shall be in an amount which will aggregate $5 per thousand dollars
of the amount of the increase requested. If an inspection fee
[[Page 14]]
was required in the original commitment, an additional inspection fee
shall accompany the application in an amount not to exceed the $5 per
thousand dollars of the amount of the increase requested.
(iii) Loan to cover operating losses. In connection with a loan to
cover operating losses (see Sec. 200.22), a combined application and
commitment fee of $5 per thousand dollars of the amount of the loan
applied for shall be submitted with the application for a firm
commitment. No inspection fee shall be required.
(2) Hospitals. Paragraph (f)(2) of this section applies to
applications in connection with a mortgage to be insured under section
242 of the Act.
(i) Increase in commitment prior to endorsement. Upon an
application, filed prior to initial endorsement (or prior to endorsement
in a case involving insurance upon completion), for an increase in the
amount of an outstanding commitment, an additional application fee of
$1.50 per thousand dollars computed on the amount of the increase
requested shall accompany the application. Any increase in the amount of
a commitment shall be subject to the payment of an additional commitment
fee which, when added to the additional application fee, will aggregate
$3 per thousand dollars of the amount of the increase. The additional
commitment fee shall be paid within 30 days after the date of the
amended commitment. If the additional commitment fee is not paid within
30 days, the commitment for the increased amount will expire and the
previous commitment will be reinstated. If an inspection fee was
required in the original commitment, an additional inspection fee shall
be paid in an amount not to exceed $5 per thousand dollars of the amount
of increase in commitment. Where insurance of advances is involved, the
additional inspection fee shall be paid at the time of initial
endorsement. Where insurance upon completion is involved, the additional
inspection fee shall be paid prior to the date construction is begun or
within 30 days after the date of the issuance of the amended commitment,
if construction has begun.
(ii) Increase in mortgage between initial and final endorsement.
Upon an application, filed between initial and final endorsement, for an
increase in the amount of the mortgage, either by amendment or by
substitution of a new mortgage, an additional application fee of $1.50
per thousand dollars computed on the amount of the increase requested
shall accompany the application. The approval of any increase in the
amount of the mortgage shall be subject to the payment of an additional
commitment fee which, when added to the additional application fee, will
aggregate $3 per thousand dollars of the amount of the increase granted.
If an inspection fee was required in the original commitment, an
additional inspection fee shall be paid in an amount not to exceed $5
per thousand dollars of the amount of the increase granted. The
additional commitment and inspection fees shall be paid within 30 days
after the increase is granted.
(g) Reopening of expired commitments. An expired commitment may be
reopened if a request for reopening is received by the Commissioner
within 90 days of the expiration of the commitment. The reopening
request shall be accompanied by a fee of 50 cents per thousand dollars
of the amount of the expired commitment. If the reopening request is not
received by the Commissioner within the required 90-day period, a new
application, accompanied by the required application and commitment fee,
must be submitted.
(h) Transfer fee. Upon application for approval of a transfer of
physical assets or the substitution of mortgagors, a transfer fee of 50
cents per thousand dollars shall be paid on the original face amount of
the mortgage in all cases, except that a transfer fee shall not be paid
where both parties to the transfer transaction are nonprofit
organizations.
(i) Refund of fees. If the amount of the commitment issued or
increase in mortgage granted is less than the amount applied for, the
Commissioner shall refund the excess amount of the application and
commitment fees submitted by the applicant. If an application is
rejected before it is assigned for processing, or in such other
instances as the Commissioner may determine, the entire application and
commitment
[[Page 15]]
fee or any portion thereof may be returned to the applicant. Commitment,
inspection and reopening fees may be refunded, in whole or in part, if
it is determined by the Commissioner that there is a lack of need for
the housing or that the construction or financing of the project has
been prevented because of condemnation proceedings or other legal action
taken by a governmental body or public agency, or in such other
instances as the Commissioner may determine. A transfer fee may be
refunded only in such instances as the Commissioner may determine.
(j) Fees not required. The payment of an application, commitment,
inspection, or reopening fee shall not be required in connection with
the insurance of a mortgage involving the sale by the Secretary of any
property acquired under any section or title of the Act.
[61 FR 14414, Apr. 1, 1996]
Sec. 200.41 Maximum mortgagee fees and charges.
(a) Mortgagee fees and charges included in the mortgage must be for
actual required services provided to the mortgagor by the mortgagee, and
shall not exceed common market rates for such services as determined by
the Commissioner.
(b) Mortgagee charges for prepayment of the mortgage and late
mortgage payments shall not exceed that determined appropriate by the
Commissioner.
Commitment Applications
Sec. 200.45 Processing of applications.
(a) Preapplication conference. Except for mortgages insured under
section 241(f) or 242 of the Act, the local HUD Office will determine
whether participation in such a conference is required as a condition to
submission of an initial application for either a site appraisal and
market analysis (SAMA) letter (for new construction), a feasibility
letter (for substantial rehabilitation), or for a firm commitment. The
project sponsor may elect (after the preapplication conference if
required) to submit an application for a SAMA or a feasibility letter
(as appropriate), or for a firm commitment for insurance depending upon
the completeness of the drawings, specifications and other required
exhibits. An application for a SAMA or feasibility letter may be
submitted by the project sponsor. An application for a firm commitment
for insurance must be submitted by both the project sponsor and an
approved mortgagee. Applications shall be submitted to the local HUD
Office on HUD-approved forms. No application will be considered unless
accompanied by all exhibits required by the form and program handbooks.
At the option of the local HUD Office, the SAMA/Feasibility letter stage
of processing can be combined with the firm commitment stage of
processing.
(b) Firm commitment requirement. An application for a firm
commitment must be made by an approved mortgagee for any project for
which a mortgagor seeks mortgage insurance under the Act.
(c) Staged applications. Staged applications leading to an
application for firm commitment shall be made as determined appropriate
by the Commissioner, and in accordance with such terms and conditions
established by the Commissioner. The intermediate stages to firm
commitment may include a site appraisal and market analysis (SAMA)
letter stage or a feasibility letter stage and a conditional commitment.
The conditional commitment stage applies only to mortgages to be insured
pursuant to section 223(f) of the Act.
(d) Effect of SAMA letter, feasibility letter, and firm commitment--
(1) SAMA letter. (i) The issuance of a SAMA letter indicates completion
of the site appraisal and market analysis stage to determine initial
acceptability of the site and recognition of a specific market need. The
SAMA letter is not a commitment to insure a mortgage for the proposed
project and does not bind the Commissioner to issue a firm commitment to
insure. The SAMA letter precedes the later submission of acceptable
plans and specifications for the proposed project and is limited to
advising the applicant as to the following determinations of the
Commissioner, which shall not be changed to the detriment of an
applicant, if the application for a firm commitment is
[[Page 16]]
received before expiration of the SAMA letter:
(A) The land value fully improved (with off-site improvements
installed);
(B) The acceptability of the proposed project site, the proposed
composition, number and size of the units and the market for the number
of proposed units. Where the application is not acceptable as submitted,
but can be made acceptable by a change in the number, size, or
composition of the units, the SAMA letter may establish the specific
lesser number of units which would be acceptable and any acceptable
alternative plan for the composition and size of units; and
(C) The acceptability of the unit rents proposed. Where rent levels
are unacceptable, the SAMA letter may establish specific rents which are
acceptable.
(ii) After receiving a SAMA letter, the sponsor shall submit design
drawings and specifications in a timeframe prescribed by the
Commissioner. The Commissioner will review and comment on design
development and the drawings and specifications. The comments will be
provided to the sponsor for use in preparing a firm commitment
application.
(2) Feasibility letter. The issuance of a feasibility letter
indicates approval of the preliminary work write-up and outline
specifications and completion of technical processing involving the
estimated rehabilitation cost of the project, the ``as is'' value of the
site, the detailed estimates of operating expenses and taxes, the
specific unit rents, the vacancy allowance, and the estimated mortgage
amount. The issuance of a feasibility letter is not a commitment to
insure a mortgage for the proposed project and does not bind the
Commissioner to issue a firm commitment to insure. Determinations found
in a feasibility letter are not to be binding upon the Department and
may be changed in whole or in part at any later point in time. The
letter may even be unilaterally terminated by the Commissioner if found
necessary.
(3) Conditional commitment. The issuance of a Section 223(f)
conditional commitment indicates completion of technical processing
involving the estimated value of the property, the detailed estimates of
rents, operating expenses and taxes and an estimated mortgage amount.
(e) Term of SAMA letter, feasibility letter, and conditional
commitment. A SAMA letter, a feasibility letter, and a conditional
commitment shall be effective for whatever term is specified in the
respective letter or commitment.
(f) Rejection of an application. A significant deviation in an
application from the Commissioner's terms or conditions in an earlier
stage application commitment or agreement shall be grounds for
rejection. The fees paid to such date shall be considered as having been
earned notwithstanding such rejection.
(Approved by the Office of Management and Budget under control number
2502-0029)
[61 FR 14415, Apr. 1, 1996]
Sec. 200.46 Commitment issuance.
Upon approval of an application for insurance, a commitment shall be
issued by the Commissioner setting forth the terms and conditions upon
which the mortgage will be insured. The commitment term and any
extension or reopening of an expired commitment shall be in accordance
with standards established by the Commissioner.
Sec. 200.47 Firm commitments.
A valid firm commitment must be in effect at the time the mortgage
instrument is endorsed.
(a) Insurance upon completion. The commitment shall provide the
terms and conditions for the insurance of the mortgage:
(1) After completion of construction or substantial rehabilitation
of the project; or
(2) Upon completion of required work, except as deferred by the
Commissioner in accordance with terms, conditions and standards
established by the Commissioner, for an existing project without
substantial rehabilitation.
(b) Insured advances. The commitment shall provide for insurance of
the mortgage as provided in paragraph (a) of this section, and for the
insurance of
[[Page 17]]
mortgage money advanced in accordance with terms and conditions
established by the Commissioner during: construction; substantial
rehabilitation; or other work acceptable to the Commissioner.
Requirements Incident to Insured Advances
Sec. 200.50 Building loan agreement.
The mortgagor and mortgagee must execute a building loan agreement
approved by the Commissioner, that sets forth the terms and conditions
under which progress payments may be advanced during construction,
before initial endorsement of the mortgage for insurance.
Sec. 200.51 Mortgagee certificate.
The mortgagee shall certify to the Commissioner that it will conform
with terms and conditions established by the Commissioner for the
mortgagee's control of project funds, and other incidental requirements
established by the Commissioner.
Sec. 200.52 Construction contract.
The form of contract between the mortgagor and builder shall be as
prescribed by the Commissioner in accordance with terms and conditions
established by the Commissioner.
Sec. 200.53 Initial operating funds.
The mortgagor shall deposit cash with the mortgagee, or in a
depository satisfactory to the mortgagee and under control of the
mortgagee, in accordance with terms, conditions and standards
established by the Commissioner for:
(a) Accruals for taxes, ground rates, mortgage insurance premiums,
and property insurance premiums, during the course of construction;
(b) Meeting the cost of equipping and renting the project subsequent
to its completion in whole or part; and
(c) Allocation by the mortgagee for assessments required by the
terms of the mortgage in an amount acceptable to the Commissioner.
Sec. 200.54 Project completion funding.
The mortgagor shall deposit with the mortgagee cash deemed by the
Commissioner to be sufficient, when added to the proceeds of the insured
mortgage, to assure completion of the project and to pay the initial
service charge, carrying charges, and legal and organizational expenses
incident to the construction of the project. The Commissioner may accept
a lesser cash deposit or an alternative to a cash deposit in accordance
with terms and conditions established by the Commissioner, where the
required funding is to be provided by a grant or loan from a Federal,
State, or local government agency or instrumentality.
(a) An agreement acceptable to the Commissioner shall require that
funds provided by the mortgagor under requirements of this section must
be disbursed in full for project work, material and incidental charges
and expenses before disbursement of any mortgage proceeds, except;
(b) Funds provided by a grant or loan from a Federal, State or local
governmental agency or instrumentality under requirements of this
section need not be fully disbursed before the disbursement of mortgage
proceeds, where approved by the Commissioner in accordance with terms,
conditions and standards established by the Commissioner.
Sec. 200.55 Financing fees and charges.
Fees and charges approved by the Commissioner in excess of the
initial service charge shall be deposited with the mortgagee in cash
before initial endorsement, except as otherwise preapproved by the
Commissioner.
Sec. 200.56 Assurance of completion for on-site improvements.
The mortgagor shall furnish assurance of completion of the project
in the form and amount provided by terms, conditions and standards
established by the Commissioner.
General Requirements
Sec. 200.60 Assurance of completion for offsite facilities.
An assurance of completion for offsite utilities, streets, and other
facilities required for a buildable site shall be provided in an amount
and form acceptable to the Commissioner, except
[[Page 18]]
where a municipality or other public body has, in a manner acceptable to
the Commissioner, agreed to install such improvements without cost to
the mortgagor.
Sec. 200.61 Title.
(a) Marketable title to the project must be vested in the mortgagor
as of the date the mortgage is filed for record.
(b) Title evidence for the Commissioner's examination shall include
a lender's title insurance policy, which title policy provides survey
coverage based on a survey acceptable to the title company and the
Commissioner; or as the Commissioner may otherwise require, in
accordance with terms, conditions and standards established by the
Commissioner.
(c) Endorsement of the credit instrument for insurance shall
evidence the acceptability of title evidence.
Sec. 200.62 Certifications.
Any agreement, undertaking, statement or certification required by
the Commissioner shall specifically state that it has been made,
presented, and delivered for the purpose of influencing an official
action of the FHA, and of the Commissioner, and may be relied upon by
the Commissioner as a true statement of the facts contained therein.
Sec. 200.63 Required deposits and letters of credit.
(a) Deposits. Where the Commissioner requires the mortgagor to make
a deposit of cash or securities, such deposit shall be with the
mortgagee or a depository acceptable to the mortgagee. The deposit shall
be held by the mortgagee in a special account or by the depository under
an appropriate agreement approved by the Commissioner.
(b) Letter of credit. Where the use of a letter of credit is
acceptable to the Commissioner in lieu of a deposit of cash or
securities, the letter of credit shall be issued to the mortgagee by a
banking institution and shall be unconditional and irrevocable:
(1) The mortgagee of record may not be the issuer of any letter of
credit without the prior written consent of the Commissioner.
(2) The mortgagee shall be responsible to the Commissioner for
collection under the letter of credit. In the event a demand for payment
thereunder is not immediately met, the mortgagee shall immediately
provide a cash deposit equivalent to the undrawn balance of the letter
of credit.
Property Requirements
Sec. 200.70 Location and fee interest.
The property must be held by an eligible mortgagor, and must conform
with requirements pertaining to property location and fee or lease
interests of the section of the Act under which the mortgage is insured.
Sec. 200.71 Liens.
The project must be free and clear of all liens other than the
insured mortgage, except that the property may be subject to an inferior
lien as provided by terms and conditions established by the Commissioner
for an inferior lien:
(a) Made or held by a Federal, State or local government
instrumentality;
(b) Required in connection with: an operating loss loan insured
pursuant to a section 223(d) of the Act; a supplemental loan insured
pursuant to section 241 of the Act; or a mortgage to purchase or
refinance an existing project pursuant to section 223(f) of the Act; or
(c) As otherwise provided by the Commissioner.
Sec. 200.72 Zoning, deed and building restrictions.
The project when completed shall not violate any material zoning or
deed restrictions applicable to the project site, and shall comply with
all applicable building and other governmental codes, ordinances,
regulations and requirements.
Sec. 200.73 Property development.
(a) The property shall be suitable and principally designed for the
intended use, as provided by the applicable section of the Act under
which the mortgage is insured, and have long-term marketability. Design,
construction, substantial rehabilitation and repairs shall be in
accordance with standards established by the Commissioner.
[[Page 19]]
(b) A project may include such commercial and community facilities
as the Commissioner deems acceptable.
(c) The improvements shall constitute a single project. Not less
than five rental dwelling units or personal care units, 20 medical care
beds, or 50 manufactured home pads, shall be on one site, except that
such limitations do not apply to group practice facilities.
Sec. 200.74 Minimum property standards.
The requirements set forth in subpart S of this part apply to these
programs, except for hospitals insured under section 242 of the Act and
group practice facilities insured under title XI of the Act.
Sec. 200.75 Environmental quality determinations and standards.
Requirements set forth in 24 CFR part 50, Protection and Enhancement
of Environmental Quality, 24 CFR part 51, Environmental Criteria and
Standards, 24 CFR part 55, Implementation of Executive Order 11988,
Flood Plain Management, and as otherwise required by the Commissioner
apply to these programs.
Sec. 200.76 Smoke detectors.
Smoke detectors and alarm devices must be installed in accordance
with standards and criteria acceptable to the Commissioner for the
protection of occupants in any dwelling or facility bedroom or other
primary sleeping area.
Sec. 200.77 Lead-based paint poisoning prevention.
Requirements set forth in 24 CFR part 35 apply to these programs.
Sec. 200.78 Energy conservation.
Construction, mechanical equipment, and energy and metering
selections shall provide cost effective energy conservation in
accordance with standards established by the Commissioner.
Mortgage Provisions
Sec. 200.80 Mortgage form.
The mortgage shall be:
(a) Executed on a form approved by the Commissioner for use in the
jurisdiction in which the property securing the mortgage is situated,
which form shall not be changed without the prior written approval of
the Commissioner.
(b) Executed by an eligible mortgagor.
(c) A first lien on the property securing the mortgage, which
property conforms with the property standards prescribed by the
Commissioner.
Sec. 200.81 Disbursement of mortgage proceeds.
The mortgagee shall be obligated, as a part of the mortgage
transaction, to disburse the principal amount of the mortgage to the:
(a) Mortgagor or mortgagor's account;
(b) Mortgagor's creditors for the mortgagor's account, subject to
the mortgagor's consent.
Sec. 200.82 Maturity.
The mortgage shall have a maturity satisfactory to the Commissioner,
and shall contain complete amortization or sinking-fund provisions
satisfactory to the Commissioner.
(a) The maximum mortgage term may not exceed the lesser of:
(1) Any limits included under the applicable section of the Act.
(2) Thirty-five years for existing projects, except that the
mortgage term may be up to 40 years under terms and conditions
established by the Commissioner, and 40 years for proposed construction
and substantial rehabilitation projects.
(3) Seventy-five percent of the estimated remaining economic life of
the physical improvements.
(b) The minimum mortgage term shall not be less than 10 years.
Sec. 200.83 Interest rate.
(a) The mortgage shall bear interest at the rate agreed upon by the
mortgagee and the mortgagor.
(b) Interest shall be payable in monthly installments on the
principal amount of the mortgage outstanding on the due date of each
installment.
(c) The amount of any increase approved by the Commissioner in the
mortgage amount between initial and final endorsement in excess of the
amount that the Commissioner had
[[Page 20]]
committed to insure at initial endorsement shall bear interest at the
rate agreed upon by the mortgagee and the mortgagor.
Sec. 200.84 Payment requirements.
The mortgage shall provide for:
(a) A single aggregate payment each month for all payments to be
made by the mortgagor to the mortgagee.
(b) The mortgagor to pay to the mortgagee:
(1) Interest and principal on the first day of each month in
accordance with an amortization plan agreed upon by the mortgagor, the
mortgagee and the Commissioner.
(i) Date of first payment to interest shall be the endorsement date
or, where there are insured advances, the initial endorsement date.
(ii) Date of first payment to principal. The Commissioner shall
estimate the time necessary to complete the project and shall establish
the date of the first payment to principal so that the lapse of time
between completion of the project and commencement of amortization will
not be longer than necessary to obtain sustaining occupancy.
(2) An amount on each interest payment date sufficient to accumulate
in the hands of the mortgagee one payment period prior to its due date,
the next annual mortgage insurance premium payable by the mortgagee to
the Commissioner. Such payments shall continue only so long as the
contract of insurance shall remain in effect.
(3) Equal monthly payments as will amortize the ground rents, if
any, and the estimated amount of all taxes, water charges, special
assessments, and fire and other hazard insurance premiums, within a
period ending one month prior to the dates on which the same become
delinquent.
(4) The mortgage shall further provide:
(i) That such payments shall be held by the mortgagee, for the
purpose of paying such items before they become delinquent.
(ii) For adjustments in case such estimated amounts shall prove to
be more, or less, than the actual amounts so paid therefor by the
mortgagor.
(c) The mortgagee to apply each mortgagor payment received to the
following items in the order set forth:
(1) Premium charges under the contract of mortgage insurance.
(2) Ground rents, taxes, special assessments, and fire and other
hazard insurance premiums.
(3) Interest on the mortgage.
(4) Amortization of the principal of the mortgage.
Sec. 200.85 Covenant against liens.
(a) The mortgage shall contain a covenant against the creation by
the mortgagor of liens against the property superior or inferior to the
lien of the mortgage except for such inferior lien as may be approved by
the Commissioner in accordance with provisions of Sec. 200.71; and
(b) A covenant against repayment of a Commissioner approved inferior
lien from mortgage proceeds other than surplus cash or residual
receipts, except in the case of an inferior lien created by an operating
loss loan insured pursuant to section 223(d) of the Act, or a
supplemental loan insured pursuant to section 241 of the Act.
Sec. 200.86 Covenant for fire and other hazard insurance.
The mortgage shall contain a covenant binding the mortgagor to
maintain fire and extended coverage insurance on the property in
accordance with terms and conditions established by the Commissioner.
Sec. 200.87 Mortgage prepayment.
(a) Prepayment privilege. Except as provided in paragraph (c) of
this section or otherwise established by the Commissioner, the mortgage
shall contain a provision permitting the mortgagor to prepay the
mortgage in whole or in part upon any interest payment date, after
giving the mortgagee 30 days' notice in writing in advance of its
intention to so prepay.
(b) Prepayment charge. The mortgage may contain a provision for such
charge, in the event of prepayment of principal, as may be agreed upon
between the mortgagor and the mortgagee, subject to the following:
[[Page 21]]
(1) The mortgagor shall be permitted to prepay up to 15 percent of
the original principal amount of the mortgage in any one calendar year
without any such charge.
(2) Any reduction in the original principal amount of the mortgage
resulting from the certification of cost which the Commissioner may
require shall not be construed as a prepayment of the mortgage.
(c) Prepayment of bond-financed or GNMA securitized mortgages. Where
the mortgage is given to secure GNMA mortgage-backed securities or a
loan made by a lender that has obtained the funds for the loan by the
issuance and sale of bonds or bond anticipation notes, or both, the
mortgage may contain a prepayment restriction and prepayment penalty
charge acceptable to the Commissioner as to term, amount, and
conditions.
(d) HUD override of prepayment restrictions. In the event of a
default, the Commissioner may override any lockout, prepayment penalty
or combination thereof in order to facilitate a partial or full
refinancing of the mortgaged property and avoid a claim.
Sec. 200.88 Late charge.
The mortgage may provide for the collection by the mortgagee of a
late charge in accordance with terms, conditions and standards of the
Commissioner for each dollar of each payment to interest or principal
more than 15 days in arrears to cover the expense involved in handling
delinquent payments. Late charges shall be separately charged to and
collected from the mortgagor and shall not be deducted from any
aggregate monthly payment.
Cost Certification
Sec. 200.95 Certification of cost requirements.
(a) Before initial endorsement of the mortgage for insurance, the
mortgagor, the mortgagee, and the Commissioner shall enter into an
agreement in form and content satisfactory to the Commissioner for the
purpose of precluding any excess of mortgage proceeds over statutory
limitations. Under this agreement, the mortgagor shall disclose its
relationship with the builder, including any collateral agreement, and
shall agree:
(1) To enter into a construction contract, the terms of which shall
depend on whether or not there exists an identity of interest between
the mortgagor and the builder.
(2) To execute a Certificate of Actual Costs, upon completion of all
physical improvements on the mortgaged property.
(3) To apply in reduction of the outstanding balance of the
principal of the mortgage any excess of mortgage proceeds over statutory
limitations based on actual cost.
(b) The provisions of paragraph (a) of this section relating to
disclosure and the requirement for a construction contract shall not
apply where the mortgagor is the general contractor.
Sec. 200.96 Certificates of actual cost.
(a) The mortgagor's certificate of actual cost, in a form prescribed
by the Commissioner, shall be submitted upon completion of the physical
improvements to the satisfaction of the Commissioner and before final
endorsement, except that in the case of an existing project that does
not require substantial rehabilitation and where the commitment provides
for completion of specified repairs after endorsement, a supplemental
certificate of actual cost will be submitted covering the completed
costs of any such repairs. The certificate shall show the actual cost to
the mortgagor, after deduction of any kickbacks, rebates, trade
discounts, or other similar payments to the mortgagor, or to any of its
officers, directors, stockholders, partners or other entity member
ownership, of construction and other costs, as prescribed by the
Commissioner.
(b) The Certificate of Actual Cost shall be verified by an
independent Certified Public Accountant or independent public accountant
in a manner acceptable to the Commissioner.
(c) Upon the Commissioner's approval of the mortgagor's
certification of actual cost such certification shall be final and
incontestable except for fraud or material misrepresentation on the part
of the mortgagor.
[[Page 22]]
Sec. 200.97 Adjustments resulting from cost certification.
(a) Fee simple site. Upon receipt of the mortgagor's certification
of actual cost there shall be added to the total amount thereof the
Commissioner's estimate of the fair market value of any land included in
the mortgage security and owned by the mortgagor in fee, such value
being prior to the construction of the improvements.
(b) Leasehold site. In the event the land is held under a leasehold
or other interest less than a fee, the cost, if any, of acquiring the
leasehold or other interest is considered an allowable expense which may
be added to actual cost provided that in no event shall such amount be
in excess of the fair market value of such leasehold or other interest
exclusive of proposed improvements.
(c) Adjustment. If the amount calculated in accordance with
paragraphs (a) or (b) of this section exceeds the statutory dollar
amount limits or loan ratio limits permitted by the section of Act under
which the mortgage is to be insured, or program loan ratio limits
established by the Commissioner in the absence of statutory limits, the
amount must be reduced to the applicable limits before final
endorsement.
Endorsement
Sec. 200.100 Insurance endorsement.
The credit instrument shall be initially and finally endorsed
simultaneously for insurance pursuant to a commitment to insure upon
completion. Where the advances of construction funds are to be insured
pursuant to a commitment for insured advances, initial endorsement of
the credit instrument shall occur before any mortgage proceeds are
insured and the time of final endorsement shall be as set forth in
paragraph (b) of this section.
(a) Initial endorsement. The Commissioner shall indicate the
insurance of the mortgage by endorsing the original credit instrument
and identifying the section of the Act and the regulations under which
the mortgage is insured and the date of insurance.
(b) Final endorsement. When all advances of mortgage proceeds have
been made and all the terms and conditions of the commitment have been
met to the Commissioner's satisfaction the Commissioner shall indicate
on the original credit instrument the total of all advances approved for
insurance and again endorse such instrument.
(c) Contract rights and obligations. The Commissioner and the
mortgagee or lender shall be bound from the date of initial endorsement,
whether the initial and final endorsement occur simultaneously or are
split, by the provisions of the Contract Rights and Obligations set
forth in the respective regulations for each section of the Act, as
follows: Section 207 of the Act (24 CFR part 207); Section 213 of the
Act (24 CFR part 213); Section 220 of the Act (24 CFR part 220); Section
221 of the Act (24 CFR part 221); Section 231 of the Act (24 CFR part
231); Section 232 of the Act (24 CFR part 232); Section 234 of the Act
(24 CFR part 234); Section 241 of the Act (24 CFR part 241); Section 242
of the Act (24 CFR part 242); title XI of the Act (24 CFR part 244).
Sec. 200.101 Mortgagor lien certificate.
The mortgagor shall certify at the final endorsement of the mortgage
for insurance as to each of the following:
(a) That the mortgage is the first lien upon and covers the entire
project, including any equipment financed with mortgage proceeds.
(b) That the property upon which the improvements have been made or
constructed and the equipment financed with mortgage proceeds are free
and clear of all liens other than the insured mortgage and such other
liens as may be approved by the Commissioner.
(c) That the certificate sets forth all unpaid obligations in
connection with the mortgage transaction, the purchase of the mortgaged
property, the construction or rehabilitation of the project or the
purchase of the equipment financed with mortgage proceeds.
Regulation of Mortgagors
Sec. 200.105 Mortgagor supervision.
(a) As long as the Commissioner is the insurer or holder of the
mortgage, the Commissioner shall regulate the mortgagor by means of a
regulatory agreement providing terms, conditions
[[Page 23]]
and standards established by the Commissioner, or by such other means as
the Commissioner may prescribe.
(b) The Commissioner may delegate to the mortgagee, or other party,
in accordance with terms, conditions and standards established by the
Commissioner in any executed Regulatory Agreement or other
instrumentality granting the Commissioner supervision of the mortgagor.
Sec. 200.106 Low-income housing tax credits and other program assistance.
Mortgagors with projects assisted through the Low-Income Housing Tax
Credit program or receiving other government assistance (as defined in
HUD's regulations implementing the HUD Reform Act) may be regulated by
the Commissioner as limited distribution mortgagors.
Subpart B--Electronic Submission of Required Data for Mortgage Defaults
and Mortgage Insurance Claims for Insured Multifamily Mortgages
Source: 64 FR 4769, Jan. 29, 1999, unless otherwise noted.
Sec. 200.120 Purpose and applicability.
(a) Purpose. The purpose of this subpart B is to require mortgagees
of all multifamily projects whose mortgages are insured or coinsured by
HUD to submit electronically information regarding mortgage
delinquencies, defaults, reinstatements, elections to assign, and
withdrawals of assignment elections, and related information, as that
information is required by 24 CFR part 207 and Form HUD-92426 (which is
available at the Department of Housing and Urban Development, HUD
Customer Service Center, 451 7th Street, SW, Room B-100, Washington, DC
20410; telephone (800) 767-7468).
(b) Applicability. This subpart applies to all HUD multifamily
mortgage insurance and coinsurance programs.
Sec. 200.121 Requirements and effectiveness.
(a) Multifamily mortgagees, which are required by 24 CFR part 207 to
report mortgage delinquencies, defaults, reinstatements, assignment
elections, withdrawals of assignment elections, and related information,
must submit this information electronically, over the Internet, in
accordance with the following schedule of effectiveness:
(1) Mortgagees having 70 or more insured mortgage loans must comply
with this section by no later than March 1, 1999;
(2) Mortgagees having from 26 to 69 insured mortgage loans must
comply with this section by no later than January 1, 2000;
(3) Mortgagees having from 11 to 25 insured mortgage loans must
comply with this section by no later than January 1, 2001;
(4) Mortgagees having 10 or fewer insured mortgage loans must comply
with this section by no later than January 1, 2002.
(b) Exception. On or after January 1, 2002, mortgagees that hold or
service fewer than 10 multifamily mortgages may continue to report
mortgage delinquencies, defaults, reinstatements, assignment elections,
withdrawals of assignment elections, and related information in writing
on Form HUD-92426 only with specific HUD approval. HUD will grant such
approval, upon application by the mortgagee, for reasons of hardship due
to insufficient financial resources to purchase the required hardware
and Internet access.
(c) HUD will not accept reports of information regarding defaults,
reinstatements, assignment elections, and related information in a
manner that is not in accordance with this section. Failure on the part
of mortgagees to report this information as required by 24 CFR part 207
and this section may result in HUD's application of the sanctions and
surcharges specified in 24 CFR part 207.
Subparts C-D [Reserved]
[[Page 24]]
Subpart E--Mortgage Insurance Procedures and Processing
Application for Insurance
Sec. 200.145 Property and mortgage assessment.
(a) The mortgagor is responsible for making those investigations,
analyses and inspections it deems necessary for protecting its interests
in the property.
(b) Any appraisals, inspections, environmental assessments, and
technical or financial evaluations conducted by or for the Commissioner
are performed to determine the maximum insurable mortgage, and to
protect the Commissioner and the FHA insurance funds. Such appraisals,
inspections, assessments and evaluations neither create nor imply a duty
or obligation from HUD to the mortgagor, or to any other party, and are
not to be regarded as a warranty by HUD to the mortgagor, or any other
party, of the value or condition of the property.
[61 FR 14404, Apr. 1, 1996]
Claims for Losses
Sec. 200.153 Presentation of claim.
In the event the insured lender is entitled under the contract of
mortgage insurance to receive a claim settlement, the mortgagee presents
a claim for insurance benefits in accordance with the Secretary's
instructions.
[61 FR 14404, Apr. 1, 1996]
Sec. 200.156 Settlement of claims.
Upon the Secretary's approval of a claim, the claim will be settled
by issuance of cash, debentures or both, and, in certain cases, by
issuance of a certificate of claim. However, in the event a final claim
is in a negative amount, the claim will be settled by the mortgagee's
payment of cash or surrender of debentures at par plus accrued interest
to the Secretary.
[61 FR 14404, Apr. 1, 1996]
Sec. 200.157 Provisions and characteristics of debentures.
(a) Series and fund. Debentures are issued in appropriate series and
are the obligation of and issued in the name of the particular mortgage
insurance fund under which the mortgage is insured.
(b) Registration and denominations. Debentures in certificated form
are issued in denominations of $50, $100, $500, $1,000 and $10,000 with
the name of the owner inscribed on the face of the certificate.
Debentures in book entry form are issued in a minimum amount of one
dollar and in increments of one cent with the name of the owner recorded
in an account master record on the books of the Treasury.
(c) Rate of interest and interchangeability. Debentures carry a rate
of interest prescribed by the Commissioner but not in excess of an
annual rate determined by the Secretary of the Treasury in accordance
with prescribed statutory formula involving yields or prices of
outstanding marketable obligations of the United States. Debentures in
certificated form of the same series bearing the same interest rate and
having the same maturity date shall be freely interchangeable between
the various authorized denominations and may be exchanged for similar
debentures in book entry form. Debentures in book entry form cannot be
exchanged for debentures in certificated form.
(d) Negotiability and Redemption. Debentures in certificated form
are negotiable and, if in book entry form, are transferable in the
manner described in applicable Treasury regulations. Debentures are
fully guaranteed as to principal and interest by the United States.
Debentures are redeemable on call issued by the Commissioner.
(e) Payment of principal and interest. Principal and interest on
debentures shall be payable when due at the Department of the Treasury,
Washington, DC, or any Government agency or agencies in the United
States which the Secretary of the Treasury may from time to time
designate for that purpose. The principal and interest shall be payable
to the owner whose name shall be inscribed on the debenture in
certificated form, to the owner designated as assignee as shown by
executed assignments for maturing or called certificated debentures, or
to the owner whose name shall be recorded in the account master record
of the book entry debentures.
[[Page 25]]
(f) Transfer and use--(1) In general. Debentures in certificated
form are negotiable and, if in book entry form, are transferable in the
manner described in applicable Treasury regulations. They may be used by
approved mortgagees in lieu of cash for payment of FHA mortgage
insurance premiums.
(2) Mutual Mortgage Insurance Fund debentures. Debentures of the
Mutual Mortgage Insurance Fund may be used to pay mortgage insurance
premiums on mortgages insured under sections 203(b), 203(h), and 203(i),
of the National Housing Act.
(3) Cooperative Management Housing Insurance Fund debentures.
Debentures which are the obligation of the Cooperative Management
Housing Insurance Fund may be used to pay premiums on mortgages and
loans which are insured under that Fund. Where the insurance of a
mortgage or loan is transferred from the General Insurance Fund to the
Cooperative Management Housing Insurance Fund, or where a mortgage or
loan is endorsed for insurance pursuant to a commitment transferred to
the Cooperative Management Housing Insurance Fund, debentures issued in
connection with such mortgage or loan may be used to pay insurance
premiums of either the Cooperative Management Housing Insurance Fund or
the General Insurance Fund.
(4) General Insurance Fund and debentures of other funds. Debentures
of the General Insurance Fund and those debentures issued as obligations
of mortgage insurance funds and accounts in existence prior to the
enactment of the Housing and Urban Development Act of 1965 (other than
the Mutual Mortgage Insurance Fund) which are transferred by the 1965
Act to the General Insurance Fund may be used to pay mortgage insurance
premiums only on the following mortgages and loans:
(i) Those which are the obligation of the General Insurance Fund.
(ii) Those transferred from the General Insurance Fund to the
Cooperative Management Housing Insurance Fund.
(iii) Those endorsed for insurance pursuant to commitments
transferred to the Cooperative Management Housing Insurance Fund.
[36 FR 24467, Dec. 22, 1971, as amended at 59 FR 49815, Sept. 30, 1994]
Sec. 200.158 Applicability of Treasury regulations to debenture transactions.
The Department of the Treasury acts as fiscal agent for the
Commissioner in connection with transactions and operations relating to
debentures. Treasury's General Regulations Governing U.S. Securities (31
CFR part 306) and its Supplemental Regulations Governing Federal Housing
Administration Debentures (31 CFR part 337) have been and are adopted as
revised and amended, to the extent applicable, as the regulations of the
Commissioner governing the issuance of, transactions in and redemption
of debentures, including the payment of interest thereon with the
following exceptions:
(a) Payment of final interest on maturing or called debentures. If
the notice of maturity or call for redemption shall so provide, the
final installment of interest payable on any debentures at maturity or
earlier redemption date may be paid with the principal in accordance
with the assignments on the debentures instead of by separate check
drawn to the order of the registered payee and forwarded to him at his
address of record.
(b) Closing of transfer books. If the call for redemption shall so
provide, the books maintained by the Treasury Department may be closed
against transfers and denominational exchanges in debentures for three
full months preceding any interest payment date with respect to any
debentures called for redemption on such interest payment date.
[36 FR 24467, Dec. 22, 1971, as amended at 59 FR 49815, Sept. 30, 1994]
Sec. 200.159 Relief on account of lost, stolen, destroyed, mutilated or defaced debentures.
The statutes of the United States and the regulations of the
Treasury Department governing relief on account of the loss, theft,
destruction, mutilation or defacement of United States securities, so
far as applicable and as necessarily modified to relate to debentures,
are adopted as the regulations of the Commissioner for the issuance of
substitute debentures or the payment of lost, stolen, destroyed,
mutilated or defaced debentures.
[[Page 26]]
Sec. 200.160 Redemption of debentures prior to maturity.
Debentures shall, at the option of the Commissioner and with the
approval of the Secretary of the Treasury, be redeemable at par plus
accrued interest on any semiannual interest payment date on 3 months'
notice of redemption given in such manner as the Commissioner shall
prescribe. The debenture interest on the debentures called for
redemption shall cease on the semiannual interest payment date
designated in the call notice. The Commissioner may include with the
notice of redemption an offer to purchase the debentures at par plus
accrued interest at any time during the period between the notice of
redemption and the redemption date. If the debentures are purchased by
the Commissioner after such call and prior to the named redemption date,
the debenture interest shall cease on the date of purchase.
Sec. 200.161 Administration of debenture transactions.
The Secretary of the Treasury or the Acting Secretary of the
Treasury is authorized and empowered, on behalf of the Commissioner, to
administer the regulations governing any transactions and operations in
debentures, to do all things necessary to conduct such transactions and
operations, and to delegate such authority at his discretion to other
officers, employees, and agents of the U.S. Treasury Department. At his
discretion the Secretary, the Under Secretary, or any Assistant
Secretary of the Treasury acting by direction of the Secretary, is
authorized to waive any such regulation on behalf of the Commissioner in
any particular case where a similar regulation of the Treasury
Department with respect to United States bonds or interest thereon would
be waived.
Sec. 200.162 Certificates of claim.
The certificate of claim issued to the mortgagee at the time
debentures are issued constitutes an agreement by the FHA that after the
FHA has recovered its investment in a particular property any excess
over and above such investment is available for payment on the
certificate of claim. Certificates of claim bear interest at the rate of
3 percent per annum.
Subpart F [Reserved]
Subpart G--Appraiser Roster
Source: 64 FR 72869, Dec. 28, 1999, unless otherwise noted.
Sec. 200.200 What is the Appraiser Roster?
(a) Appraiser Roster. HUD maintains a list of appraisers. A
mortgagee must select only an appraiser from this list for the appraisal
of a property that is to be the security for an FHA-insured single
family mortgage.
(b) Disclaimer. Since an appraisal is performed to determine the
maximum insurable mortgage and to also protect the FHA insurance funds,
the inclusion of an appraiser on the Appraiser Roster does not create or
imply a warranty or endorsement to a prospective homebuyer or to any
other organization or individual by HUD of the listed appraiser nor does
it represent a warranty of any appraisal performed by the listed
appraiser. The inclusion of an appraiser on the Appraiser Roster means
only that a listed appraiser has met the qualifications and conditions,
prescribed by the Secretary, for inclusion on the Appraiser Roster.
Sec. 200.202 How do I apply for placement on the Appraiser Roster?
(a) Application. To apply for placement on the Appraiser Roster, you
must submit an application to HUD.
(b) Eligibility. To be eligible for placement on the Appraiser
Roster:
(1) You must be a state-licensed or state-certified appraiser;
(2) You must pass a HUD test on FHA appraisal methods and reporting;
and
(3) You must not be listed on:
(i) The General Service Administration's Suspension and Debarment
List;
(ii) HUD's Limited Denial of Participation List; or
(iii) HUD's Credit Alert Interactive Voice Response System.
[[Page 27]]
Sec. 200.204 [Reserved]
Sec. 200.206 What are my responsibilities as an appraiser listed on the Appraiser Roster?
All appraisers listed on the Appraiser Roster are responsible for:
(a) Obtaining and reading the HUD Appraiser Handbook (4150.2) and
any updates to the Handbook;
(b) Complying with the HUD Appraiser Handbook (4150.2), and any
updates to the Handbook, when performing all appraisals of properties
for HUD single family mortgage insurance purposes; and
(c) Complying with all other instructions and standards issued by
HUD when performing all appraisals of properties for HUD single family
mortgage insurance purposes.
Subpart H--Participation and Compliance Requirements
Source: 45 FR 54199, Aug. 14, 1980, unless otherwise noted.
Previous Participation Review and Clearance Procedure
Sec. 200.210 Policy.
It is the Department's policy that participants in its housing
programs be responsible individuals and organizations who will honor
their legal, financial and contractual obligations. Accordingly, uniform
standards are established in this part for approval, disapproval, or
withholding of action on principals in projects based upon their past
performance as well as other aspects of their records.
Sec. 200.213 Applicability of procedure.
The Previous Participation Review and Clearance procedure set forth
in this part is administered by the Assistant Secretary for Housing-
Federal Housing Commissioner and is applicable to all principals and to
their:
(a) Projects already financed or which are proposed to be financed
with a mortgage insured under the National Housing Act and projects
subject to a mortgage held by the Secretary under that Act or projects
acquired by the Secretary under that Act (FHA projects);
(b) Projects financed or to be financed with direct loans or
projects acquired by the Secretary pursuant to section 202 of the
Housing Act of 1959 (Housing for the Elderly and Handicapped);
(c) Projects in which 20% or more of the units now receive or will
receive a subsidy in the form of:
(1) Interest reduction payments under section 236 of the National
Housing Act;
(2) Rent Supplement payments under section 101 of the Housing and
Urban Development Act of 1965;
(3) Housing assistance payments under section 8 of the United States
Housing Act of 1937 (with the exception of the programs described in 24
CFR part 882, subparts A, B, C and F, and in 24 CFR part 887, which are
tenant-based programs);
(d) Sales of projects by the Secretary, including ``all cash''
sales.
[45 FR 54199, Aug. 14, 1980, as amended at 56 FR 50820, Oct. 9, 1991; 59
FR 31522, June 20, 1994]
Sec. 200.215 Definitions.
(a) Affiliate. Any person or business concern that directly or
indirectly controls policy of a principal or has the power to do so is
an affiliate. Persons and business concerns controlled by the same third
party are also affiliates.
(b) Felony. A felony is any offense punishable by imprisonment for a
term exceeding one year, but does not include any offense classified as
a misdemeanor under the laws of a State and punishable by a term of
imprisonment of two years or less.
(c) Packager or Consultant. A person or firm that furnishes or
proposes to furnish advisory services in connection with the financing
or construction of a project and the related HUD requirements. Such
services may include, but are not limited to, the selection and
negotiation of contracts with a general contractor, architect, attorney
or management agent.
(d) Participation Control Officer. (See Sec. 200.224)
(e) Principal. (1) An individual, joint venture, partnership,
corporation, trust, nonprofit association, or any other public or
private entity proposing to participate, or participating,
[[Page 28]]
in a project as sponsor, owner, prime contractor, Turnkey Developer,
management agent, nursing home administrator or operator, packager, or
consultant; and architects and attorneys who have any interest in the
project other than an arms-length fee arrangement for professional
services.
(2) The term principal also includes: (i) Any affiliates of a
principal; (ii) if the principal is a partnership, all general partners,
and each limited partner having a 25 percent or more interest in the
partnership; (iii) if the principal is a public or private corporation
or governmental entity; the President, Vice-President, Secretary and
Treasurer and any other executive officers who are directly responsible
to the Board of Directors, or the equivalent thereof; all the directors;
and each stockholder having a 10 percent or more interest.
(3) Specifically excepted from this definition of a principal are:
(i) Parties whose sole interest is that of purchaser or owner of less
than five individual unit(s) in the same condominium or cooperative
development; (ii) parties whose sole interest is that of a tenant; and
(iii) Public Housing Agencies.
(f) Project. A project is: (1) Five or more residential units
covered by a single mortgage, loan or contract of assistance; (2) a
hospital, group practice facility or nursing home; (3) cooperative and
condominium developments; and (4) a subdivision being developed and
financed with a mortgage under title X of the National Housing Act.
(g) Review Committee. (See Secs. 200.224 and 200.93).
(h) Risk. In order to determine whether a participant's
participation in a project would constitute an unacceptable risk, the
following factors must be considered: Financial stability; previous
performance in accordance with HUD statutes, regulations, and program
requirements; general business practices; or other factors which
indicate to the MPRC that the principal could not be expected to operate
the project in a manner consistent with furthering the Department's
purpose of supporting and providing decent, safe and affordable housing
for the public.
[45 FR 54199, Aug. 14, 1980, as amended at 56 FR 50820, Oct. 9, 1991]
Sec. 200.217 Filing of previous participation certificate on prescribed form.
(a) A previous participation certificate on a form prescribed by the
Assistant Secretary of Housing-Federal Housing Commissioner shall be
completed by every principal in each of the following transactions and
shall be filed with HUD at the times specified herein:
(1) Projects to be financed with mortgages insured under the
National Housing Act (FHA)--With an Application for a Site Appraisal and
Market Analysis Letter, Feasibility Letter, Conditional Commitment for
Mortgage Insurance, or Firm Commitment for Mortgage Insurance, whichever
Application is first filed;
(2) Projects to be financed pursuant to section 202 of the Housing
Act of 1959 (Elderly and Handicapped)--With the Application for a Fund
Reservation;
(3) Projects in which 20% or more of the units are to receive a
subsidy as described under Sec. 200.213(c)--With the first request for a
reservation of funds for assistance payments;
(4) Purchase of a project subject to a mortgage insured or held by
the Secretary--With the Application for Transfer of Physical Assets;
(5) Purchase of a Secretary-owned project--With the Bid to Purchase;
(6) Proposed substitution or addition of a principal, such as
management agents or partners or proposed participation in a different
capacity from that previously approved for the same project--Prior to
the date that the proposed action or transfer is to become final; and
(7) Proposed acquisition by existing limited partner or stockholder
of additional interest resulting in a total interest of at least 25
percent or 10 percent, respectively--Prior to the proposed acquisition.
(b) Certificates are not required for interests acquired by
inheritance or by Court decree.
[45 FR 54199, Aug. 14, 1980, as amended at 59 FR 31522, June 20, 1994]
Sec. 200.218 Who must certify and sign.
All principals must certify and sign the certificate personally as
to their individual record and are responsible
[[Page 29]]
for its timely filing with the HUD Area Office in whose jurisdiction the
project or proposal is located except:
(a) When a corporation is a principal all its officers, directors
and principal stockholders need not individually sign, certify nor file
the certificate when they all have the same record. When their previous
participation records are the same the officer authorized to sign for
the corporation will list on the certificate the full names for all such
principals connected with the corporation who do not elect to sign.
Those principals who have a separate participation record outside that
of their corporation must certify, sign and file. The objective is full
disclosure.
(b) The Participation Control Officer is authorized to waive the
requirement for signatures for good cause in cases where he finds that
adequate provision has been made for full disclosure, and the signature
is thereafter provided.
Sec. 200.219 Content of certification.
(a) Each principal who executes the certificate certifies that:
(1) The certificate contains a listing of every assisted or insured
project of HUD, Farmers Home Administration and State or local
government housing finance agencies in which the principal has been or
is now a principal;
(2) For a period beginning 10 years prior to the date of the
certificate under review and except as shown on the certificate:
(i) No mortgage on a project listed has ever been in default nor has
mortgage relief been given;
(ii) There have been no defaults or noncompliances under any
conventional construction contract or Turnkey contract of sale in
connection with a public housing project;
(iii) There are no known unresolved findings raised as a result of
HUD audits, management reviews or other governmental investigations;
(iv) There has been no suspension or termination of payments under
any HUD assistance contract attributable to the fault or negligence of
principal;
(v) The principal has not been convicted of a felony (See
definitions Sec. 200.215(b)) and is not presently the subject of a
complaint or indictment charging a felony;
(vi) The principal has not been suspended, debarred, or otherwise
restricted by any Department or Agency of the Federal Government or of a
State Government from doing business with such Department or Agency;
(vii) The principal has not defaulted on an obligation covered by a
surety or performance bond, and has not been the subject of a Claim
under an employee fidelity bond;
(3) The principal has listed all parties who are known to him to be
principals under Sec. 200.215(e)(2);
(4) The principal is not a HUD employee or a member of an employee's
immediate household as defined by HUD's Standards of Conduct in 24 CFR
0.735-205(c);
(5) Except as shown on the certificate under review, the principal
is not a participant: (i) In a HUD assisted or insured project on which
construction, as of the date of said certificate, has stopped for a
period in excess of twenty days or; (ii) in an insured project on which
construction, as of the date of said certificate, has been substantially
completed for more than 90 days and documents for closing, including
cost certification, have not been filed with HUD;
(b) The project owner shall certify that he has also listed all
other parties who are principals under Sec. 200.215(e)(1).
(c) If a principal cannot certify as to any items under paragraphs
(a) and (b) of this section, such items may be deleted from the face of
the certificate and a full explanation of the reason for the deletion,
signed by the principal, may be attached to the certificate for HUD's
review, evaluation and determination.
(d) Each principal who executes the certificate must also certify
that said principal is not a Member of Congress or a Resident
Commissioner.
Sec. 200.222 Certification of previous record on basis of a master list.
A principal may avoid repetitious listings by providing HUD with a
complete master list, acceptable to the Participation Control Officer,
of all projects in which the principal has participated. Where such a
list has been
[[Page 30]]
provided, the principal may submit a certificate which refers to the
master list and which supplements it by the addition of all information
required under Sec. 200.219 with respect to occurrences since the date
of the master list (including subsequent occurrences with respect to the
projects on the master list as well as subsequent projects). Partners,
corporate officers, directors and stockholders may likewise refer to and
thereby incorporate their firm's master list when they certify.
Sec. 200.224 Multifamily Participation Review Committee and Participation Control Officer.
The membership and authority of the Multifamily Participation Review
Committee (hereinafter referred to as the Review Committee) are set
forth in Sec. 200.227. A majority of the members of the Review Committee
shall constitute a quorum. The Executive Secretary of the Review
Committee shall be the Participation Control Officer under this part and
shall serve under the administrative supervision of the Director of the
Participation and Compliance Division, who acts as Participation Control
Officer in his absence.
[45 FR 54199, Aug. 14, 1980, as amended at 61 FR 7944, Feb. 29, 1996]
Sec. 200.225 Approvals by Area Managers for limited partners.
The Area Manager of the HUD Area Office where the certificate is
filed is authorized to review the certificate and approve for
participation limited partner principals: Provided, That they have no
previous record of participation or their only participation in previous
projects covered by these regulations has been as a limited partner. All
other certificates must be forwarded to the Participation Control
Officer.
Sec. 200.226 Determination by the Participation Control Officer.
(a) The Participation Control Officer is authorized to:
(1) Approve a principal when a review of the previous participation
certificate and other available information reveals that there are no
grounds to withhold approval or disapprove under the standards in
Sec. 200.229 or Sec. 200.230, respectively;
(2) Disapprove a principal who; (i) is suspended or debarred or
otherwise restricted under 24 CFR part 24; or (ii) has been disapproved
for participation no more than 12 months prior to the filing of the
certificate under review, unless the principal has requested
reconsideration of the disapproval;
(3) Refer all other cases to the Review Committee, together with all
available information and documents and a recommendation of the action
to be taken.
Sec. 200.227 Multifamily Participation Review Committee.
(a) Members. (1) The Director, Office of Lender Activities and Land
Sales Registration serves as Chairman and does not vote. The Committee
is composed of the following voting members or their designees
representing the Assistant Secretary for Housing- Federal Housing
Commissioner: the Director of the Office of Insured Multifamily Housing
Development; the Director of the Office of the Elderly and Assisted
Housing; the Director of the Office of Multifamily Housing Management;
the Director of the Office of Multifamily Preservation and Property
Disposition; the Director of the Previous Participation and Compliance
Division; and a designee of the Director of the Office of Lender
Activities and Land Sales Registration.
(2) The Committee also includes, as non-voting members, the General
Counsel or his or her designee, who provides legal counsel, and the
Participation Control Officer in the Office of Lender Activities and
Land Sales Registration. The Participation Control Officer is the
Executive Secretary to the Committee and is empowered to issue and sign
all notices, orders, letters and directives on behalf of the committee,
to keep minutes, and to perform other duties assigned by the Chairman or
directed by the Committee.
(b) Functions. The Committee will act for the Assistant Secretary
for Housing-Federal Housing Commissioner and for the Assistant Secretary
for Public and Indian Housing to determine the
[[Page 31]]
acceptability of participants in multifamily proposals under subpart H
of this part.
[50 FR 37520, Sept. 16, 1985, as amended at 56 FR 41791, Aug. 23, 1991;
59 FR 31522, June 20, 1994. Redesignated at 61 FR 7943, Feb. 29, 1996]
Sec. 200.228 Determination by the Review Committee.
(a) The Review Committee shall make one of the following
determinations in connection with every case referred to it by the
Participation Control Officer:
(1) Approve the principal after consideration of the entire record
in the light of the standards in Sec. 200.230. All mitigating or
extenuating factors will be considered. In each case, the decision shall
be within the discretion of the Review Committee and rendered in the
best interest of the Government and the public;
(2) Conditionally approve the principal's participation with such
conditions or limitations which in the Review Committee's judgment are
necessary to make the principal approvable;
(3) Withhold approval of the principal in accordance with
Sec. 200.229; or
(4) Disapprove the principal when approval is not justified and
withholding approval is not appropriate.
(b) All determinations by the Review Committee shall be made by
majority vote of those members present and entitled to vote.
Sec. 200.229 Withholding approval.
Approval of a principal may be withheld for:
(a) A period not to exceed 120 days when such action is deemed
necessary to secure additional information upon which to base a final
action including a determination as to whether a suspension or debarment
action will be taken; or
(b) For a longer period pending the resolution of a criminal
complaint or indictment.
Sec. 200.230 Standards for disapproval.
The standards for disapproval shall be as follows:
(a) Suspension, debarment or other restriction of the principal
under part 24 of this title;
(b) Suspension, debarment or other restriction of the principal by
any other Department or Agency of the Federal Government from doing
business with such Department or Agency;
(c) Unless the Review Committee finds mitigating or extenuating
circumstances that enable it to make a risk determination for approval,
any of the following occurrences attributable or legally imputable to a
principal may be the basis for disapproval, whether or not the principal
was actively involved in the project:
(1) Mortgage defaults, assignments or foreclosures, unless the
Review Committee determines that the default, assignment or foreclosure
was caused by circumstances beyond the principal's control;
(2) Defaults or noncompliance under any conventional construction
contract or turnkey contract of sale in connection with a public housing
project;
(3) Violation of the regulatory agreement or noncompliance with any
other obligation to HUD that has not been corrected to the satisfaction
of the Review Committee at the time of its consideration;
(4) Suspension or termination of payments under any HUD assistance
contract;
(5) Defaults under an obligation covered by a surety or performance
bond and/or claims under an employee fidelity bond;
(6) Unresolved findings as a result of HUD or other governmental
audits or investigations; or
(7) A criminal record or other evidence that the principal's
previous conduct or method of doing business has been such that his
participation in the project would make it an unacceptable risk from the
underwriting standpoint of an insurer, lender or governmental agency;
(d) With respect to any HUD insured or assisted projects, work
stoppage for a period in excess of 20 days, or in the case of an insured
project, failure to achieve final endorsement of the mortgage where the
project has been substantially completed for more than 90
[[Page 32]]
days but documents for closing, including cost certification have not
been filed with HUD and such is chargeable to the fault or neglect of
the principal;
(e) Any serious and significant violation by a management agent of a
project management contract, where the contract required HUD or other
Governmental agency approval at its inception;
(f) Submission of a false or materially incomplete form 2530
certification application.
(g) Any other significant violation of or noncompliance with
regulations, or programs or contract requirements of HUD, Farmers Home
Administration or a State or local government's Housing Finance Agency
in connection with any insured or assisted project.
[45 FR 54199, Aug. 14, 1980, as amended at 56 FR 50820, Oct. 9, 1991]
Sec. 200.233 Effect and requirement of approval.
Approval is required as a precondition for participation and
constitutes clearance of the principal under this part for participation
only for a specific project in a specific role. Approval of a principal
does not obligate the Department to approve the principal's applications
or contracts for program participation.
Sec. 200.236 Modification or withdrawal of certain approvals.
Approvals will not be modified or withdrawn except in cases where
the principal is subsequently suspended or debarred from further
participation in any HUD programs under part 24 of this title, or is
found by the Review Committee to have obtained approval based upon
submission of a false, fraudulent or incomplete report or certificate
submitted to HUD. In such cases the Review Committee may take such
action, including modification or withdrawal of approval, as it
determines to be in the best interest of the Department and the public.
For the purpose of this section, the term approval includes conditional
approval.
Sec. 200.239 Notice of determination.
The Participation Control Officer shall give written notice to the
principal and to the field office concerned of disapproval under
Sec. 200.226, and conditional approval, withholding of approval or
disapproval by the Review Committee under Sec. 200.228. In the case of
any such adverse notice:
(a) The notice shall contain a general statement of the reasons for
the determination; and
(b) The notice to the principal shall be sent by certified mail to
the address shown on the certificate with a return receipt requested.
Sec. 200.241 Request for reconsideration of an adverse determination and request for a hearing.
(a) Where approval has been withheld, denied, or conditionally
granted, the principal may request reconsideration by the Review
Committee. Such request shall be made in writing, within 30 days of
receipt of the notice of such action, addressed to the Review Committee.
It may contain such supporting material as principal desires; or
(b) The principal may file a request for a hearing before a Hearing
Officer as provided in Sec. 200.243. Such request for a hearing shall be
made in writing within 30 days from the date of receipt of the
determination.
Sec. 200.243 Hearing rules--How and when to apply.
(a) A principal who has been disapproved, conditionally approved, or
who has had approval withheld by the Review Committee, either initially
or after reconsideration, or who is disapproved by the Participation
Control Officer, may request a hearing before a Hearing Officer. The
hearing will be conducted in accordance with the provisions of 24 CFR
part 26, subpart A, except as modified by this section. Requests for
hearing must be made within 30 days from the date of receipt of notice
of the adverse determination.
(1) Except as provided in paragraphs (a)(2) and (3) of this section,
a principal may request an oral hearing before a hearing officer.
(2) Where a disapproval is based solely on a suspension or debarment
that has been previously adjudicated, the
[[Page 33]]
hearing shall be limited to the opportunity to submit documentary
evidence and written briefs for consideration by a hearing officer.
(3) Where a disapproval is based on a suspension and an appeal is
pending, the hearing shall be stayed pending the outcome of the
suspension, unless the parties and the hearing officer agree that the
matter should be consolidated with the suspension for hearing.
(b) Hearings and review of determination by the Hearing Officer
shall be governed by the procedures contained in part 24 of this title
except as modified in paragraph (a) of this section and by Sec. 200.245.
[45 FR 54199, Aug. 14, 1980, as amended at 56 FR 50820, Oct. 9, 1991; 61
FR 50219, Sept. 24, 1996]
Sec. 200.245 Hearing Officer determines facts and law: Review Committee makes final administrative decision.
The Hearing Officer will determine the facts and the law relevant to
the issues and will report the determination in writing to the Review
Committee and to the principal. The Review Committee shall be bound by
the Hearing Officer's findings of facts and law and will make a final
decision based upon its application of the uniform underwriting and risk
evaluation standards contained in this part. It will notify principal of
the final action taken.
Subpart I--Nondiscrimination and Fair Housing
Sec. 200.300 Nondiscrimination and fair housing policy.
Federal Housing Administration programs shall be administered in
accordance with:
(a) The nondiscrimination and fair housing requirements set forth in
24 CFR part 5; and
(b) The affirmative fair housing marketing requirements in 24 CFR
part 200, subpart M and 24 CFR part 108.
[61 FR 7944, Feb. 29, 1996]
Subpart J--Equal Employment Opportunity
Sec. 200.400 Purpose.
The purpose of this subpart is to assist in achieving the aims of
part III of Executive Order 11246 and the relevant regulations of the
Secretary of Labor and the Secretary of Housing and Urban Development.
Sec. 200.405 Notice to public.
Participants in insurance programs under the National Housing Act
shall be informed, as early as possible upon indicating their interest
in any such program, of the established policy of nondiscrimination in
employment in construction, repair or rehabilitation work financed with
assistance under the Act.
Sec. 200.410 Definition of term ``applicant''.
(a) In any mortgage or loan insurance transaction under this chapter
where the Commissioner will control the mortgagor either through the
ownership of corporate stock or under the provisions of a regulatory
agreement, the term applicant as used in Sec. 200.415 shall mean the
mortgagor.
(b) In any transaction other than one specified in paragraph (a) of
this section, the term applicant as used in Sec. 200.415 shall mean the
developer, or the builder, dealer or contractor performing the
construction, repair or rehabilitation work for the property owner.
Sec. 200.415 Agreement of applicant.
An applicant, prior to the Commissioner's issuance of any commitment
or other loan approval, shall agree (in a form prescribed by the
Commissioner) that there shall be no discrimination against anyone who
is employed in carrying out work receiving assistance pursuant to this
chapter, or against an applicant for such employment, because of race,
color, religion, sex, handicap, age, or national origin.
[58 FR 41000, July 30, 1993]
[[Page 34]]
Sec. 200.420 Equal opportunity clause to be included in contracts and subcontracts.
(a) The equal opportunity clause prescribed by the Commissioner
pursuant to the regulations of the Secretary of Labor (41 CFR chapter
60) shall be included in each nonexempt contract and subcontract for
work receiving FHA assistance.
(b) Subcontracts less than $50,000 may incorporate by reference the
equal opportunity clause.
(c) The equal opportunity clause shall be deemed to be a part of
each nonexempt contract or subcontract whether or not it is physically
incorporated in such contract.
Sec. 200.425 Exemptions.
(a) Transactions of $10,000 or under. Contracts and subcontracts not
exceeding $10,000 are exempt from the requirements of the equal
opportunity clause. No contractor or subcontractor shall procure
supplies or services in less than usual quantities to avoid
applicability of the equal opportunity clause.
(b) Contracts and subcontracts for indefinite quantities. Contracts
and subcontracts for indefinite quantities are exempt from the
requirements of the equal opportunity clause if the amount to be ordered
in a single year under any such contract will not exceed $10,000.
(c) Work outside the United States. Contracts and subcontracts with
regard to work performed outside the United States by employees who were
not recruited within the United States are exempt from the requirements
of the equal opportunity clause.
(d) Others. Other exemptions set forth in the regulations of the
Secretary of Labor at 41 CFR 60-1.5 apply to transactions under this
subpart.
Sec. 200.430 Sanctions.
Failure or refusal to comply and give satisfactory assurances of
future compliance with the requirements of this subpart shall be proper
basis for applying sanctions. The sanctions shall be applied in
accordance with the provisions of Executive Order 11246 and the relevant
regulations of the Secretary of Labor.
Subparts K-L [Reserved]
Subpart M--Affirmative Fair Housing Marketing Regulations
Source: 37 FR 75, Jan. 5, 1972, unless otherwise noted.
Sec. 200.600 Purpose.
The purpose of this subpart is to set forth the Department's equal
opportunity regulations for affirmative fair housing marketing under FHA
subsidized and unsubsidized housing programs.
Sec. 200.605 Authority.
The regulations in this subpart are issued pursuant to the authority
to issue regulations granted to the Secretary by section 7(d) of the
Department of Housing and Urban Development Act of 1965, 42 U.S.C.
3535(d), and implement the functions, powers, and duties imposed on the
Secretary by Executive Order 11063, 27 FR 11527, and title VIII of the
Civil Rights Act of 1968, as amended, 42 U.S.C. 3608.
[40 FR 20080, May 8, 1975]
Sec. 200.610 Policy.
It is the policy of the Department to administer its FHA housing
programs affirmatively, as to achieve a condition in which individuals
of similar income levels in the same housing market area have a like
range of housing choices available to them regardless of their race,
color, religion, sex, handicap, familial status or national origin. Each
applicant for participation in FHA subsidized and unsubsidized housing
programs shall pursue affirmative fair housing marketing policies in
soliciting buyers and tenants, in determining their eligibility, and in
concluding sales and rental transactions.
[40 FR 20080, May 8, 1975, as amended at 58 FR 41337, Aug. 3, 1993]
Sec. 200.615 Applicability.
The affirmative fair housing marketing requirements, as set forth in
paragraphs (a) through (f) of Sec. 200.620,
[[Page 35]]
shall apply to all applicants for participation in FHA subsidized and
unsubsidized housing programs whose application is hereafter approved
for development or rehabilitation of:
(a) Multifamily projects and manufactured home parks of five or more
lots, units or spaces, and initial submissions by a lender for an
application for mortgage insurance on a single family property, where
the property is located in a subdivision and the builder or developer
intends to sell five or more properties in the subdivision; or
(b) Dwelling units, when the applicant's participation in FHA
housing programs had exceeded or would thereby exceed development of
five or more such dwelling units during the year preceding the
application, except that there shall not be included in a determination
of the number of dwelling units developed by an applicant those in which
a single family dwelling is constructed or rehabilitated for occupancy
by a mortgagor on property owned by the mortgagor and in which the
applicant had no interest prior to entering into the contract for
construction or rehabilitation.
[37 FR 75, Jan. 5, 1972, as amended at 50 FR 9268, Mar. 7, 1985; 58 FR
41337, Aug. 3, 1993]
Sec. 200.620 Requirements.
With respect to all FHA subsidized or unsubsidized programs in which
the applicant hereafter participates (except for housing for which a
conditional commitment has been issued prior to the effective date of
these regulations), the applicant shall meet the following requirements
or, if he contracts marketing responsibility to another party, be
responsible for that party's carrying out the requirements:
(a) Carry out an affirmative program to attract buyers or tenants,
regardless of sex, handicap or familial status, of all minority and
majority groups to the housing for initial sale or rental. An
affirmative marketing program shall be in effect for each multifamily
project throughout the life of the mortgage. Such a program shall
typically involve publicizing to minority persons the availability of
housing opportunities regardless of race, color, religion, sex, handicap
or familial status or national origin, through the type of media
customarily utilized by the applicant, including minority publications
or other minority outlets which are available in the housing market
area. All advertising shall include either the Department-approved Equal
Housing Opportunity logo or slogan or statement and all advertising
depicting persons shall depict persons of majority and minority groups,
including both sexes.
(b) Maintain a nondiscriminatory hiring policy in recruiting from
both minority and majority groups, including both sexes and the
handicapped, for staff engaged in the sale or rental of properties.
(c) Instruct all employees and agents in writing and orally in the
policy of nondiscrimination and fair housing.
(d) Specifically solicit eligible buyers or tenants reported to the
applicant by the Area or Insuring Office.
(e) Prominently display in all offices in which sale or rental
activity pertaining to the project or subdivision takes place the
Department-approved Fair Housing Poster and include in any printed
material used in connection with sales or rentals, the Department-
approved Equal Housing Opportunity logo or slogan or statement.
(f) Post in a conspicuous position on all FHA project sites a sign
displaying prominently either the Department-approved Equal Housing
Opportunity logo or slogan or statement.
[37 FR 75, Jan. 5, 1972, as amended at 40 FR 20080, May 8, 1975; 40 FR
53008, Nov. 14, 1975; 58 FR 41337, Aug. 3, 1993]
Sec. 200.625 Affirmative fair housing marketing plan.
Each applicant for participation in FHA housing programs to which
these regulations apply shall provide on a form to be supplied by the
Department information indicating his affirmative fair housing marketing
plan to comply with the requirements set forth in Sec. 200.620. This
form, once approved by HUD, will be available for public inspection at
the sales or rental offices of the applicant.
Sec. 200.630 Notice of housing opportunities.
The Director of each Field Office shall prepare monthly a list of
all
[[Page 36]]
projects covered by this subpart, and of all initial submissions by
lenders for single family mortgage insurance where the property is
located in a subdivision and the builder or developer intends to sell
five or more properties in the subdivision, on which commitments have
been issued during the preceding 30 days. The Director shall maintain a
roster of interested organizations and individuals (including public
agencies responsible for providing relocation assistance and local
housing authorities) who have expressed a wish to receive the monthly
list, and shall provide the list to these organizations and individuals.
[58 FR 41337, Aug. 3, 1993]
Sec. 200.635 Compliance.
Applicants failing to comply with the requirements of this subpart
will make themselves liable to sanctions authorized by regulations,
rules or policies governing the program pursuant to which the
application was made, including but not limited to denial of further
participation in departmental programs and referral to the Department of
Justice for suit by the United States for injunctive or other
appropriate relief. The Department will enforce compliance through the
procedures outlined in 24 CFR part 108.
[37 FR 75, Jan. 5, 1972, as amended at 58 FR 41337, Aug. 3, 1993]
Sec. 200.640 Effect on other requirements.
The requirement for compliance with this part is in addition to, and
not in substitution for, any other requirements imposed by or under
Executive Order 11063 or the Fair Housing Act.
[58 FR 41337, Aug. 3, 1993]
Appendix to Subpart M to Part 200--Equal Housing Opportunity Insignia
The Equal Housing Opportunity insignia are as follows:
Equal Housing Opportunity logo:
[GRAPHIC] [TIFF OMITTED] TC05OC91.037
Equal Housing Opportunity statement: ``We are pledged to the letter
and spirit of U.S. policy for the achievement of equal housing
opportunity throughout the Nation. We encourage and support an
affirmative advertising and marketing program in which there are no
barriers to obtaining housing because of race, color, religion, sex, or
national origin.''
Equal Housing Opportunity slogan: ``Equal Housing Opportunity.''
[37 FR 75, Jan. 5, 1972, as amended at 40 FR 20080, May 8, 1975]
Subpart N [Reserved]
Subpart O--Lead-Based Paint Poisoning Prevention
Source: 64 FR 50224, Sept. 15, 1999, unless otherwise noted.
Effective Date Note: At 64 FR 50224, Sept. 15, 1999, subpart O was
revised, effective Sept. 15, 2000. For the convenience of the user,
Subpart O remaining in effect until Sept. 15, 2000, follows the text of
this new subpart.
Sec. 200.800 Lead-based paint.
The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846),
the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C.
4851-4856), and implementing regulations at part 35, subparts A, B, F,
G, I, and R of
[[Page 37]]
this title, apply to activities under these programs, except for single
family mortgage insurance and guarantee programs. Sections 200.805 and
200.810 apply to single family mortgage insurance and guarantee programs
administered by HUD.
Sec. 200.805 Definitions.
Applicable surface. All intact and nonintact interior and exterior
painted surfaces of a residential structure.
Defective paint surface. Paint on applicable surfaces that is
cracking, scaling, chipping, peeling or loose.
Lead-based paint surface. A paint surface, whether or not defective,
identified as having a lead content greater than or equal to 1 mg/cm\2\.
Sec. 200.810 Single family insurance and coinsurance.
(a) General. (1) The requirements of this section apply to any one-
to four-family dwelling which was constructed before 1978 and is the
subject of an application for mortgage insurance under section 203(b) or
other sections of the National Housing Act relating to the insurance or
coinsurance of mortgages on one-to-four-family dwellings. Such other
sections include:
(i) Section 244 (coinsurance);
(ii) Section 213 (cooperative housing insurance);
(iii) Section 220 (rehabilitation and neighborhood conservation
housing insurance);
(iv) Section 221 (housing for moderate income and displaced
families);
(v) Section 222 (mortgagor insurance for servicemen);
(vi) Section 809 (armed services housing for civilian employees);
(vii) Section 810 (armed services housing in impacted areas);
(viii) Section 234 (mortgage insurance for condominiums);
(ix) Section 235 (mortgage assistance payments for home ownership
and project rehabilitation);
(x) Section 237 (special mortgage insurance for low and moderate
income families); and
(xi) Section 240 (mortgage insurance on loans for purchase of fee
simple title from lessors).
(2) This section is also applicable to single family mortgage
insurance on Indian reservations (12 U.S.C. 1715z-13) and loan
guarantees for Indian housing (25 U.S.C. 4191).
(3) Applications for insurance in connection with a refinancing
transaction where an appraisal is not required under the applicable
procedures established by the Commissioner are excluded from the
coverage of this section. Any housing assisted under the programs set
out in this section for which no new activity is applied for or required
is not covered by this section.
(b) Appraisal. The appraiser shall, when appraising a dwelling
constructed prior to 1978, inspect the dwelling for defective paint
surfaces.
(c) Treatment of defective paint surfaces. For defective paint
surfaces, treatment shall be provided to defective areas. Treatment of
hazards shall consist of covering or removing defective paint surfaces.
Covering may be accomplished by such means as adding a layer of
wallboard to the wall surface. Depending on the wall condition,
wallcoverings which are permanently attached may be used. Covering or
replacing trim surfaces is also permitted. Paint removal may be
accomplished by such methods as scraping, heat treatment (infra-red or
coil type heat guns) or chemicals. Machine sanding and use of propane or
gasoline torches (open-flame methods) are not permitted. Washing and
repainting without thorough removal or covering does not constitute
adequate treatment. In the case of defective paint spots, scraping and
repainting the defective area is considered adequate treatment.
Treatment of a defective paint surface is not required if such a surface
is found to not be a lead-based paint surface by a lead-based paint
inspector certified pursuant to procedures of the U.S. Environmental
Protection Agency at 40 CFR part 745.
(d) Home equity conversion mortgage insurance. The requirements of
this section, as modified by the following sentence, apply to a dwelling
which is the subject of an application for mortgage insurance under
section 255 of the National Housing Act (home equity conversion
insurance) unless the mortgagor provides the certification described in
Sec. 206.45(d) of this title. The defective paint surface may be treated
[[Page 38]]
after the mortgage is endorsed for insurance, provided that the
defective paint surface is treated as expeditiously as possible in
accordance with the repair work provisions contained in Sec. 206.47 of
this title.
Effective Date Note: At 64 FR 50224, Sept. 15, 1999, subpart O was
revised, effective Sept. 15, 2000. For the convenience of the user, the
superseded text is set forth as follows:
Subpart O--Lead-Based Paint Poisoning Prevention
Sec. 200.800 Purpose and applicability.
The purpose of this subpart is to implement the provisions of
section 302 of the Lead-Based Paint Poisoning Prevention Act, 42 U.S.C.
4821-4186, by establishing procedures to eliminate as far as practicable
the hazards of lead-based paint poisoning with respect to existing
housing within the coverage hereinafter described. This subpart is
promulgated under the authorization granted in 24 CFR 35.24(b)(4), and
it supersedes, with respect to all housing to which it applies, the
requirements prescribed by subpart C of 24 CFR part 35. Any housing
assisted under the programs set out in this part 200 for which no new
activity is applied for or required is not covered by this subpart nor
by subpart C of part 35. The requirements of subpart A of 24 CFR part 35
apply to all housing constructed prior to 1978 and covered by this
subpart.
[52 FR 1891, Jan. 15, 1987]
Sec. 200.805 Definitions.
Applicable surface. All intact and nonintact interior and exterior
painted surfaces of a residential structure.
Chewable surface. All chewable protruding painted surfaces up to
five feet from the floor or ground, which are readily accessible to
children under seven years of age, e.g., protruding corners, windowsills
and frames, doors and frames, and other protruding woodwork.
Defective paint surface. Paint on applicable surfaces that is
cracking, scaling, chipping, peeling or loose.
Elevated blood lead level or EBL. Excessive absorption of lead, that
is, a confirmed concentration of lead in whole blood of 25 ug/d1
(micrograms of lead per deciliter of whole blood) or greater.
HUD-owned properties. Properties with residential units to which HUD
acquired title, or any Federally-owned properties for which HUD has
disposition responsibility and which are intended for residential
habitation.
Lead-based paint surface. A paint surface, whether or not defective,
identified as having a lead content greater than or equal to 1 mg/cm
\2\.
Sale of HUD-owned properties. Any sale of federally-owned properties
by HUD.
Use for residential habitation. The use of a property as a
residential structure as defined in 24 CFR 35.3.
[52 FR 1891, Jan. 15, 1987, as amended at 53 FR 20799, June 6, 1988]
Sec. 200.810 Single family insurance and coinsurance.
(a) General. The requirements of this section apply to any one- to
four-family dwelling which is the subject of an application for mortgage
insurance under section 203(b) or other sections of the National Housing
Act relating to the insurance or coinsurance of mortgages on one- to
four-family dwellings. (Such other sections include sections 244
(coinsurance), 213 (cooperative housing insurance), 220 (rehabilitation
and neighborhood conservation housing insurance), 221 (housing for
moderate income and displaced families), 222 (mortgagor insurance for
servicemen), 809 (armed services housing for civilian employees), 810
(armed services housing in impacted areas), 234 (mortgage insurance for
condominiums), 235 (mortgage assistance payments for home ownership and
project rehabilitation), 237 (special mortgage insurance for low and
moderate income families), and 240 (mortgage insurance on loans for
purchase of fee simple title from lessors).) Applications for insurance
in connection with a refinancing transaction where an appraisal is not
required under the applicable procedures established by the Commissioner
are excluded from the coverage of this section.
(b) Appraisal. The appraiser shall, when appraising a dwelling
constructed prior to 1978, inspect the dwelling for defective paint
surfaces.
(c) Abatement. For defective paint surfaces, treatment shall be
provided to defective areas. Treatment of hazards shall consist of
covering or removing defective paint surfaces as described in 24 CFR
35.24(b)(2)(ii).
(d) Home equity conversion mortgage insurance. The requirements of
this section, as modified by the following sentence, apply to a dwelling
which is the subject of an application for mortgage insurance under
section 255 of the National Housing Act (home equity conversion
insurance) unless the mortgagor provides the certification described in
Sec. 206.45(d) of this chapter. The defective paint surface may be
treated after the mortgage is endorsed for insurance, provided that the
defective paint surface is treated as expeditiously as possible in
accordance with the repair work provisions contained in Sec. 206.47 of
this chapter.
[36 FR 24467, Dec. 22, 1971, as amended at 53 FR 20799, June 6, 1988; 54
FR 24832, June 9,
[[Page 39]]
1989; 54 FR 32060, Aug. 4, 1989; 59 FR 50463, Oct. 3, 1994; 61 FR 36263,
July 9, 1996]
Sec. 200.815 HUD-owned single family property disposition.
(a) General. The requirements of this section apply to the sale of
HUD-owned one- to four-family dwellings when their use is intended for
residential habitation.
(b) Defective paint surfaces. For residential structures constructed
prior to 1978, HUD shall cause the property to be inspected for
defective paint surfaces before the closing of the sale of the property.
If defective paint surfaces are found, treatment as required by 24 CFR
35.24(b)(2)(ii) shall be completed before the closing of the sale of the
property. In the case of a sale to a non-owner occupant purchaser,
treatment may be made a condition of sale, with sufficient sale funds
escrowed to assure treatment.
(c) Chewable surfaces. This subsection applies to dwellings
constructed prior to 1978. If the purchaser is an owner-occupant and the
occupant family contains one or more children under the age of seven
years, closing of the sale shall be deferred until completion of the
following procedures. Where a blood lead level screening program is
determined by HUD to be reasonably available, screening of each occupant
child under the age of seven years will be required. If an EBL condition
is identified, HUD will cause the dwelling to be tested for lead-based
paint on chewable surfaces or follow treatment procedures. Testing shall
be conducted by a State or local health or housing agency, an inspector
certified or regulated by a State or local health or housing agency, a
qualified HUD inspector or an organization recognized by HUD. Lead
content shall be tested by using an X-ray fluorescence analyzer (XRF) or
other method approved by the Commissioner. Test readings of 1 mg/
cm2 or higher using an XRF shall be considered positive for
presence of lead-based paint. Where lead-based paint on chewable
surfaces is identified, the entire interior or exterior chewable surface
shall be treated. Treatment shall consist of covering or removal of the
paint surface in accordance with 24 CFR 35.24(b)(2)(ii).
(d) Abatement without testing. In lieu of the procedures set forth
in paragraph (c) of this section in the case of a residential structure
constructed prior to 1978, HUD, at its option, may forgo testing and
abate all applicable surfaces in accordance with the methods set out at
24 CFR 35.24(b)(2)(ii).
[52 FR 1891, Jan. 15, 1987; 52 FR 9828, Mar. 27, 1987, as amended at 53
FR 20799, June 6, 1988]
Sec. 200.820 Multifamily insurance and coinsurance.
(a) General. The requirements of this section apply to any existing
property which is the subject of an application for mortgage insurance
under sections 207 (including applications under section 207 pursuant to
section 223(f)), 213, 220, 221 or 234 of the National Housing Act,
including applications for mortgage insurance under any of these
sections pursuant to section 223(a)(7) of the National Housing Act. This
section also applies to the applicat pursuant to section 223(f)), 213,
220, 221 or 234 of the National Housing Act, including applications for
mortgage insurance under any of these sections pursuant to sectionon of
an existing property. This section does not apply to projects for the
elderly or handicapped (except for units housing children under seven
years of age) or projects subject to an application for insurance under
section 231, 232, 241 or 242 of the National Housing Act. The
requirements of this section do not apply to 0-bedroom units. The
requirements of paragraph (c) of this section apply to projects that
have not received a conditional commitment for insurance on or before
May 1, 1987.
(b) Defective paint surfaces. In the case of a residential structure
constructed prior to 1978, the HUD or coinsurer's architect and the
sponsor's architect shall inspect the property for defective paint
surfaces before the issuance of a commitment. If defective paint
surfaces are found, treatment as required by 24 CFR 35.24(b)(2)(ii)
shall be completed before final endorsement as a condition of the firm
commitment.
(c) Chewable surfaces--(1)(i) Random sample. In the case of a
residential structure constructed prior to 1978 a random sample of
dwelling units shall be tested for lead-based paint on chewable
surfaces. Ten units shall be tested in projects with twenty or more
units, and six units shall be tested in projects with fewer than twenty
units, together with a sample of common areas and exterior applicable
surfaces. Common areas included in the sample should include non-
dwelling facilities commonly used by children under seven years of age,
such as child care centers. All chewable surfaces in selected units
shall be tested. If none of the tested units, common areas or exterior
applicable surfaces contain lead-based paint, the project may be
considered free of lead-based paint, and no further testing or abatement
action will be required. If lead-based paint is found in any unit in the
sample, all units in the project are required to be tested. If lead-
based paint is found in any common area, all common areas in the project
are required to be tested. If lead-based paint is found in any exterior
applicable surface, all exterior applicable surfaces in the project are
required to be tested.
(ii) EBL Child. In the case of a residential structure constructed
prior to 1978, if the developer is presented with test results that
indicate a child seven years of age or younger living in a unit has an
EBL the developer must test the unit occupied by the child and
[[Page 40]]
if such test is positive for lead-based paint, abate the unit surfaces
in accordance with the methods set out at 24 CFR 35.24(b)(2)(ii) or
choose not to test, and abate all the unit surfaces.
(2) Testing requirements. Testing shall be performed using an X-ray
fluorescence analyzer (XRF) or other method approved by the
Commissioner. Test readings of 1 mg/cm\2\ or higher using an XRF shall
be considered positive for presence of lead-based paint. Testing of
chewable surfaces shall be performed by a State or local health or
housing agency or by an inspector certified or regulated by the State or
local health or housing agency. The testing entity shall certify to the
results of the test. The mortgagor shall be responsible for obtaining
these testing services.
(3) Treatment. Where lead-based paint on chewable surfaces is
identified, the entire interior or exterior chewable surface shall be
treated. Treatment shall consist of covering or removal of the paint
surface in accordance with 24 CFR 35.24(b)(2)(ii). After joint
inspection and during the write-up stage, completion of abatement of
defective paint surfaces and lead-based paint on chewable surfaces will
be a special condition requirement in the commitment. The developer will
be required to abate all defective paint surfaces and lead-based paint
on chewable surfaces. HUD or the coinsuring lender will reinspect all
units after repair and before final endorsements.
(4) Abatement without testing. In lieu of the procedures set forth
in paragraphs (c)(1)(i), (2) and (3) of this section, in the case of a
residential structure constructed prior to 1978, the developer may
forego testing and abatement, and abate all applicable surfaces in
accordance with the methods set out at 24 CFR 35.24(b)(2)(ii) before
final endorsement. HUD or the coinsuring lender will reinspect all units
after repair and before final endorsement.
(d) Tenant protection. Owners shall take appropriate action as
prescribed by the Commissioner to protect tenants from hazards
associated with abatement procedures.
(e) Monitoring and enforcement. (1) For multifamily insurance
programs, compliance with any rehabilitation requirement will utilize
the standard construction compliance regulations (e.g., 24 CFR
207.19(c)(6)) for the assurance of completion requirements for section
207 and the incomplete repair escrow requirement of section 223(f) for
each program.
(2) For coinsurance, owner compliance with the requirements of this
section shall be monitored by the approved coinsurance lender.
Compliance with any requirements of this section shall also be enforced
by the Assurance of Completion Agreement as provided under 24 CFR
251.402(d) or by escrow under 24 CFR 255.401(c).
[52 FR 1891, Jan. 15, 1987; 52 FR 9828, Mar. 27, 1987, as amended at 53
FR 20799, June 6, 1988]
Sec. 200.825 HUD-owned multifamily property disposition.
(a) General. The requirements of this section apply to the sale of
any HUD-owned multifamily property when its use is intended for
residential habitation. This section does not apply to projects for the
elderly or handicapped (except for units housing children under seven
years of age). The requirements of this section do not apply to 0-
bedroom units.
(b) Defective paint surfaces. For residential structures constructed
prior to 1978, HUD shall cause the property to be inspected for
defective paint surfaces before offering the property for sale. If
defective paint surfaces are found, treatment as required by 24 CFR
35.24(b)(2)(ii) shall be completed before delivery of the property to
the purchaser or, if the disposition program under 24 CFR part 290
provides for repairs to be performed by the purchaser, such treatment
may be included in the required reports. Residential structures assisted
under section 223(f) of the National Housing Act are to be inspected and
treated as set forth in this paragraph.
(c) Chewable surfaces. If the residential structure was constructed
or substantially rehabilitated prior to 1978, HUD shall cause a random
sampling of dwelling units to be tested for lead-based paint on chewable
surfaces as part of the sales contracting procedure. Random testing
shall be performed as described in Sec. 200.820(c)(1). Testing shall be
performed using an X-ray fluorescence analyzer (XRF) or other method
approved by the Commissioner. Test readings of 1 mg/cm \2\ or higher
using an XRF shall be considered positive for presence of lead-based
paint. Testing shall be conducted by a State or local health or housing
agency, an inspector certified or regulated by the State or local health
or housing agency, a qualified HUD inspector, or an organization
recognized by HUD. The testing entity shall certify to the results of
the test. Where lead-based paint on chewable surfaces is identified, the
entire interior or exterior surface shall be treated. Treatment shall
consist of covering or removal of the paint surface in accordance with
24 CFR 35.24(b)(2)(ii). Treatment shall be completed before delivery of
the property to the purchaser, or, if the disposition program under 24
CFR part 290 provides for repairs to be performed by the purchaser, such
treatment may be included in the required repairs.
(1) EBL Child. In the case of a residential structure constructed
prior to 1978, if HUD is presented with test results that indicate a
child seven years of age or younger living in a unit has an elevated
blood level or EBL, HUD must test or cause to be tested the unit
[[Page 41]]
occupied by the child and if such test is positive for lead-based paint,
abate the unit surfaces in accordance with the methods set out at 24 CFR
35.24(b)(2)(ii) or choose not to test and abate all the unit surfaces.
(2) Abatement without testing. In lieu of the procedures set forth
in paragraph (c) of this section, in the case of a residential structure
constructed prior to 1978, HUD, at its option, may forego testing, and
abate all applicable surfaces in accordance with the methods set out in
24 CFR 35.24(b)(2)(ii).
(d) Tenant protection. HUD or the purchaser, as appropriate, shall
take appropriate action as prescribed by the Commissioner to protect
tenants from hazards associated with abatement procedures.
[52 FR 1891, Jan. 15, 1987; 52 FR 9828, Mar. 27, 1987, as amended at 53
FR 20800, June 6, 1988]
Sec. 200.830 Compliance with other Federal, State and local laws.
(a) HUD responsibility. If HUD determines that a State or local law,
ordinance, code or regulation provides for lead-based paint testing or
hazard abatement in a manner that provides a comparable level of
protection from the hazards of lead-based paint poisoning to that
provided by the requirements of this subpart and that adherence to the
requirements of this subpart would be duplicative or otherwise cause
inefficiencies, HUD may modify or waive the requirements of this subpart
in a manner that will promote efficiency while ensuring a comparable
level of protection.
(b) Participant responsibility. Nothing in this subpart is intended
to relieve any participant in the programs covered by this subpart of
any responsibility for compliance with State or local laws, ordinances,
codes or regulations governing lead-based paint testing or hazard
abatement.
(c) Disposal of lead-based paint debris. Lead-based paint and
defective paint debris shall be disposed of in accordance with
applicable Federal, State or local requirements. (See, e.g., 40 CFR
parts 260-271.)
[52 FR 1891, Jan. 15, 1987]
Subparts P-R [Reserved]
Subpart S--Minimum Property Standards
Sec. 200.925 Applicability of minimum property standards.
All housing constructed under HUD mortgage insurance and low-rent
public housing programs shall meet or exceed HUD Minimum Property
Standards, except that this requirement shall be applicable to
manufactured homes eligible for insurance pursuant to Sec. 203.43f of
this chapter only to the extent provided therein. The Minimum Property
Standards may be waived to the same extent as the other regulatory
requirements for eligibility for insurance under the specific mortgage
insurance program involved.
[58 FR 60248, Nov. 15, 1993]
Sec. 200.925a Multifamily and care-type minimum property standards.
(a) Construction standards. Multifamily or care-type properties
shall comply with the minimum property standards contained in the
handbook identified in Sec. 200.929(b)(2). In addition, each such
property shall, for the Department's purposes, comply with:
(1) The applicable State of local building code, if the property is
located within a jurisdiction which has a building code accepted by the
Secretary under Sec. 200.925a(d); or
(2)(i) The applicable State or local building code, and
(ii) Those portions of the codes identified in Sec. 200.295c which
are designated by the HUD Field Office serving the jurisdiction in which
the property is to be located, if the property is located in a
jurisdiction which has a building code partially accepted by the
Secretary; or
(3) The appropriate codes, as identified in Sec. 200.925c(c), if the
property is not located within a jurisdiction which has a building code
accepted by the Secretary.
(b) Conflicting standards. The minimum property standards contained
in the handbook identified in Sec. 200.929(b)(2) do not preempt state or
local standards, nor do they alter or affect a builder's obligation to
comply with any state or local requirements. However, a property shall
be eligible for benefits only if it complies with all applicable minimum
property standards, including referenced standards.
(c) Standard for evaluating local building codes. The Secretary
shall compare the portions of a local or State building code applicable
to residential or institutional occupancy, as appropriate, submitted
under Sec. 200.925a(d) to the list of construction related areas
contained in Sec. 200.925b.
[[Page 42]]
(1) A State or local code will be accepted if it regulates each area
on the list.
(2) A State or local building code will be partially accepted if it
regulates most of the areas on the list. However, no code may be
partially accepted if it fails to regulate the subarea for seismic
design (see Sec. 200.925b(c)(5)), or if it fails to regulate subareas in
more than one of the following major areas listed in Sec. 200.925b: fire
safety, light and ventilation, structural loads and seismic design,
foundation systems, materials standards, construction components, glass,
mechanical, plumbing, electrical, and elevators.
(3) For purposes of this paragraph, a state or local code regulates
an area if it establishes a standard concerning that area. However, for
earthquake loads (see Sec. 200.925b(c)(5)), ASCE 7-88 is mandatory.
(d) Review process and acceptance--(1) Jurisdictions without
previously accepted building codes. The following submission
requirements apply to developers and other interested parties in
jurisdictions without building codes, jurisdictions with building codes
which have never been submitted for acceptance, and jurisdictions with
building codes which have been submitted for acceptance and neither
accepted nor partially accepted by the Secretary.
(i) Developers or other interested parties must comply with one of
the following by the time of application for insurance or other
benefits:
(A) The developer or other interested party may choose to comply
with the appropriate codes as identified in Sec. 200.925c. If the
developer or other interested party so chooses, then the multifamily or
care-type property shall be constructed in accordance with one of the
model codes designated in paragraph (c)(1), (2) or (3) of Sec. 200.925c
and with any other code or codes identified in the same paragraph. In
such instances, the developer or other interested party shall notify the
Department of the code or group of codes with which it intends to comply
by the time of application for insurance or other benefits; or
(B) The developer or other interested party may choose to comply
with the State or local building code, if such code is acceptable to the
Secretary. To obtain the Secretary's acceptance, the developer or other
interested party shall submit the material specified in paragraph
(d)(1)(ii) of this section to the HUD Field Office serving the
jurisdiction in which the property is to be constructed. Such material
may be submitted at any time; provided, however, that it must be
submitted no later than the time of application for mortgage insurance
or other benefits.
(ii) If, under paragraph (d)(1)(i)(B) of this section, the developer
or other interested party chooses to comply with the State or local
building code as prescribed in paragraph (a)(1) of this section, it
shall submit the following material to the HUD field Office serving the
jurisdiction in which the property is to be constructed:
(A) A copy of the jurisdiction's building code, including all
applicable service codes, appendices and referenced standards; and
(B) A copy of the statute, ordinance, regulation, or order
establishing the code, if such statute, ordinance, regulation or order
is not contained in the building code itself.
However, the developer or other interested party need not submit any
document already on file in the Field Office.
(2) Jurisdictions with previously accepted or partially accepted
building codes. The following submission requirements apply to
developers and other interested parties in any jurisdiction with a
building code which has been accepted or partially accepted by the
Secretary:
(i) At the time of application for mortgage insurance or other
benefits, the developer or other interested party shall submit to the
HUD Field Office serving the jurisdiction in which the property is to be
constructed.
(A) A certificate stating that, since its acceptance by the
Secretary, the jurisdiction's building code has not been changed; or
(B)(1) A copy of all changes to the jurisdiction's building code,
including all applicable service codes and appendices, which have been
made since the date of the code's acceptance by the Secretary. However,
the developer or other interested party need not submit
[[Page 43]]
any part already in the possession of the Field Office; and
(2) A copy of the statute, ordinance regulation, or order making
such changes in the code.
(3) Notification of decision. The Secretary shall review the
material submitted under paragraphs (d) (1)(ii) and (2)(i). Following
that review, the Secretary shall issue a written notice (except in the
case of a previously accepted code which hasn't been changed) to the
submitting party stating whether the State or local building code has
been accepted, partially accepted, or whether the Secretary's previous
acceptance or partial acceptance has been continued; the basis for the
Secretary's decision; and a notification of the submitting party's right
to present its views concerning the denial of acceptance if the code is
neither accepted nor partially accepted. The Secretary may, in his
discretion, permit either an oral or written presentation of views.
(i) If a developer or other interested party is notified that a
State or local building code has not been accepted, then the multifamily
or care-type properties eligible for HUD benefits in that jurisdiction
shall be constructed in accordance with the appropriate codes indicated
in Sec. 200.925c(c). In such instances, the developer or other
interested party shall notify the HUD Field Office of the code or codes
with which it chooses to comply, in accordance with
Sec. 200.925a(d)(1)(i)(A).
(ii) If a developer or other interested party is notified that a
State or local building code has been partially accepted, then the
multifamily or care-type properties eligible for HUD benefits in that
jurisdiction shall be constructed in accordance with the applicable
State or local building code, plus those additional requirements
identified in the written notice issued by the Secretary under
Sec. 200.925a(d)(3). The written notice shall identify, in accordance
with appendix J of the Handbook identified in Sec. 200.929(b)(2), those
portions of the codes listed at Sec. 200.925c(a) with which the property
must comply.
(iii) Each Regional Office will maintain a current list of
jurisdictions with accepted building codes and a current list of
jurisdictions with partially accepted building codes. The lists will
state the most recent date of each code's acceptance or partial
acceptance and will be available to any interested party upon request.
In addition, the list of jurisdictions whose codes have been partially
accepted shall identify those portions of the codes listed at
Sec. 200.925c(a) with which the property must comply.
(Approved by the Office of Management and Budget under control number
2502-0321)
[49 FR 18695, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58
FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]
Sec. 200.925b Residential and institutional building code comparison items.
HUD will review each local code submitted under this chapter to
determine whether it regulates all of the following areas and subareas:
(a) Fire safety.
(1) Construction types permitted;
(2) Allowable height and area;
(3) Fire separations;
(4) Fire resistance requirements;
(5) Means of egress (number and distance);
(6) Individual unit smoke detectors;
(7) Building alarm systems;
(8) Highrise criteria;
(b) Light and ventilation.
(1) Habitable rooms;
(2) Bath and toilet rooms.
(c) Structural loads and seismic design.
(1) Design live loads;
(2) Design dead loads;
(3) Snow loads;
(4) Wind loads.
(5) Earthquake loads (in localities identified by ASCE 7-88
(formerly ANSI A58.1-82) as being in seismic zones 1, 2, 3, or 4, and
Guam).
(6) Special loads, i.e., soil pressure, railings, interior walls
etc.
(d) Foundation systems.
(1) Soil tests;
(2) Foundation depths;
(3) Footings;
(4) Foundation materials criteria;
(5) Piles, i.e., materials, allowable stresses, design;
(6) Excavation;
(e) Materials standards.
(f) Construction components.
(1) Steel;
(2) Masonry;
(3) Concrete;
[[Page 44]]
(4) Gypsum;
(5) Lumber;
(6) Roof construction and covering;
(7) Chimneys and fireplaces.
(g) Glass.
(1) Thickness/area requirements;
(2) Safety glazing.
(h) Mechanical.
(1) Heating, cooling and ventilation systems;
(2) Boilers and pressure vessels;
(3) Gas, liquid and solid fuel piping and equipment;
(4) Chimneys and vents;
(5) Ventilation (air changes).
(i) Plumbing.
(1) Materials standards;
(2) Sizing and installing drainage systems;
(3) Vents and venting;
(4) Traps;
(5) Cleanouts;
(6) Plumbing fixtures;
(7) Water supply and distribution;
(8) Storm drain systems.
(j) Electrical.
(1) Wiring design and protection;
(2) Wiring methods and materials;
(3) Equipment for general use;
(4) Special equipment;
(5) Special conditions;
(6) Communication systems.
(k) Elevators.
(1) Reference ASME/ANSI Standard A 17.1-1987; and the ASME/ANSI
A17.1b-1989 Addenda.
(2) Acceptance tests and periodic tests.
[49 FR 18696, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58
FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]
Sec. 200.925c Model codes.
(a) Incorporation by reference. The following publications are
incorporated by reference under 5 U.S.C. 552(a) and 1 CFR part 51. The
incorporation by reference of these publications has been approved by
the Director of the Federal Register. The locations where copies of
these publications are available are set forth below.
(1) Model Building Codes--(i) The BOCA National Building Code, 1993
Edition, The BOCA National Plumbing Code, 1993 Edition, and the BOCA
National Mechanical Code, 1993 Edition, excluding Chapter I,
Administration, for the Building, Plumbing and Mechanical Codes and the
references to fire retardant treated wood and a distance of 4 feet (1219
mm) from the wall in exception number 1 of paragraph 705.6 and 707.5.2
number 2 (Chapter 7) of the Building Code, but including the Appendices
of the Code. Available from Building Officials and Code Administrators
International, Inc., 4051 West Flossmoor Road, Country Club Hills,
Illinois 60478.
(ii) Standard Building Code, 1991 Edition, including 1992/1993
revisions. Standard Plumbing Code, 1991 Edition, Standard Mechanical
Code, 1991 Edition, including 1992 revisions, and Standard Gas Code,
1991 Edition, including the 1992 revisions, but excluding Chapter I--
Administration from each standard code and the phrase ``or fire
retardant treated wood'' in reference note (a) of table 600 (Chapter 6)
of the Standard Building Code, but including Appendices A, C, E, J, K,
M, and R. Available from the Southern Building Code Congress
International, Inc., 900 Montclair Road, Birmingham, Alabama 35213.
(iii) Uniform Building Code, 1991 Edition, including the 1993
Accumulative Supplement, but excluding Part I--Administrative, and the
reference to fire retardant treated plywood in section 2504(c)3 and to
fire retardant treated wood in 1-HR type III and V construction
referenced in paragraph 4203.2., but including the Appendix of the Code.
Uniform Plumbing Code, 1991 Edition, including the 1992 Code Changes but
excluding Part I--Administration, but including the Appendices of the
Code. Uniform Mechanical Code, 1991 Edition, including the 1993
Accumulative Supplement but excluding Part I--Administrative, but
including the Appendices of the Code. All available from the
International Conference of Building Officials, 5360 South Workman Mill
Road, Whittier, California 90601.
(2) National Electrical Code, NFPA 70, 1993 Edition, including
appendices. Available from the National Fire Protection Association,
Batterymarch Park, Quincy, Massachusetts 02269.
(3) National Standard Plumbing Code, 1993 Edition. Available from
the National Association of Plumbing-Heating-Cooling Contractors, P.O.
Box 6808, Falls Church, Virginia 22046.
[[Page 45]]
(b) Model Code Compliance Requirements. (1) When a multifamily or
care-type property is to comply with one of the model building codes set
forth in paragraph (a)(1) of this section, the following requirements of
those model codes shall not apply to those properties:
(i) Those provisions of the model codes that do not pertain to
residential or institutional buildings;
(ii) Those provisions of the model codes that establish energy
requirements for multifamily or care-type structures; and
(iii) Those provisions of the model codes that require or allow the
issuance of permits of any sort.
(2) Where the model codes set forth in paragraph (a)(1) of this
section designate a building, fire, mechanical, plumbing or other
official, the Secretary's designee in the HUD Field Office serving the
jurisdiction in which the property is to be constructed shall act as
such official.
(c) Designation of Model Codes. When a multifamily or care-type
property is to comply with a model code, it shall comply with one of the
model codes designated in paragraphs (c)(1), (2), or (3) of this
section, and with any other code or codes identified in the same
paragraph. However, seismic design is a mandatory requirement. In
addition, the property shall comply with all of the standards that are
incorporated into the code or codes by reference. By the time of
application for insurance or other benefits, the developer or other
interested party shall notify the Department of the code or group of
codes to which the developer intends to comply.
(1) The BOCA National Building Code, The BOCA National Plumbing and
The BOCA National Mechanical Code, 1993 Editions.
(2) Standard Building Code, Standard Plumbing Code, Standard
Mechanical Code and Standard Gas Code, 1991 Editions, including the
revisions specified in paragraph (a)(1)(ii) of this section, and the
National Electrical Code, 1993 Edition.
(3) Uniform Building Code, Uniform Plumbing Code and Uniform
Mechanical Code, 1991 Editions, including the 1993 Accumulative
Supplements to the Building and Mechanical Codes, and the 1992 Code
Changes to the Uniform Plumbing Code, and the National Electrical Code,
NFPA 70, 1993 Edition.
(4) The National Electrical Code, NFPA 70, 1993 Edition.
[49 FR 18696, May 1, 1984, as amended at 51 FR 28699, Aug. 11, 1986; 58
FR 60248, Nov. 15, 1993; 59 FR 36695, July 19, 1994]
Sec. 200.926 Minimum property standards for one and two family dwellings.
(a) Construction standards--(1) Applicable structures. The standards
identified or contained in this section, and in Secs. 200.926a-200.926e,
apply to single family detached homes, duplexes, three-unit homes, and
to living units in a structure where the units are located side-by-side
in town house fashion. Section 200.926d(c)(4) also applies to four-unit
homes.
(2) Applicability of standards to new construction. The standards
referenced in paragraph (a)(1) of this section are applicable to
structures which are:
(i) Approved for insurance or other benefits prior to the start of
construction, including approval under the Direct Endorsement process
described in Sec. 203.5 of this chapter, or under the Lender Insurance
process described in Sec. 203.6 of this chapter;
(ii) Approved for insurance or other benefits based upon
participation in an insured warranty program; or
(iii) Insured as new construction based upon a Certificate of
Reasonable Value issued by the Department of Veterans Affairs.
(b) Conflicting standards. The requirements contained in
Sec. 200.926d do not preempt local or State standards, nor do they alter
or affect a builder's obligation to comply with any local or State
requirements. However, a property shall be eligible for benefits only if
it complies with the requirements of this subpart, including any
referenced standards. When any of the requirements identified in
Sec. 200.926c are in conflict with a partially accepted local or state
code, the conflict will be resolved by the HUD Field Office servicing
the jurisdiction in which the property is to be located.
(c) Standard for evaluating local or state building codes. The
Secretary shall
[[Page 46]]
compare a local building code submitted under paragraph (d) of this
section or a State code to the list of construction related areas
contained in Sec. 200.926a.
(1) A local or State code will be accepted if it regulates each area
and subarea on the list.
(2) A State or local building code will be partially accepted if it
regulates most of the areas on the list. However, no code may be
partially accepted if it fails to regulate the subarea for seismic
design (see Sec. 200.926a(c)(5)), or if it fails to regulate subareas in
more than one of the following major areas listed in Sec. 200.926a: fire
safety, light and ventilation, structural loads and seismic design,
foundation systems, materials standards, construction components, glass,
mechanical, plumbing, and electrical.
(3) For purposes of this paragraph, a local or State code regulates
an area or subarea if it establishes a standard concerning that area or
subarea. However, for earthquake loads (see Sec. 200.926a(c)(5)), ASCE
7-88 is mandatory.
(d) Code selection. Any materials required to be submitted under
this section must be submitted by the time the lender or other
interested party applies for mortgage insurance or other benefits.
(1) Jurisdictions without previously accepted building codes. The
following submission requirements apply to lenders and other interested
parties in jurisdictions without building codes, jurisdictions with
building codes which have never been submitted for acceptance, and
jurisdictions with building codes which previously have been submitted
for acceptance and have not been accepted or partially accepted by the
Secretary.
(i) In jurisdictions without local building codes:
(A) If the State building code is acceptable, the lender or other
interested party must comply with the State building code and the
requirements of Sec. 200.926d;
(B) If the State building code is partially acceptable, the lender
or other interested party must comply with:
(1) The acceptable portions of the partially acceptable code; and
(2) Those portions of the CABO One and Two Family Dwelling Code
designated by the HUD Field Office in accordance with Sec. 200.926c; and
(3) The requirements of Sec. 200.926d.
(C) If there is no State building code or if the State building code
is unacceptable, the lender or other interested party must comply with:
(1) The CABO One and Two Family Dwelling Code as identified in
Sec. 200.926b(a); and
(2) The requirements of Sec. 200.926d.
(ii) In jurisdictions with local building codes which have never
been submitted for review, lenders or other interested parties must:
(A) Comply with the requirements of paragraph (d)(1)(i) (A), (B) or
(C) of this section, as appropriate; or
(B) Request the Secretary's acceptance of the local building code in
accordance with paragraph (d)(1)(iv) of this section.
(1) If the Secretary determines that the local building code is
unacceptable, then the lender or other interested party must comply with
the requirements of paragraph (d)(1)(i) (A), (B) or (C) of this section
as appropriate.
(2) If the Secretary determines that the local code is partially
acceptable, then the lender or other interested party must comply with:
(i) The acceptable portions of the partially acceptable local code;
and
(ii) Those portions of the CABO One and Two Family Dwelling Code
designated by the HUD Field Office in accordance with Sec. 200.926c; and
(iii) The requirements of Sec. 200.926d.
(3) If the Secretary determines that the local code is acceptable,
then the lender or other interested party must comply with the local
building code and the requirements of Sec. 200.926d.
(iii) In jurisdictions with local building codes which previously
have been submitted for review and which have been found unacceptable by
the Secretary:
(A) If the local code has not been changed since the date the code
or changes thereto were submitted to the Secretary, the lender or other
interested party must comply with the requirements of paragraph
(d)(1)(i) (A), (B) or (C) of this section, as appropriate; or
[[Page 47]]
(B) If the local code has been changed since the date when the code
or changes thereto were submitted to the Secretary, the lender or other
interested party must submit a copy of all changes to the local building
code, including all applicable service codes and appendices and a copy
of the statute, ordinance, regulation or order making such changes in
the code, which have been made since the date when the code or other
changes thereto were last submitted to the Secretary. However, the
lender or other interested party need not submit any part already in the
possession of the HUD Field Office. Based upon the Secretary's
determination concerning the acceptability of the local code as changed,
the lender or other interested party must comply with the requirements
of paragraph (d)(1)(ii)(B) (1), (2) or (3) of this section, as
appropriate.
(iv) In order to obtain the Department's approval of a local code,
the lender or other interested party must submit the following material
to the HUD Field Office serving the jurisdiction in which the property
is to be constructed:
(A) A copy of the jurisdiction's local building code, including all
applicable service codes and appendices; and
(B) A copy of the statute, ordinance, regulation, or order
establishing the code, if such statute, ordinance, regulation or order
is not contained in the building code itself.
However, the lender or other interested party need not submit any
document already on file in the HUD Field Office.
(2) Jurisdictions with previously accepted or partially accepted
building codes. The following submission requirements apply to lenders
or other interested parties in any jurisdiction with a building code
which has been accepted or partially accepted by the Secretary:
(i) The lender or other interested party shall submit to the HUD
Field Office serving the jurisdiction in which the property is to be
constructed:
(A) A certificate stating that, since the date when the code or any
changes thereto were last submitted to the Secretary, the jurisdiction's
local building code has not been changed; or
(B)(1) A copy of all changes to the jurisdiction's building code,
including all applicable service codes and appendices, which have been
made since the date when the code or other changes thereto were last
submitted to the Secretary. However, the lender or other interested
party need not submit any part already in the possession of the HUD
Field Office; and
(2) A copy of the statute, ordinance, regulation, or order making
such changes in the code.
(ii) If, based upon changes to the local building code, the
Secretary determines that it is unacceptable, the lender or other
interested party must comply with the requirements of paragraph (d)(1)
(i)(A), (B) or (C) of this section, as appropriate.
(iii) If the local building code was previously found by the
Secretary to be partially acceptable and there have been no changes to
it or if the local building code was previously found by the Secretary
to be partially acceptable and if, based upon changes to it, the
Secretary determines that it is still partially acceptable or if the
local building code was previously found by the Secretary to be
acceptable and if, based upon changes to it, the Secretary determines
that it is partially acceptable, then the lender or other interested
party must comply with paragraphs (d)(1)(ii)(B)(2) (i), (ii) and (iii)
of this section.
(iv) If the local building code was previously found by the
Secretary to be partially acceptable and if, based upon changes to it,
the Secretary determines that it is acceptable, or if the local building
code was previously found by the Secretary to be acceptable and there
have been no changes to the code, or if the local building code was
previously found by the Secretary to be acceptable and if, based upon
changes to it, the Secretary determines that it is still acceptable,
then the lender or other interested party must comply with the local
building code and the requirements of Sec. 200.926d.
(3) Notification of decision. (i) Fire retardant treated plywood,
where approved by a State or local building code, shall not be permitted
for use in roof construction unless a HUD technical suitability bulletin
has been issued by the Department for that product.
[[Page 48]]
(ii) The Secretary shall review the material submitted under
Sec. 200.926(d). Following that review, the Secretary shall issue a
written notice (except where there is a previously accepted or partially
accepted code which has not been changed) to the submitting party
stating whether the local building code is acceptable, partially
acceptable, or not acceptable. Where the local building code is not
acceptable, the notice shall also state whether the State code is
acceptable, partially acceptable or not acceptable. The notice shall
also contain the basis for the Secretary's decision and a notification
of the submitting party's right to present its views concerning the
denial of acceptance if the code is neither accepted nor partially
accepted. The Secretary may, in his or her discretion, permit either an
oral or written presentation of views.
(4) Department's responsibilities. (i) Each Regional and Field
Office will maintain a current list of jurisdictions with accepted local
or State building codes, a current list of jurisdictions with partially
accepted local or State building codes and a current list of
jurisdictions with local or State building codes which have not been
accepted. For local codes, the lists will state the most recent date
when the code or changes thereto were submitted to the Secretary. The
lists, which shall be prepared by the Field Offices and submitted to the
Regional Offices, will be available to any interested party upon
request. In addition, the list of jurisdictions whose codes have been
partially accepted shall identify in accordance with Sec. 200.926c those
portions of the codes listed at Sec. 200.926b(a) with which the property
must comply.
(ii) The Department is responsible for obtaining copies of the State
codes and any changes thereto.
(Approved by the Office of Management and Budget under control number
2502-0474)
[50 FR 39592, Sept. 27, 1985, as amended at 57 FR 27927, June 23, 1992;
57 FR 58340, Dec. 9, 1992; 58 FR 13536, Mar. 12, 1993; 58 FR 41337, Aug.
3, 1993; 58 FR 60249, Nov. 15, 1993; 59 FR 36695, July 19, 1994; 62 FR
30225, June 2, 1997; 64 FR 56110, Oct. 15, 1999]
Sec. 200.926a Residential building code comparison items.
HUD will review each local and State code submitted under this
subpart to determine whether it regulates all of the following areas and
subareas:
(a) Fire Safety.
(1) Allowable height;
(2) Fire separations;
(3) Fire resistance requirements;
(4) Egress doors and windows;
(5) Unit smoke detectors;
(6) Flame spread.
(b) Light and ventilation.
(1) Habitable rooms;
(2) Bath and toilet rooms.
(c) Structural loads and seismic design.
(1) Design live loads;
(2) Design dead loads;
(3) Snow loads (for jurisdictions with snow loading conditions
identified in Section 7 of ASCE-7-88 (formerly ANSI A58.1-82);
(4) Wind loads;
(5) Earthquake loads (for jurisdictions in seismic zones 3 or 4, as
identified in Section 9 of ASCE-7-88 (formerly ANSI A58.1-82)).
(d) Foundation systems.
(1) Foundation depths;
(2) Footings;
(3) Foundation materials criteria.
(e) Materials standards.
(1) Materials standards.
(f) Construction components.
(1) Steel;
(2) Masonry;
(3) Concrete;
(4) Lumber;
(5) Roof construction and covering;
(6) Chimneys and fireplaces.
(g) Glass.
(1) Thickness/area requirements;
(2) Safety glazing.
(h) Mechanical.
(1) Heating, cooling and ventilation systems;
(2) Gas, liquid and solid fuel piping and equipment;
(3) Chimneys and vents;
(4) Ventilation (air changes).
(i) Plumbing.
(1) Materials standards;
(2) Sizing and installing drainage systems;
(3) Vents and venting;
(4) Traps;
(5) Cleanouts;
(6) Plumbing fixtures;
[[Page 49]]
(7) Water supply and distribution;
(8) Sewage disposal systems.
(j) Electrical.
(1) Branch circuits;
(2) Services;
(3) Grounding;
(4) Wiring methods;
(5) Cable;
(6) Conduit;
(7) Outlets, switches and junction boxes;
(8) Panelboards.
[50 FR 39594, Sept. 27, 1985, as amended at 59 FR 36695, July 19, 1994]
Sec. 200.926b Model codes.
(a) Incorporation by reference. The following model code
publications are incorporated by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. The incorporation by reference of these
publications has been approved by the Director of the Federal Register.
The locations where copies of these publications are available are set
forth below.
(1) CABO One and Two Family Dwelling Code, 1992 Edition, including
the 1993 amendments, but excluding Chapter I--Administrative, and the
phrase ``or approved fire retardant wood'' contained in the exception of
paragraph R-218.2.2(2), but including the Appendices A, B, D, and E of
the Code. (Available from the Council of American Building Officials,
Suite 708, 5203 Leesburg Pike, Falls Church, VA 22041.)
(2) Electrical Code for One and Two Family Dwellings, NFPA 70A, 1990
Edition, including Tables and Examples. Available from the National Fire
Protection Association, Batterymarch Park, Quincy, MA 02269.
(b) Model code compliance requirements. (1) When a one or two family
dwelling is to comply with the model codes set forth in
Sec. 200.926b(a), the following requirements of those model codes shall
not apply to those properties:
(i) Those provisions of the model codes that establish energy
requirements for one and two family dwellings; and
(ii) Those provisions of the model codes that require or allow the
issuance of permits of any sort.
(2) Where the model codes set forth in paragraph (a) of this section
designate a building, fire, mechanical, plumbing or other official, the
Secretary's designee in the HUD Field Office serving the jurisdiction in
which the dwelling is to be constructed shall act as such official.
(c) Designation of Model Codes. When a one or two family dwelling or
townhouse is to comply with portions of the model code or the entire
model code, the dwelling shall comply with the CABO One and Two Family
Dwelling Code 1992 Edition, including the 1993 amendments, or portion
thereof as modified by Sec. 200.926e of this part and designated by the
HUD Field Office serving a jurisdiction in which a property is located.
In addition, the property shall comply with all of the standards which
are referenced for any designated portions of the model code, and with
the Electrical Code for One and Two Family Dwellings, NFPA 70A/1990.
[50 FR 39594, Sept. 27, 1985, as amended at 58 FR 60249, Nov. 15, 1993]
Sec. 200.926c Model code provisions for use in partially accepted code jurisdictions.
If a lender or other interested party is notified that a State or
local building code has been partially accepted, then the properties
eligible for HUD benefits in that jurisdiction shall be constructed in
accordance with the applicable State or local building code, plus those
additional requirements identified below. Depending upon the major area
identified in Sec. 200.926a which is not adequately regulated by the
State or local code, the HUD Field Office will designate, in accordance
with the schedule below, those portions of one of the model codes with
which the property must comply.
Schedule for Model Code Supplements to Local or State Codes
------------------------------------------------------------------------
Portions of the CABO One and
Two Family Dwelling Code,
Deficient major items from Sec. 200.926a 1992 Edition, including the
as determined by field office review 1993 amendments, with which
a property must comply
------------------------------------------------------------------------
(a) Fire safety........................... Chapters 2, 9; Section R-
402.
(b) Light and ventilation................. Chapter 2; Section R-309.
(c) Structural loads and seismic design... Chapter 2.
(d) Foundation systems.................... Chapter 3.
(e) Materials standards................... Chapter 26.
(f) Construction components............... Part III.
(g) Glass................................. Chapter 2.
[[Page 50]]
(h) Mechanical............................ Part IV.
(i) Plumbing.............................. Part V.
(j) Electrical............................ Electrical code for 1- and 2-
family dwellings (NFPA 70A-
1990).
------------------------------------------------------------------------
[50 FR 39594, Sept. 27, 1985, as amended at 58 FR 60249, Nov. 15, 1993;
59 FR 36695, July 19, 1994]
Sec. 200.926d Construction requirements.
(a) Application--(1) General. These standards cover the agency
requirements for accessibility to physically handicapped people,
variations to standards, real estate entity, trespass and utilities,
site conditions, access, site design, streets, dedication of utilities,
drainage and flood hazard exposure, special construction and product
acceptance, thermal requirements, and water supply systems.
(2) Requirements for accessibility to physically handicapped people.
The HUD Field Office will advise project sponsors as to the extent
accessibility will be required for new construction of one- and two-
family dwellings on a project-by-project basis.
(i) Technical standards. See HUD Handbook, 4910.1, Sections 100-1.3b
and 100-1.3c.
(3) Variations to standards--(i) New materials and technologies. See
paragraph (d) of this section. Alternatives, nonconventional or
innovative methods and materials shall be equivalent to these standards
in the areas of structural soundness, durability, economy of maintenance
or operation and usability.
(ii) Variation procedures. Variations from the requirements of any
standard with which the Department requires compliance shall be made in
the following ways:
(A) For a particular design or construction method to be used on a
single case or project, the decision is the responsibility of the Field
Office. Headquarters concurrence is not required.
(B) Where a variation is intended to be on a repetitive basis, a
recommendation for a Local Acceptable Standard, substantiating data, and
background information shall be submitted by the Field Office to the
Director, Office of Manufactured Housing and Regulatory Functions.
(iii) Variances which require individual analysis and decision in
each instance are not considered as repetitive variances even though one
particular standard is repeatedly the subject of variation. Such
variances are covered by paragraph (a)(3)(ii)(A) of this section.
(b) General acceptability criteria--(1) Real estate entity. The
property shall comprise a single plot except that a primary plot with a
secondary plot for an appurtenant garage or for other use contributing
to the marketability of the property will be acceptable provided the two
plots are in such proximity as to comprise a readily marketable real
estate entity.
(2) Service and facilities--(i) Trespass. Each living unit shall be
one that can be used and maintained individually without trespass upon
adjoining properties, except when the windowless wall of a detached
dwelling is located on a side lot line. A detached dwelling may be
located on a side lot line if:
(A) legal provision is made for permanent access for the maintenance
of the exterior portion of the lot line wall, and
(B) the minimum distances from the dwelling to the dwellings on the
abutting properties are not less than the sum of the side yard distances
computed as appropriate for the type of opposing walls. (minimum
distance 10 ft).
(ii) Utilities. Utility services shall be independent for each
living unit, except that common services such as water, sewer, gas and
electricity may be provided for living units under a single mortgage or
ownership. Separate utility service shut-off for each unit shall be
provided. For living units under separate ownership, common utility
services may be provided from the main to the building line when
protected by an easement or convenant and maintenance agreement
acceptable to HUD, but shall not pass over, under or through any other
living unit. Individual utilities serving a living unit may not pass
over, under or through
[[Page 51]]
another living unit under the same mortgage unless provision is made for
repair and maintenance of utilities without trespass or when protected
by an easement or covenant providing permanent access for maintenance
and repair of the utilities. Building drain cleanouts shall be
accessible from the exterior where a single drain line within the
building serves more than one unit.
(3) Site conditions. (i) The property shall be free of those
foreseeable hazards and adverse conditions which may affect the health
and safety of occupants or the structural soundness of the improvements,
or which may impair the customary use and enjoyment of the property. The
hazards include toxic chemicals, radioactive materials, other pollution,
hazardous activities, potential damage from soil or other differential
ground movements, ground water, inadequate surface drainage, flood,
erosion, or other hazards located on or off site. The site must meet the
standards set forth in 24 CFR part 51, and HUD Handbook 4910.1, section
606 for termite and decay protection.
(ii) When special conditions exist or arise during construction
which were unforeseen and which necessitate precautionary or hazard
mitigation measures, the HUD Field Office shall require corrective work
to mitigate potential adverse effects from the special conditions as
necessary. Special conditions include rock formations, unstable soils or
slopes, high ground water levels, springs, or other conditions which may
adversely affect a property. It shall be the builder's responsibility to
ensure proper design, construction and satisfactory performance where
these conditions are present.
(4) Access. (i) Each property shall be provided with vehicular or
pedestrian access by a public or private street. Private streets shall
be protected by permanent easement.
(ii) Each living unit shall have a means of access such that it is
unnecessary to pass through any other living unit.
(iii) The rear yard shall be accessible without passing through any
other living unit.
(iv) For a townhouse type dwelling, access to the rear yard may be
by means of alley, easement, passage through the dwelling, or other
means acceptable to the HUD Field Office.
(c) Site design--(1) General. (i) A site design shall be provided
which includes an arrangement of all site facilities necessary to create
a safe, functional, healthful, durable and energy efficient living
environment.
(ii) With the exception of paragraph (c)(4) of this section, these
site design standards apply only in communities that have not adopted
criteria for site development applicable to one and two family
dwellings.
(iii) Single family detached houses situated on individual lots
located on existing streets with utilities need not comply with the
requirements of paragraphs (c)(2) and (c)(3) of this section.
(2) Streets. (i) Existing or proposed streets on the site shall
connect to private or public streets and shall provide all-weather
access to all buildings for essential and emergency use, including
access needed for deliveries, service, maintenance and fire equipment.
(ii) Streets shall be designed for dedication for public use and
maintenance or, when approved by the HUD Field Office, may be retained
as private streets where protected by permanent easements.
(3) Dedication. Utilities shall be located to permit dedication to
the local government or appropriate public body.
(4) Drainage and flood hazard exposure--(i) Residential structures
with basements located in FEMA-designated areas of special flood hazard.
The elevation of the lowest floor in structures with basements shall be
at or above the base flood level (100-year flood level) required for new
construction or substantial improvement of residential structures under
regulations for the National Flood Insurance Program (NFIP) (see 44 CFR
60.3 through 60.6), except where variances from this standard are
granted by communities under the procedures of the Federal Emergency
Management Agency (FEMA) at 44 CFR 60.6(a) or exceptions from this NFIP
standard for basements are approved by FEMA in accordance with
procedures at 44 CFR 60.6(c).
(ii) Residential structures without basements located in FEMA-
designated areas of special flood hazard. The elevation of
[[Page 52]]
the lowest floor in structures without basements shall be at or above
the FEMA-designated base flood elevation (100-year flood level).
(iii) Residential structures located in FEMA-designated ``coastal
high hazard areas''. (A) Basements or any permanent enclosure of space
below the lowest floor of a structure are prohibited.
(B) Where FEMA has determined the base flood level without
establishing stillwater elevations, the bottom of the lowest structural
member of the lowest floor (excluding pilings and columns) and its
horizontal supports shall be at or above the base flood level.
(iv)(A) In all cases in which a Direct Endorsement (DE) mortgagee or
a Lender Insurance (LI) mortgagee seek to insure a mortgage on a newly
constructed one-to four-family dwelling (including a newly erected
manufactured home) that was processed by the DE or LI mortgagee, the DE
or LI mortgagee must determine whether the property improvements
(dwelling and related structures/equipment essential to the value of the
property and subject to flood damage) are located in a 100-year
floodplain, as designated on maps of the Federal Emergency Management
Agency. If so, the DE mortgagee, before submitting the application for
insurance to HUD, or the LI mortgagee, before submitting all the
required data regarding the mortgage to HUD, must obtain:
(1) A final Letter of Map Amendment (LOMA);
(2) A final Letter of Map Revision (LOMR); or
(3) A signed Elevation Certificate documenting that the lowest floor
(including basement) of the property improvements is built at or above
the 100-year flood elevation in compliance with National Flood Insurance
program criteria 44 CFR 60.3 through 60.6.
(B) Under the DE program, these mortgages are not eligible for
insurance unless the DE mortgagee submits the LOMA, LOMR, or Elevation
Certificate to HUD with the mortgagee's request for endorsement.
(v) Streets. Streets must be usable during runoff equivalent to a
10-year return frequency. Where drainage outfall is inadequate to
prevent runoff equivalent to a 10-year return frequency from ponding
over 6 inches deep, streets must be made passable for commonly used
emergency vehicles during runoff equivalent to a 25-year return
frequency, except where an alternative access street not subject to such
ponding is available.
(vi) Crawl spaces. Crawl spaces must not pond water or be subject to
prolonged dampness.
(d) Special construction and product acceptance--(1) Structural
features of factory produced (modular or panelized) housing or
components.
(i) For factory fabricated systems or components, HUD Handbook
4950.1, ``Technical Suitability of Products Program Technical and
Processing Procedures'' shall apply.
(ii) The requirements of this part shall apply to structural
features, consisting of factory fabricated systems or components
assembled either at the factory or at the construction site, if the
total construction is covered by these standards and can be inspected
on-site for determination of compliance.
(2) Non-structural or non-standard features. These features include
methods of construction, systems, sub-systems, components, materials and
processes which are not covered by these requirements. See HUD Handbook
4950.1 for procedures to be followed in order to obtain acceptance of
non-structural components or materials. See HUD Handbook 4910.1,
appendix F for a list of Use of Materials Bulletins. Products and
methods shall conform to the appropriate Use of Materials Bulletin.
(3) Standard Features. These features include methods of
construction, systems, sub-systems, components, materials and processes
which are covered by national society or industry standards. For a list
of standards and practices to which compliance is required, see HUD
Handbook 4910.1, Appendix C and Appendices E and F, available from HUD,
451 Seventh Street, SW., Attention: Mailroom B-133, Washington, DC
20410.
(e) Energy efficiency. All detached one- and two-family dwellings
and one-family townhouses not more than three stories in height shall
comply with the CABO Model Energy Code, 1992 Edition,
[[Page 53]]
Residential Buildings, except for Sections 101.3.1, 101.3.2, 104, and
105, but Section 101.3.2.2, Historic Buildings, shall remain, and
including the Appendix, and HUD intermediate MPS Supplement 4930.2 Solar
Heating and Domestic Hot Water Systems, 1989 edition.
(f) Water supply systems--(1) General. (i) Each living unit shall be
provided with a continuing and sufficient supply of safe water under
adequate pressure and of appropriate quality for all household uses.
Newly constructed residential property for which a building permit has
been applied for on or after June 19, 1988 from the competent authority
with jurisdiction in this matter shall have lead-free water piping. For
purposes of these standards, water piping is ``lead free'' if it uses
solders and flux containing not more than 0.2 percent lead and pipes and
pipe fittings containing not more than 8.0 percent lead. This system
shall not impair the function or durability of the plumbing system or
attachments.
(ii) The chemical and bacteriological standards of the local health
authority shall apply. In the absence of such standards, those of the
appropriate State agency shall apply. A water analysis may be required
by either the health authority or the HUD Field Office.
(iii) Whenever feasible, connection shall be made to a public water
system. When a public system is not available, connection shall be made
to a community system which complies with HUD Handbook 4940.2, if
feasible.
(2) Individual water systems. (i) The system should be capable of
delivering a flow of 5 gpm over at least a 4 hour period.
(ii) The chemical and bacteriological standards of the local health
authority shall apply. In the absence of such standards, those of the
appropriate State agency shall apply. A water analysis may be required
by either the health authority or the HUD Field Office.
(iii) After installation, the system shall be disinfected in
accordance with the recommendations or requirements of the local health
authority. In the absence of a health authority, system cleaning and
disinfection shall conform to the current EPA Manual of Individual Water
Supply Systems.
(iv) Bacteriological or chemical examination of a water sample
collected by a representative of the local or state health authority
shall be made when required by that authority or the HUD Field Office.
(3) Location of wells. (i) A well located within the foundation
walls of a dwelling is not acceptable except in arctic or subarctic
regions.
(ii) Water which comes from any soil formation which may be
polluted, contaminated, fissured, creviced or less than 20 ft. below the
natural ground surface is not acceptable, unless acceptable to the local
health authority.
(iii) Individual water supply systems are not acceptable for
individual lots in areas where chemical soil poisoning has been or is
practiced if the overburden of soil between the ground surface and the
water bearing strata is coarse grained sand, gravel, or porous rock, or
is creviced in a manner which will permit the recharge water to carry
the toxicants into the zone of saturation.
(iv) The following table shall be used in establishing the minimum
acceptable distances between wells and sources of pollution located on
either the same or adjoining lots. These distances may be increased by
either the health authority having jurisdiction or the HUD Field Office.
Distance From Source of Pollution
------------------------------------------------------------------------
Minimum
horizontal
Source of pollution distance
(feet)
------------------------------------------------------------------------
Property Line........................................... 10
Septic Tank............................................. 50
Absorption Field........................................ 1 100
Seepage Pit............................................. 1 100
Absorption Bed.......................................... 1 100
Sewer Lines w/Permanent Watertight Joints............... 10
Other Sewer Lines....................................... 50
Chemically Poisoned Soil................................ 3 25
Dry Well................................................ 50
Other................................................... (2)
------------------------------------------------------------------------
1 This clearance may be increased or decreased depending upon soil and
rock penetrated by the well and aquifer conditions. The clearance may
be increased in creviced limestone and permeable strata of gravel and
sand. The clearance may be reduced to 50 ft. only where the ground
surface is effectively separated from the water bearing formation by
an extensive, continuous and impervious strata of clay, hardpan, or
rock. The well shall be constructed so as to prevent the entrance of
surface water and contaminants.
2 The recommendations or requirements of the local health authority
shall apply.
[[Page 54]]
3 This clearance may be reduced to 15 feet only where the ground surface
is effectively separated from the water bearing formation by an
extensive, continuous and impervious strata of clay, hardpan, or rock.
(4) Well construction. (i) The well shall be constructed so as to
allow the pump to be easily placed and to function properly.
(ii)(A) All drilled wells shall be provided with a sound, durable
and watertight casing capable of sustaining the loads imposed.
(B) The casing shall extend from a point several feet below the
water level at drawdown or from an impervious strata above the water
level to 12 in. above either the ground surface or the pump room floor.
The casing shall be sealed at the upper opening to a depth of at least
15 feet.
(iii) Bored wells shall be lined with concrete, vitrified clay or
equivalent materials.
(iv) The space between the casing or liner and the wall of the well
hole shall be sealed with cement grout.
(v) The well casing shall not be used to convey water except under
positive pressure. A separate drop pipe shall be used for the suction
line.
(vi) When sand or silt is encountered in the water-bearing
formation, the well shall either be compacted and gravel packed, or a
removable strainer or screen shall be installed.
(vii) The surface of the ground above and around the well shall be
compacted and graded to drain surface water away from the well.
(viii) Openings in the casing, cap, or concrete cover for the
entrance of pipes, pumps or manholes shall be watertight.
(ix) If a breather is provided, it shall extend above the highest
level to which surface water may rise. The breather shall be watertight,
and the open end shall be screened and positioned to prevent entry of
dust, insects and foreign objects.
(5) Pump and equipment. (i) Pumps shall be capable of delivering the
volume of water required under normal operating pressure within the
living unit. Pump capacity shall not exceed the output of the well.
(ii) Pumps and equipment shall be mounted to be free of
objectionable noises, vibrations, flooding, pollution, and freezing.
(iii) Suction lines shall terminate below maximum drawdown of the
water level in the well.
(iv) Horizontal segments of suction line shall be placed below the
frost line in a sealed casing pipe or in at least 4 in. of concrete. The
distance from suction line to sources of pollution shall be not less
than shown in the table at paragraph (f)(3)(iv) of this section.
(6) Storage tanks. (i) A pressure tank having a minimum capacity of
42 gallons shall be provided. However, prepressured tanks and other
pressurizing devices are acceptable provided that delivery between pump
cycles equals or exceeds that of a 42 gallon tank.
(ii) Tanks shall be equipped with a clean-out plug at the lowest
point, and a suitable pressure relief valve.
(Approved by the Office of Management and Budget under control number
2502-0474)
[50 FR 39594, Sept. 27, 1985, as amended at 53 FR 11271, Apr. 6, 1988;
56 FR 5350, Feb. 11, 1991; 57 FR 9609, Mar. 19, 1992; 57 FR 27927, June
23, 1992; 58 FR 41337, Aug. 3, 1993; 58 FR 60249, Nov. 15, 1993; 59 FR
19112, Apr. 21, 1994; 62 FR 30225, June 2, 1997; 64 FR 56110, Oct. 15,
1999]
Sec. 200.926e Supplemental information for use with the CABO One and Two Family Dwelling Code.
The following shall be used in Table No. R-202, Climatic and
Geographic Design Criteria of the CABO One and Two Family Dwelling Code.
(a) Roof live loads.
Roof slope 3 in 12 or less: 20 psf
Roof slope over 3 in 12: 15 psf
Roof used as deck: 40 psf
(b) Roof snow load. The roof snow load shall be in accordance with
section 7 of ASCE 7-88.
(c) Wind pressures. The minimum Design Wind Pressures (net
pressures) set forth below apply to areas designated as experiencing
basic wind speeds up to and including 80 mph, as shown in ASCE 7-88,
Figure 1, Basic Wind Speed Map. These pressures also apply to buildings
not over 30 ft. in height above finish grade, assuming exposure C or
defined in ASCE 7-88.
(1) Minimum design wind pressure criteria. (i) Buildings (for
overturning racking or sliding); p=20 psf.
(ii) Chimneys, p=30 psf.
[[Page 55]]
(iii) Exterior walls, p=15 psf inward or outward. Local pressure at
corners of walls shall be not less than p=30 psf outward. These local
pressures shall not be included with the design pressure when computing
overall loads. The pressures shall be applied perpendicularly outward on
strips of width equal to 10 percent of the least width of building.
(iv) Partitions, p=10 psf.
(v) Windows, p=20 psf inward or outward.
(vi) Roof, p=20 psf inward or outward.
Roofs with slopes greater than 6 in 12 shall be designed to withstand
pressures acting inward normal to the surface, equal to the design wind
pressure for exterior walls. Overhanging eaves, cornices, and ridges, 40
psf upward normal to roof surface. These local pressures shall not be
included with the design pressure when computing overall loads. The
pressures shall be applied perpendicularly outward on strips of width
equal to 10 percent of the least width of building. Net uplift on
horizontal projection of roof shall not be less than 12 psf.
(2) Severe wind design pressures. If the construction is higher than
30 ft., or if it is located in an area experiencing wind speeds greater
than 80 mph, higher design wind pressures than shown above are required.
Use Section 6 of ASCE 7-88 for higher criteria and for determining where
wind speeds greater than 80 mph occur. Pressures are assumed to act
horizontally on the gross area of the vertical projection of the
structure except as noted for roof design.
(d) Seismic conditions shall be in accordance with Section 9 of ASCE
7-88.
(e) Subject to damage from: weathering. A jurisdiction's weathering
region shall be as established by the map in ASTM C 62-83.
(f) Subject to damage from: frost line depth. Exterior wall footings
or foundation walls including those of accessory buildings shall extend
a minimum of 6 in. below the finished grade and, where applicable, the
prevailing frost line.
(g) Subject to damage from: termites. ``Yes'' shall be used in
locations designated as Regions I, II or III. ``No'' shall be used in
locations designated as Region IV. The map for Termite Infestation
Probability in appendix A of CABO, One and Two Family Dwelling Code
shall be used to determine the jurisdiction's region.
(h) Subject to damage from: decay. ``Yes'' shall be used in
locations designated as moderate to severe and slight to moderate.
``No'' shall be used in locations designated as none to slight. The
Decay Probability map in appendix A of CABO, One and Two Family Dwelling
Code shall be used to determine the jurisdiction's decay designation.
(Approved by the Office of Management and Budget under control number
2502-0338)
[50 FR 39599, Sept. 27, 1985, as amended at 59 FR 36695, July 19, 1994]
Sec. 200.927 Incorporation by reference of minimum property standards.
The Minimum Property Standards as contained in the handbooks
identified in Sec. 200.929(b) are incorporated by reference into this
section as though set forth in full in accordance with 5 U.S.C. 552(a)
and 1 CFR part 51.
[50 FR 39592, Sept. 29, 1985]
Sec. 200.929 Description and identification of minimum property standards.
(a) Description. The Minimum Property Standards describe physical
standards for housing. They are intended to provide a sound basis for
determining the acceptability of housing built under the HUD mortgage
insurance and low-rent public housing programs. The Minimum Property
Standards refer to material standards developed by industry and accepted
by HUD. In addition, under Section 521 of the National Housing Act, HUD
adopts its own technical suitability standards for materials and
products for which there are no industry standards acceptable to HUD.
These standards are contained in Use of Materials Bulletins that apply
to products and methods and Materials Releases that apply to specific
materials. Use of Materials Bulletins and Materials Releases are addenda
to the Minimum Property Standards. Unless otherwise stated, the current
edition, issue, or version of each of these documents, as available from
its source, is applicable to this subpart S. A list of
[[Page 56]]
the Use of Materials Bulletins, Materials Releases, and MPS Appendix
listing the applicable referenced Standards may be obtained from the
Construction Standards Division, Office of Manufactured Housing and
Construction Standards, room 6170 Department of Housing and Urban
Development, 451 7th Street, SW, Washington, DC 20410.
(b) Identification. The Minimum Property Standards have been
published as described below:
(1) MPS for One and Two Family Dwellings. See Secs. 200.926, 200.926
(a) through (e).
(2) MPS for Housing 4910.1, 1994 edition. This volume applies to
buildings and sites designed and used for normal multifamily occupancy,
including both unsubsidized and subsidized insured housing, and to care-
type housing insured under the National Housing Act. It also includes,
in Appendix K, a reprint of the MPS for One and Two Family Dwellings
identified in paragraph (b)(1) of this section.
[39 FR 26895, July 24, 1974, as amended at 42 FR 33890, July 1, 1977; 47
FR 29524, July 7, 1982; 47 FR 35761, Aug. 17, 1982; 49 FR 18695, May 1,
1984; 50 FR 39592, Sept. 29, 1985; 51 FR 28699, Aug. 11, 1986; 58 FR
60250, Nov. 15, 1993; 63 FR 5423, Feb. 2, 1998]
Sec. 200.929a Fair Housing Accessibility Guidelines.
Builders and developers may use the Department's Fair Housing
Accessibility Guideline when designing or constructing covered
multifamily dwelling units in order to comply with the Fair Housing Act.
The Guidelines may be found in the 24 CFR Chapter I, Subchapter A,
Appendix II, titled Fair Housing Accessibility Guidelines--Design
Guidelines for Accessible/Adaptable Dwellings.
[58 FR 60250, Nov. 15, 1993]
Sec. 200.931 Statement of availability.
(a) Updated copies of the Minimum Property Standards and Use of
Materials Bulletins are available for public examination in the Office
of Consumer and Regulatory Affairs, Department of Housing and Urban
Development, room 9156, 451 Seventh St. SW., Washington, D.C. 20410-
8000. In addition, copies of volumes 1, 2, and 3 of the Minimum Property
Standards may be purchased from the U.S. Government Printing Office,
Washington, D.C. 20402.
(b) Publications approved by the Director of the Federal Register
for incorporation by reference in accordance with 5 U.S.C. 552(a) and 1
CFR part 51 are available for inspection at the Office of the Federal
Register, 800 North Capitol Street, NW., Suite 700, Washington, D.C.
[63 FR 5423, Feb. 2, 1998]
Sec. 200.933 Changes in minimum property standards.
Changes in the Minimum Property Standards will generally be made
every three years. Changes will be made in accordance with HUD policy
for the adoption of rules and regulations set forth in part 10 of this
title. Notice of such changes will be published in the Federal Register.
As the changes are made, they will be incorporated into the volumes of
the Minimum Property Standards to which they apply. The volumes
available for public examination and for purchase will contain all
changes up to the date of examination or purchase. An official, historic
file of such changes will be available in the office of the Rules Docket
Clerk in the HUD Central Office in Washington, DC, and in each HUD
Regional, Area, and Insuring Office. A similar copy of the standards
will also be maintained in the Office of the Federal Register,
Washington, DC.
[39 FR 26895, July 24, 1974, as amended at 58 FR 60250, Nov. 15, 1993]
Sec. 200.934 User fee system for the technical suitability of products program.
(a) General. This section establishes fee requirements for the
issuance of Structural Engineering Bulletins (SEBs), Mechanical
Engineering Bulletins (MEBs), Truss Connector Bulletins (TCBs), Area
Letters of Acceptance (ALAs), Materials Releases (MRs), and review of
program administrator applications submitted pursuant to Sec. 200.935 of
this title.
(b) Filing address--(1) Applications containing payment. When
applications for or correspondence concerning SEBs, MEBs, TCBs, MRs, or
program administrator approval contain payment,
[[Page 57]]
such applications or correspondence shall be sent to the following
address:
U.S. Department of Housing and Urban Development, Technical
Suitability of Product Fees, P.O. Box 954199, St. Louis, MO. 63195-4199.
(2) Other correspondence. All other correspondence concerning SEBs,
MEBs, TCBs, MRs, and program administrator acceptance shall be sent to
the following address:
Manufactured Housing and Construction Standards Division, Department
of Housing and Urban Development, 451 Seventh Street, SW., Attn: Mail
Room B-133, Washington, DC 20410.
(3) Application for ALAs. Applications for or correspondence
concerning ALAs shall be submitted to the Housing Division of the field
office having jurisdiction over the area in which the production
facility of the system is located, except that applications containing
payment shall be addressed to the attention of the Collection Officer
for deposit to Account No. 86-09-0300.
(c) Fees. Applicants for renewal and applicants for acceptance as
program administrators under Sec. 200.935 of this title shall include
the entire processing fee with the application. All other applicants
shall submit one half of the required processing fee with each
application. The applicant shall pay the balance when the draft issuance
is returned to HUD with the applicant's concurrence signature. The
Department will not prepare a final document for printing and
distribution until it has received the full processing fee. From time to
time, as may be necessary, the Department will establish and amend the
fee schedule by publication of a Notice in the Federal Register.
(d) Initial application and review--(1) Content of applications.
Each application shall include only one item. All applications will be
promptly processed on receipt by the Department.
(i) With respect to Mechanical Engineering Bulletins (MEBs),
Structural Engineering Bulletins (SEBs), Truss Connector Bulletins
(TCBs), and Area Letters of Acceptance (ALAs), each structural design
shall constitute a different item.
(ii) With respect to Materials Releases (MRs), each product or
system shall constitute a different item.
(2) Revisions. A recipient of a technical suitability document
issued by the Department may apply for revision of that document at any
time. The revision may be in the form of an amendment of or supplement
to the document, for which the recipient will be charged the applicable
revision fee. However, where the Department determines that a proposed
revision constitutes a different item, the schedule of fees for initial
applications shall apply.
(3) Renewals. Each issuance shall be valid for a period of three
years from the date of initial issuance or most recent renewal,
whichever is later. An applicant shall submit an application for renewal
with the entire required fee three months before the expiration of the
three-year period. Failure to submit a timely renewal application along
with the required fee shall constitute a basis for cancellation of the
issuance.
(4) Initial and revision applications requiring further study or
additional data. In its discretion, the Department may request an
applicant to submit additional data or to conduct further study to
supplement or clarify an initial application or an application for
revision of a previously issued technical suitability document. If the
applicant fails to comply with the Department's request within ninety
days of the date of that request or within such longer time as may be
specified by the Secretary, the Department will return the application
to the applicant. The Department will not refund any fees paid toward an
application returned under this paragraph. The application will be
considered further only if it is resubmitted along with payment of the
full fee as required by these regulations.
(5) Ineligible applications. If the Secretary determines that an
application or request will not be considered because it is not eligible
for issuance of a technical suitability document, the Department will
promptly return the application or request, refund any fees paid, and
explain why the application or request is ineligible.
[[Page 58]]
(6) Cancellation of a technical suitability document. If the
Department determines that (i) the conditions under which a technical
suitability document was issued have so changed as to affect the
production of, or to compromise the integrity of, the material, product,
or system approved thereby, or (ii) that the producer has changed its
organizational form without notifying HUD, or (iii) that the producer is
not complying with the responsibilities it assumed as a condition of
HUD's acceptance of its material, product or system, the Department will
notify the producer or manufacturer that the technical suitability
document may be cancelled. However, before cancelling a technical
suitability document, the Department will give the manufacturer
reasonable notice in writing of the specific reasons therefore and an
opportunity to present its views on why the technical suitability
document should not be cancelled. No refund of fees will be made on a
cancelled document.
(e) Identification. (1) Applications for issuance of a MEB, SEB,
TCB, or MR submitted to HUD Headquarters will be identified with a case
number. The applicant will be notified of the case number when receipt
of the application is acknowledged. Thereafter, the case number will be
used on all correspondence relating to the application. When a final
draft of a new document is prepared for publication and distribution, a
bulletin or release number will be assigned to the new issuance.
(2) In the case of an application for an ALA submitted to a field
office, the application will be processed in accordance with the
identification and processing procedures established by the responsible
field office. The field office will notify the applicant of receipt of
the application and inform the applicant of the procedures that will be
followed with respect to the issuance of an ALA.
(Information collection requirements in paragraphs (b), (c), (d)(1),
(2), (3) and (4) were approved by the Office of Management and Budget
under control number 2502-0313)
[49 FR 31856, Aug. 9, 1984, as amended at 58 FR 60250, Nov. 15, 1993]
Sec. 200.935 Administrator qualifications and procedures for HUD building products certification programs.
(a) General. This section establishes administrator qualifications
and procedures for the HUD Building Products Certification Programs
under section 521 of the National Housing Act and the HUD Minimum
Property Standards. Under these programs organizations acceptable to HUD
validate manufacturers' certifications that certain building products or
materials meet applicable standards. HUD may decide to implement a
certification program for a particular building product or material for
a variety of reasons, such as when deemed necessary by HUD to facilitate
the introduction of new and innovative products or materials; or in
response to reports of fraud or misrepresentation by manufacturers in
advertising that their product or materials comply with a standard.
(b) Definitions--(1) Certification program (``program''). The
procedure under which accepted administrators validate manufacturers'
certifications that particular building products or materials meet
applicable HUD standards. A separate program is used to validate
certifications for each particular product or material for which HUD
requires certifications.
(2) Program administrator (``administrator''). An organization which
conducts the program validating the manufacturer's certification that a
particular building product or material meets applicable HUD standards.
(c) Administrator qualifications and application procedures--(1)
Qualifications. Each program administrator shall be capable of
conducting a certification program with respect to organization, staff
and facilities, and have a reputation for adhering to high ethical
standards. To be considered acceptable for conducting a certification
program, each administrator shall:
(i) Be a technically qualified organization with past experience in
the administration of certification programs. The certification
program(s) shall be under the supervision of a qualified professional
with six years of experience in interpreting testing standards, test
methods, evaluating test reports
[[Page 59]]
and quality control programs. Each administrator is responsible for
staffing the program with qualified professional personnel with
experience in interpreting testing standards, test methods, evaluating
test reports and quality control programs. The staff shall be adequate
to service all aspects of the program.
(ii) Have field inspectors trained to make selections of materials
for testing from manufacturer's stock or from distributors'
establishments and to conduct product compliance inspections. Such
inspectors must be trained and experienced in evaluating manufacturer's
quality control records to ascertain with a reasonable degree of
assurance that continuing production remains in compliance with the
applicable standard set forth in the Use of Materials (UM) Bulletin.
When inspectors are used to evaluate laboratory operations, they shall
be qualified and under the supervision of the administrator. They shall
be knowledgeable in such areas as test methods, quality control, testing
techniques, and instrument calibration.
(iii) Have facilities and capabilities for communications with
manufacturers, laboratories, and HUD, including publication of a
directory of certified products and a list of accredited laboratories,
if required by the program.
(iv) Have adequate policies and practices for preserving information
entrusted to its care. HUD reserves the right to review all technical
records related to the program for the purpose of monitoring.
(v) Have a copy of all applicable standards, test methods and
related information necessary to carry out the program.
(vi) Have a registered or pending certification mark at the United
States Patent Office and be willing to license, on a uniform basis, the
use of that mark by manufacturers as a validation of the manufacturer's
certification that the product complies with the applicable standard.
(2) Applications procedures. Any organization desiring HUD
acceptance as a qualified administrator to conduct a certification
program shall make application in writing to the Director, Office of
Architecture and Engineering Standards. The application shall state the
particular certification program for which acceptance is requested and
include information indicating compliance with each of the qualification
requirements by number and subsection. Attached to the application shall
be:
(i) A list of certification programs in which the organization is
participating or has participated and the types of participation
(sponsor, administrator, testing laboratory, etc.).
(ii) A procedural guide used in one of these programs.
(iii) A directory or listing used in one of these programs.
(iv) A reproduction or facsimile of the organization's registered or
pending mark.
(v) A proposed procedural guide for the particular certification
program. HUD certification program procedures described in paragraph (d)
of this section shall be followed.
(3) Acceptance. HUD shall review each submission and notify the
applicant whether or not they are accepted or rejected. HUD shall be
notified immediately of any change(s) in the administrator's submission
regarding program procedures and/or major personnel associated with the
program. HUD reserves the right to suspend or debar an administrator in
accordance with part 24 of this title.
(d) HUD building products certification procedures--(1)
Certification program development. Certification program development by
an administrator shall be based upon the procedures and standards for
the specific building product described in a Use of Materials Bulletin
or a Materials Release.
(2) License agreement. Each administrator shall have a written
license agreement with each participating manufacturer binding each to
the provisions of the specific program and authorizing the manufacturer
to use the administrator's mark, seal, or label on its products. The
administrator shall have the right to terminate any agreement prior to
an expiration date, for example, if there has been a breach of the
requirement of the certification program by the manufacturer.
(3) Laboratory approval. The administrator shall review laboratories
that apply for participation in this program
[[Page 60]]
on the basis of the procedures described in paragraph (e) of this
section. A list of approved laboratories shall be maintained by the
administrator. When the certification program allows the use of the
administrator's testing laboratories, the laboratories shall be reviewed
by a qualified party acceptable to HUD. As accreditation procedures are
made available through the National Voluntary Laboratory Accreditation
Program (NVLAP) for specifc products, HUD may require such
accreditation.
(4) Initial testing and quality control review--(i) Initial testing.
Each participating manufacturer shall submit to the appropriate
administrator, the product(s) specification and statement(s) that the
product complies with the applicable standard. The administrator shall
select samples of the product(s), or when HUD specifies as acceptable, a
prototype. The particular method of sample selection shall be determined
by HUD for each specific product certification program. Other methods of
initial sample selection may be used if deemed necessary. If a failure
occurs on the initial tests, additional sampling and testing may be done
at the manufacturer's request. The administrator's validation of the
manufacturer's declaration of certification shall be withheld until a
finding of compliance is achieved.
(ii) Quality assurance system review. (A) Each administrator shall
examine a participating manufacturer's facilities and quality assurance
system procedures to determine that they are adequate to assure
continuing production of the product that complies with the applicable
standard. These quality assurance system procedures shall be documented
in the administrator's and the manufacturer's files. If a manufacturer's
quality assurance system is not satisfactory to the administrator,
validation of the manufacturer's declaration of certification shall be
withheld. The following American Society for Quality Control (ASQC)
standards, which are incorporated by reference, may be used as
guidelines in any quality assurance review:
(1) ASQC Q9000-1-1994 Quality Management and Quality Assurance
Standards Guidelines for Selection and Use;
(2) ASQC Q9001-1994 Quality Systems--Model for Quality Assurance in
Design, Development, Production, Installation, and Servicing;
(3) ASQC Q9002-1994 Quality Systems--Model for Quality Assurance in
Production, Installation, and Servicing;
(4) ASQC Q9003-1994 Quality Systems--Model for Quality Assurance in
Final Inspection and Test;
(5) ASQC Q9004-1-1994 Quality Management and Quality System
Elements-Guidelines.
(B) These standards have been approved by the Director of the
Federal Register for incorporation by reference in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. They are available from the American
Society for Quality Control (ASQC), 611 East Wisconsin Avenue,
Milwaukee, WI 53202.
(5) Notice of validation. When initial testing, quality control
review, and evaluation of other technical data are satisfactory to the
administrator, a Notice of Validation or Certification shall be issued
to the manufacturer. This allows the use of the administrator's
registered mark on the product label.
(6) Labeling. Each administrator shall issue to the manufacturer
labels, tags, marks containing the administrator's validation mark, and
the manufacturer's certification of compliance with the applicable
standard. The registered administrator's (validator's) mark shall be on
the label. A sponsor's (association, testing agencies, society or
others) mark may be used in addition to the administrator's mark. The
manufacturer's certification of compliance to the standard may be coded.
Additional information such as type, grade, class, etc., may also be
coded. When coding is used, the code shall be described in the directory
or listing.
(7) Directory or listing. When required by the program, the
administrator shall publish a directory or listing for all certified
products. The directory shall list the items described in paragraph
(d)(6) of this section. The directly shall also carry a complete list of
approved laboratories and shall be updated to reflect additions or
deletions of certified products and laboratories. Directories or
listings shall be
[[Page 61]]
published periodically as described in the specific program. Each
administrator shall make a complimentary distribution of the directory
or listing to the HUD Field Offices and other government agencies
designated by HUD. A subscription fee may be charged to others
requesting copies.
(8) Periodic tests and quality control inspections. Samples of the
certified product or prototype shall be selected periodically from the
plant, warehouse inventory or sales points. The samples shall be sent to
an administrator-approved laboratory and tested in accordance with the
applicable standard. The frequency of testing shall be described in the
specific building product program. The administrator shall periodically
visit the manufacturer's facility to assure that the initially accepted
quality control procedures are being followed.
(9) Product decertification. If a failure should occur in any test,
the laboratory shall notify the administrator and the manufacturer. The
manufacturer shall notify the administrator if a retest if requested. If
a retest is not requested, validation shall be withdrawn. If the
manufacturer requests a retest, the administrator shall select new
samples and submit them to the same or another laboratory at the
manufacturer's expense, for retest of only the test requirement(s) in
which the failure(s) occurred. If the specified number of specimens pass
the retest, the product can continue to be validated and listed. If the
designated number of specimens described in the UM Bulletin fail, the
administrator shall decertify the product. The manufacturer may request
that a new selection be made of the product after corredction or
modifications and be subjected to the initial acceptance testing
procedure or to a program of retesting established by the administrator.
The administrator may decertify the product on the basis of inadequate
quality control by the manufacturer. The administrator shall notify the
manufacturer, HUD headquarters and the HUD Field Offices of any
decertification within 7 days. When the product is decertified the
maqnufacturer shall remove labels, tags or marks from all production and
inventory in his/her control determined to be in noncompliance.
(10) Challenge response. Any person or organization may submit a
sample of a manufacturer's certified product to the administrator in
substantiation of a claim of noncompliance. Submission shall be made to
the administrator that validated the manufacturer's product. The
administrator shall notify the manufacturer that its product has been
challenged and shall make arrangements to obtain test samples of the
challenged product. An estimate of the cost of the special sample
selection and testing shall be made to the complainant. The complainant
shall pay the estimated cost of the investigation in advance of any
testing of the challenged product, unless HUD believes the complaint to
be in the public's interest. HUD may conduct its own investigation when
deemed necessary based upon a complaint or a product failure. The
administrator shall submit the sample of the challenged product to an
approved laboratory of the administrator's choice with the request to
test compliance of only the challenged requirement(s). If the samples
tested prove that the product failed to meet the standard, the product
shall be decertified immediately. The manufacturer whose product is
decertified shall reimburse the administrator for all costs of the
investigation and the administrator shall refund the complainant's
advance payment. If the tests prove that the product does comply with
the standard, the complainant shall be notified that the tests do not
support the complaint and that the advance fee has been used for the
cost of testing and investigating the claim.
(11) Maintainance of the program. Each administrator shall maintain
the program in conformance with administrative letters issued by HUD for
the purpose of clarifying procedures and interpreting the applicable
standard. These letters may also be used to revise and amend the
procedures used in specific programs. Significant changes in any program
shall be published in the Federal Register.
(e) Laboratory qualifications. The following laboratory
qualifications apply
[[Page 62]]
to all testing laboratories participating in the program including
manufacturer's laboratories and the administrator's own laboratories
when designated in the specific program.
(1) Organization and personnel. Laboratories wishing to participate
in a certification program shall apply to the administrator and shall
furnish the following information:
(i) Name of laboratory, address, telephone number, name and title of
official to be contacted for this program.
(ii) Name and qualifications of person assigned by the laboratory to
supervise testing under a specific certification program.
(iii) Name and qualifications of engineers and other key personnel
who shall conduct the testing.
(iv) Brief review of training program for personnel associated with
program to assure the operational efficiency and uniformity of the
testing and quality control procedures.
Each laboratory shall notify the administrator of any change in its
submission regarding procedures and/or major personnel associated with
the program.
(2) Equipment and facilities. Each laboratory shall:
(i) Describe the test instruments and testing facilities to be used
in making the test(s) required by the applicable standard. Information
shall include: Item of equipment, manufacturer, type or model, serial
number, range, precision, frequency of calibration and dates of
calibration.
(ii) Provide photographs of the listed equipment.
(iii) Provide a description of the applicable standards and
calibration equipment being used and the calibration procedures
followed, including National Bureau of Standards traceability, when
applicable. List outside organizations providing calibration services,
if used.
(iv) Demonstrate that measurements can be made with existing
equipment and repeated precision within the limits established by the
applicable standards. Administrator may periodically require
laboratories to conduct collaborative testing on standard reference
materials.
(v) Provide evidence, when regulated temperatures and humidity are
required, that charts are maintained from a continuous recorder
registering both wet and dry bulb temperature or relative humidity. The
charts are to be properly dated, retained and available for inspection.
(vi) Provide a list of standards, test methods and other information
necessary to carry out the program.
(3) Testing methodology. (i) Describe concisely the procedures for
conducting the tests required and the specific equipment to be used.
(ii) Attach a sample test report showing representative test results
and accompanied by test data forms for each test required. When approved
for program participation, testing laboratories may be required by
administrator to report test results on standard summary report forms.
(4) Subcontractors. If a testing laboratory plans to subcontract any
of its testing to other laboratories, only approved laboratories
acceptable to the administrator shall be used.
(5) Laboratory quality control. The laboratory shall develop
operating quality control procedures acceptable to the administrator.
The procedures of the American Council of Independent Laboratories1
may be used as a guideline.
---------------------------------------------------------------------------
1 Copies are available from the American Council of
Independent Laboratories, Inc., 1725 ``K'' Street, NW., Washington, DC
20006.
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(6) Approval of laboratories. Administrators shall develop detailed
laboratory approval requirements and conduct periodic inspections to
assure each test laboratory's capability. Laboratory approval may be
granted for 2 years. Reapproval of the laboratory shall be necessary
every 2 years. When a program allows the use of an administrator's own
laboratories, these laboratories shall be reviewed by a qualified third
party acceptable to HUD. Documentation of acceptance for administrator
laboratories shall be maintained by the administrator and HUD.
Administrator laboratories shall be subject to reapproval every two
years.
(7) Withdrawal of approval. Laboratory approval shall be withdrawn
or
[[Page 63]]
temporarily suspended if it is determined that the laboratory is not
complying with the approved requirements. Causes for suspension include,
but are not limited to, the following:
(i) Incompetence.
(ii) Failure to test in accordance with the test methods described
in the standard.
(iii) Issuance of test reports which fail to comply with the
requirements described in the specific product certification program.
(iv) Falsification of the information reported.
(v) A statement implying validation of the product using a test
report which constitutes only part of the total standard.
(vi) Deceptively utilizing references in advertising or other
promotional activities.
(vii) Submission of incomplete or inadequate information and
documentation called for herein.
[44 FR 54656, Sept. 20, 1979, as amended at 63 FR 5423, Feb. 2, 1998]
Sec. 200.936 Supplementary specific procedural requirements under HUD building products certification program for solid fuel type room heaters and fireplace
stoves.
(a) Applicable standards. Solid fuel type room heaters and fireplace
stoves certified under the HUD Building Products Certification Program
shall be designed, assembled and tested in conformance with the
following standards, which are incorporated by reference:
(1) ANSI/UL 737 (1978), for fireplace stoves;
(2) ANSI/UL 1482 (1979), for solid fuel type room heaters with coal
amendments.
(b) Labelling. (1) Under the procedures set forth in paragraph
(d)(6) of Sec. 200.935, concerning labelling of a product, the
administrator's validation mark and the manufacturer's certification of
compliance with the applicable standards are required to be on the
certification label issued by the administrator to the manufacturer. In
the case of solid fuel type room heaters and fireplace stoves, the
following additional information must be included on the certification
label:
(i) The manufacturer's statement of conformance to the HUD Building
Products Certification Program;
(ii) The manufacturer's name and the identity and location of
manufacturing plant;
(iii) The specification designation and manufacturer series or model
number; and
(iv) The type of fuel to be used.
(2) The certification label must be permanently affixed to the
heater or stove and be readily visible after the heater or stove is
installed.
(c) Periodic tests and quality control inspections. Under the
procedures set forth in paragraph (d)(8) of Sec. 200.935, concerning
periodic tests and quality control inspections, the frequency of testing
for a product must be described in the specific building product
certification program. In the case of solid fuel type room heaters and
fireplace stoves, testing and inspection shall be conducted as follows:
(1) Once every four years, beginning with the initial administrator
visit, a sample of each certified product shall be selected by the
administrator for testing for compliance with the applicable standards
in a laboratory which has been accredited under the National Voluntary
Laboratory Accreditation Program.
(2) The administrator shall visit the manufacturer's facility two
times a year to assure that the initially accepted quality control
procedures are being followed.
[48 FR 1955, Jan. 17, 1983]
Sec. 200.937 Supplementary specific procedural requirements under HUD building product standards and certification program for plastic bathtub units, plastic
shower receptors and stalls, plastic lavatories, plastic water
closet bowls and tanks.
(a) Applicable standards. (1) Plastic bathtub units, plastic shower
receptors and stalls, plastic lavatories, and plastic water closet bowls
and tanks shall be designed, assembled and tested in compliance with the
following standards, which are incorporated by reference:
ANSI Z124.1--(1980) Plastic Bathtub Units
ANSI Z124.2--(1980) Plastic Shower Receptors and Stalls
[[Page 64]]
ANSI Z124.3--(1980) Plastic Lavatories
ANSI Z124.4--(1983) Plastic Water Closet Bowls and Tanks
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. They are available from
the American National Standards Institute, Inc., 11 West 42nd Street,
New York, NY 10036. The standards are also available for inspection at
the Office of the Federal Register, 800 North Capitol Street, NW., suite
700, Washington DC 20408.
(b) Labeling. (1) Under the procedures set forth in paragraph (d)(6)
of Sec. 200.935, concerning labeling of a product, the administrator's
validation mark and the manufacturer's certification of compliance with
the applicable standards are required to be on the certification label
issued by the administrator to the manufacturer. In the case of plastic
bathtub units, plastic shower receptors and stalls, plastic lavatories,
and plastic water closet bowls and tanks, the following additional
information shall be included on the certification label:
(i) Manufacturer's statement of conformance to UM 73a;
(ii) Manufacturer's name and code identifying the plant location.
(2) The certification label shall be affixed to each plastic
bathroom fixture.
(c) Periodic tests and quality control inspections. Under the
procedures set forth in paragraph (d)(8) of Sec. 200.935, concerning
periodic tests and quality control inspections, the frequency of testing
for a product shall be described in the specific building product
certification program. In the case of plastic bathroom fixtures, testing
and inspection shall be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample of each certified plastic
bathtub unit, plastic shower receptor and stall, plastic water closet
bowl and tank for testing in an approved laboratory, in accordance with
applicable standards.
(2) At least every twelve months, the administrator shall visit the
manufacturer's facility to select a sample of each certified plastic
lavatory for testing in accordance with applicable standards.
(3) The administrator shall also review quality control procedures
at each visit to determine that they continue to be followed.
[49 FR 378, Jan. 4, 1984, as amended at 59 FR 36695, July 19, 1994]
Sec. 200.940 Supplementary specific requirements under the HUD building product standards and certification program for sealed insulating glass units.
(a) Applicable standards. (1) All sealed insulating glass units
shall be designed, manufactured, and tested in compliance with the
American Society for Testing and Materials standard: ASTM E-774-92
Standard Specification for Sealed Insulating Glass Units.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference. The standard is available from
the American Society for Testing and Materials, 1916 Race Street,
Philadelphia, PA 19103. This standard is also available for inspection
at the Office of the Federal Register, 800 North Capitol Street, NW.,
7th Floor, suite 700, Washington, DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are issued by the administrator to the manufacturer. Each
sealed insulating glass unit shall be marked as conforming to UM 82a.
The label shall be located on each sealed insulating unit so that it is
available for inspection. The label shall include the manufacturer's
name and plant location.
(c) Periodic tests and quality assurance inspections. Under the
procedures set forth in Sec. 200.935(d)(8) concerning periodic tests and
quality assurance inspections, the frequency of testing for a product
shall be described in the specific building product certification
program. In the case of sealed insulating glass units, testing and
inspection shall be conducted as follows:
(1) At least once a year, the administrator shall visit the
manufacturer's facility to select a sample, of the maximum size
commercially available, for
[[Page 65]]
testing in a laboratory approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[58 FR 67674, Dec. 22, 1993]
Sec. 200.942 Supplementary specific procedural requirements under HUD building product standards and certification program for carpet and carpet with attached
cushion.
(a) Applicable standards. (1) Carpet and carpet with attached
cushion certified for this program shall be designed, manufactured and
tested in accordance with the following standards:
(i) AATCC 20A-81--Fiber Analysis: Quantitative;
(ii) AATCC 16E-82--Colorfastness to Light: Water-Cooled Xenon-Arc
Lamp, Continuous Light;
(iii) AATCC 8-85--Colorfastness to Crocking: AATCC Crockmeter
Method;
(iv) AATCC 24-85--Insect, Resistance to Textiles to;
(v) ASTM D1335-67 (Reapproved 1972)--Standard Test Method for Tuft
Bind of Pile Floor Coverings;
(vi) ASTM D3676-78 (Reapproved 1983)--Standard Specification for
Rubber Cellular Cushion Used for Carpet or Rug Underlay;
(vii) ASTM E648-78--Standard Test Method for Critical Radiant Flux
of Floor-Covering Systems Using a Radiant Heat Energy Source;
(viii) ASTM D2646-79--Standard Methods of Testing Backing Fabrics;
(ix) ASTM D3936-80--Standard Test Method for Delamination Strength
of Secondary Backing of Pile Floor Coverings;
(x) ASTM D297-81--Standard Methods for Rubber Products--Chemical
Analysis;
(xi) ASTM D418-82--Standard Methods of Testing Pile Yarn Floor
Covering Construction; and
(xii) National Bureau of Standards DOC FF 1-70. (ASTM D2859-76)--
Standard Test Method for Flammability of Finished Textile Floor Covering
Materials.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. They are available from
the (i) American Association of Textile Chemists and Colorists (AATCC),
P.O. Box 12215, Research Triangle Park, NC 27709;
(ii) American Society for Testing and Materials (ASTM), 1916 Race
Street, Philadelphia, PA 19103; and
(iii) U.S. Department of Commerce, National Bureau of Standards,
Washington, DC 20234.
The standards are also available for inspection at the Office of the
Federal Register, 800 North Capitol Street, NW., suite 700, Washington
DC 20408.
(b) Labeling. (1) Under the procedures set forth in
Sec. 202.935(d)(6), concerning labeling of a product, the
administrator's validation mark and the manufacturer's certification of
compliance with the applied standard is required to be on the
certification label issued by the administrator to the manufacturer. In
the case of carpet and carpet with attached cushion, the following
additional information shall be included on the certification label,
mark or stamp:
(i) Manufacturer's name or code identifying the manufacturing plant
location; and
(ii) Manufacturer's statement of compliance with UM 44d.
(2) The certification mark shall be applied to each carpet at
intervals of at least every six feet, not less than one foot from the
edge.
(c) Periodic tests and quality control inspections. (1) Five samples
of carpet and carpet with attached cushion shall be tested annually by
the administrator or by an administrator-approved laboratory. Three
samples of each certified quality shall be taken from the plant
annually. Of these, two shall be interim samples (taken every six
months) and one an annual sample. In addition, two samples of each
certified quality shall be taken annually from sources other than the
manufacturer, i.e., brought in the market place from distributors or
stores, not from the factory. The administrator shall select samples for
testing, and testing shall be conducted, in accordance with the
applicable standards in a laboratory accredited by the National
Voluntary Laboratory Accreditation Program (NVLAP) of the National
Bureau of Standards, U.S. Department of Commerce.
[[Page 66]]
(2) The administrator shall visit the manufacturer's facility at
least once every six months to assure that the initially accepted
quality control procedures continue to be followed.
[51 FR 17928, May 16, 1986]
Sec. 200.943 Supplementary specific requirements under the HUD building product standards and certification program for the grademarking of lumber.
(a) Applicable standard. (1) In accordance with UM 38j, lumber shall
be grademarked in compliance with the U.S. Department of Commerce
Voluntary Product Standard PS 20-94 American Softwood Lumber Standard.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51. It is available from the U.S. Department of
Commerce, NIST, Office of Voluntary Product Standards, Gaithersburg, MD
20899.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standard are required on the certification label issued by the
administrator to the manufacturer. However, in the case of grademarking
of lumber, the following information shall be included on the
certification label or mark:
(1) The registered symbol which identifies the grading agency;
(2) Species or species combination;
(3) Grade;
(4) Identification of the applicable grading rules when not
indicated by the species identification or agency symbol;
(5) Mill or grader;
(6) For members which are less than 5 inches in nominal thickness,
indication that the lumber was green or dry at the time of dressing;
(7) Indication that the lumber was finger jointed; and
(8) The certification mark shall be affixed to each piece of lumber.
(c) Periodic tests and quality assurance. Periodic tests and quality
assurance inspections shall be carried out by the American Lumber
Standard Committee as defined in PS 20-94.
[63 FR 5423, Feb. 2, 1998]
Sec. 200.944 Supplementary specific requirements under the HUD building product standards and certification program for plywood and other performance rated
wood-based structural-use panels.
(a)(1) All plywood made to specifications of Voluntary Product
Standard, PS 1-83, ``Construction and Industrial Plywood'' (published by
the U.S. Department of Commerce, National Bureau of Standards (May
1984)) and grade marked as PS 1-83 shall conform to the requirements of
PS 1-83, except that all veneers may be D-grade. A copy of PS 1-83 may
be obtained from the U.S. Department of Commerce, National Institute for
Standards and Technology, Office of Product Standards, Gaithersburg, MD
20899.
(2) All plywood panels not meeting the veneer grade requirements of
PS 1-83, and all performance rated composite and nonveneer structural-
use panels shall comply with the requirements described in the APA PRP-
108, ``Performance Standards and Policies for Structural-Use panels''
(published by the American Plywood Association, June 1988). However, in
ASTM D-3043-87, ``Standard Methods of Testing Structural Panels in
Flexure'' (published by the American Society for Testing and Materials,
August 28, 1987), Method B may be used in lieu of Method C for measuring
the mechanical properties of the panel, provided that the test specimen
has a width of at least 12 inches. The impact load shall be 150 ft. lbs.
for single-layer floor panels excluding any floor finishes. Copies of
the APA Standard may be obtained from the American Plywood Association,
P.O. Box 11700, Tacoma, WA 98411-0770. Copies of the ASTM Standard may
be obtained from the American Society of Testing and Materials, 1916
Race Street, Philadelphia, PA 19103.
(3) Structural-use panels shall be installed in accordance with the
manufacturer's installation instructions and Form No. E30K, ``APA
Design/Construction Guide-Residential and Commercial'' (published by the
American Plywood Association, January 1989).
[[Page 67]]
(4) These standards have been approved by the Director of the
Federal Register for incorporation by reference in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. Copies of the standards are available
for inspection at the Office of the Federal Register, 800 North Capitol
Street, NW., suite 700, Washington DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are required to be on the certification label issued by the
administrator to the manufacturer. Panels that conform to the
Performance Standards and Policy for Structural-Use Panels shall be
marked as conforming to UM 40c. All panels complying with APA PRP-108
shall be marked with a label formatted in the manner similar to the
trademark examples shown in APA PRP-108. All panels will be marked with
the mill number. The certification mark shall be stamped on each panel
and be located so that it is available for inspection.
(c) Periodic tests and qualify control inspections. Under the
procedures set forth in Sec. 200.935(d)(8) concerning periodic tests and
quality control inspections, the frequency of testing for a product
shall be described in the specific building product certification
program. In the case of plywood and wood-based structural-use panels,
testing and inspection shall be conducted as follows:
(1) Testing shall be done in an Administrator's laboratory or an
Administrator-approved laboratory every three months. All plywood
qualified for conformance with PS 1-83 shall be tested in accordance
with PS 1-83.
(2) All thickness and lay-ups of structural-use panels in production
made in conformance with the Performance Standards shall be tested in
accordance with procedures set forth in APA PRP-108 Performance
Standards and Policies for Structural-Use Panels (published by the
American Plywood Association Standard June 1988).
(3) The Administrator shall examine each manufacturer's quality
control procedures to assure they are the same as or equivalent to those
set forth under the Quality Assurance Policy section 4.2.3 of the
publication referenced in paragraph (2) above or PS 1-83 section
3.8.6.6, Reexamination.
(4) The Administrator shall inspect the manufacturer's procedures at
the plant at least every three months to assure that the initially
accepted quality control procedures are being followed.
[55 FR 38785, Sept. 20, 1990]
Sec. 200.945 Supplementary specific requirements under the HUD building product standards and certification program for carpet.
(a) Applicable standards. (1) All carpet shall be designed,
manufactured, and tested in compliance with the following standards from
the American Society for Testing and Materials and the American
Association of Textile Chemists and Colorists:
(i) ASTM D418-92--Standard Test Methods for Tuft and Yarn Length of
Uncoated Floor Coverings;
(ii) ASTM D1335-67--(Reapproved 1972) Standard Test Method for Tuft
Bind of Pile Floor Coverings;
(iii) ASTM D 2646-87--Standard Test Methods for Backing Fabrics;
(iv) ASTM D 3936-80--Standard Test Method for Delamination Strength
of Secondary Backing of Pile Floor Coverings;
(v) AATCC Test Method 16e-82--Colorfastness to Light: Water-Cooled
Xenon-Arc Lamp, Continuous Light;
(vi) AATCC Test Method 165-86--Colorfastness to Crocking: Carpets--
AATCC Crock Meter Method;
(vii) ASTM D 3676-78--(Reapproved 1989) Standard Specification for
Rubber Cellular Cushion Used for Carpet or Rug Underlay;
(viii) ASTM D 3574-91--Standard Test Methods for Flexible Cellular
Materials--Slab, Bonded and Molded Urethane Foams.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. The standards are
available from the American Society for Testing and Materials, 1916 Race
Street, Philadelphia, PA 19103 and the American Association of Textile
Chemists and
[[Page 68]]
Colorists, P.O. Box 12215, Research Triangle Park, NC 27709. These
standards are also available for inspection at the Office of the Federal
Register, 800 North Capitol Street, NW., 7th Floor, suite 700,
Washington, DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with UM 44d are
required to be on the certification label issued by the Administrator to
the manufacturer. The label shall be placed on each carpet every six
feet not less than one foot from the edge.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) Every six months, three samples and one annual field sample of
carpet shall be submitted to the Administrator for testing in a
laboratory accredited by the National Voluntary Laboratory Accreditation
Program of the U.S. Department of Commerce.
(2) The administrator also shall review the quality assurance
procedures every six months to assure that they are being followed by
the manufacturer.
[58 FR 67674, Dec. 22, 1993]
Sec. 200.946 Building product standards and certification program for exterior finish and insulation systems, use of Materials Bulletin UM 101.
(a) Applicable standards: (1) All Exterior Finish and Insulation
Systems shall be designed, manufactured, and tested in compliance with
the following standards:
(i) ASCE 7-93, American Society of Civil Engineers--Minimum Design
Loads for Buildings and Other Structures.
(ii) ASTM C 150-94 Standard Specification for Portland Cement.
(iii) ASTM C 920-87 Standard Specification for Elastomeric Joint
Sealants.
(iv) ASTM C-1186-91 Standard Specification for Flat Non-Asbestos
Fiber-Cement Sheets.
(v) ASTM D 579-90 Standard Specification for Greige Woven Glass
Fabrics.
(vi) ASTM-D 3273-86--(Reapproved 1991) Standard Test Method for
Resistance to Growth of Mold on the Surface of Interior Coatings in an
Environmental Chamber.
(vii) ASTM E 330-90 Standard Test Method for Structural Performance
of Exterior Windows, Curtain Walls, and Doors by Uniform Static Air
Pressure Difference.
(viii) ASTM E 695-79 (Reapproved 1991), Standard Method of Measuring
Relative Resistance of Wall, Floor, and Roof Construction to Impact
Loading.
(ix) ASTM G 26-93 Standard Practice for Operating Light-Exposure
Apparatus (Xenon-Arc Type) With and Without Water for Exposure of
Nonmetallic Materials.
(x) Council of American Building Officials, Model Energy Code, 1993
Edition.
(xi) EIMA Test Method 101.01-95 (modified ASTM C67-91) Standard Test
Method for Freeze/Thaw Resistance of Exterior Insulation and Finish
Systems (EIFS), Class PB.
(xii) EIMA Test Method 101.02-95 (modified ASTM E331-91)--Standard
Test Method for Resistance to Water Penetration of Exterior Insulation
and Finish Systems (EIFS), Class PB.
(xiii) EIMA Test Method 101.03-95 (modified ASTM C297-91)--Standard
Test Method for Determining the Tensile Adhesion Strength of an Exterior
Insulation and Finish System (EIFS), Class PB.
(xiv) EIMA Test Method 105.01-95--Standard Test Method for Alkali
Resistance of Glass Fiber Reinforcing Mesh for Use in Exterior
Insulation and Finish Systems (EIFS), Class PB.
(xv) European Agreement Union Technical Committee--June 88--UEAtc
Directives for the Assessment of External Insulation System for Walls
(Expanded Polystyrene Insulation Faced with a Thin Rendering) Section
3.3.3.3.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. They are available from:
(i) American Society Civil Engineers (ASCE) 345 East 47th Street,
New York, NY 10017.
[[Page 69]]
(ii) American Society for Testing and Materials (ASTM), 1916 Race
Street, Philadelphia, Pennsylvania 19103;
(iii) Council of American Building Officials, 5203 Leesburg Pike,
Falls Church, Virginia 22041;
(iv) EAUTC Centre Scientifique ET Technique Du Batiment (CSTB), 84
Avenue Jesu Jaures, B.P. 02-77421 Marne-LA-Valee Cedex 2, Paris, France.
(v) Exterior Insulation Manufacturers Association (EIMA), 2759 State
Road 580, Suite 112, Clearwater, Florida 34621-3350.
(3) The standards are available also for inspection at the Office of
Manufactured Housing and Regulatory Functions, Standards and Products
Branch, Department of Housing and Urban Development, room 3214, L'Enfant
Plaza, 490E, Mail Room B-133, Washington, DC 20410-8000, and at the
Office of the Federal Register, 800 North Capitol Street, NW., Suite
700, Washington, DC.
(b) Labeling. Under the procedures as set forth in
Sec. 200.935(d)(6), concerning labeling of a product, the
administrator's validation mark and the manufacturer's certification of
compliance with the applied standard is required to be on the
certification label issued by the administrator to the manufacturers. In
the case of exterior wall insulation and finish systems, the
certification label containing the administrator's mark shall be
permanently affixed on the package or container of base and finish
coating materials. Further, additional information shall be included on
the certification label or mark:
(1) Manufacturer's name.
(2) Manufacturer's statement of conformance with UM 101.
(c) The Administrator shall visit the manufacturer's or sponsor's
facility every 6 months, to assure that the initially accepted quality
assurance procedures are being followed. At least every four years, the
Administrator also shall have the exterior wall insulation and finish
systems tested in an approved laboratory to assure that the original
performance is maintained.
(d) The administrator's (or administration-accepted inspection
agency) inspection of EFIS system installation of 5000 sq. ft. or more,
shall be made during and upon completion of the construction. Reports of
the inspection shall be made to the owner. These reports shall state:
(1) The coverage of the finish coat per square foot for a given
volume of finish.
(2) The minimum thickness of the base and finish coatings.
(3) The fiberglass mesh is installed properly around joints and
insulation. All penetrations, including windows, flashing, etc., are
sealed; and there is a caulk and sealant continuity evaluation; and
(4) There is a caulk and sealant continuity evaluation with special
concerns on maintenance.
(e) The manufacturer shall warrant their exterior wall insulation
and finish system, including any caulks and sealants, for twenty years
against faulty performance. The warranty shall include correction of
delamination, chipping, denting, peeling, blistering, flaking, bulging,
unsightly discoloration, or other serious deterioration of the system
such as the intrusion of water through the wall or structural failure of
the system's surface materials. Should any of these defects occur, the
manufacturer shall make a pro-rata allowance for replacement or pay the
owner the amount of the allowance. The manufacturer shall not be liable
for damages or defects resulting from misuse, natural catastrophes, or
other causes beyond the control of the manufacturer. The contractor
shall provide a statement to the owner that the product has been
installed in compliance with HUD requirements and that the
manufacturer's warranty does not relieve the builder, in any way, of
responsibility under the terms of the Builder's Warranty required by the
National Housing Act, or under any other housing program.
[60 FR 47841, Sept. 14, 1995]
Sec. 200.947 Building product standards and certification program for polystyrene foam insulation board.
(a) Applicable standards. (1) All polystyrene foam insulation board
shall be designed, manufactured, and tested in compliance with the
American Society for Testing and Materials (ASTM)
[[Page 70]]
standard C-578-92, Standard Specification for Rigid, Cellular
Polystyrene Thermal Insulation.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference. The standard is available from
the American Society for Testing and Materials, 1916 Race Street,
Philadelphia, PA 19103. This standard is also available for inspection
at the Office of the Federal Register, 800 North Capitol Street, NW.,
7th Floor, suite 700, Washington, DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's certification of
compliance with the applicable standards and the type of board are
required to be on the certification label issued by the administrator to
the manufacturer.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample of each certified polystyrene
foam insulation board for testing by a laboratory approved by the
administrator.
(2) The administrator also shall review the quality assurance
procedures every six months to assure that they are being followed by
the manufacturer.
[58 FR 67675, Dec. 22, 1993]
Sec. 200.948 Building product standards and certification program for carpet cushion.
(a) Applicable standards. (1) All carpet cushion shall be designed,
manufactured, and tested in compliance with the following standards from
the American Society for Testing and Materials:
(i) ASTM D 1667-76--(Reapproved 1990) Standard Specification for
Flexible Cellular Materials--Vinyl Chloride Polymers and Copolymers
(Closed-Cell Foam);
(ii) ASTM D2646-87--Standard Test Methods for Backing Fabrics;
(iii) ASTM D629-88--Standard Test Methods for Quantitative Analysis
of Textiles;
(iv) ASTM D3574-91--Standard Test Methods for Flexible Cellular
Materials--Slab, Bonded, and Molded Urethane Foams;
(v) ASTM D3676-78--Standard Specification for Rubber Cellular
Cushion Used for Carpet or Rug Underlay.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. The standards are
available from the American Society for Testing Materials, 1916 Race
Street, Philadelphia, PA 19103. These standards are also available for
inspection at the Office of the Federal Register, 800 North Capitol
Street, NW., 7th Floor, suite 700, Washington, DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark,
the manufacturer's certification of compliance with the applicable
standards, and the type and class all are required to be on the
certification label issued by the administrator to the manufacturer.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample of each certified carpet
cushion for testing by a laboratory approved by the administrator.
(2) The administrator also shall review the quality assurance
procedures every six months to assure that they are being followed by
the manufacturer.
[58 FR 67675, Dec. 22, 1993]
Sec. 200.949 Building product standards and certification program for exterior insulated steel door systems.
(a) Applicable standards. (1) All Exterior Insulated Steel Door
Systems shall be designed, manufactured, and tested in compliance with
the following standards from the American Society for Testing and
Materials and Insulated Steel Door Systems Institute:
(i) ASTM A591/A591M-89--Standard Specification for Steel Sheet,
Electrolytic-Zinc Coated, for Light Coating Mass Applications;
[[Page 71]]
(ii) ISDSI-100-90--Door Size Dimensional Standard and Assembly
Tolerances for Insulated Steel Door Systems;
(iii) ISDSI-101-83--(Reapproved 1989) Air Infiltration Performance
Standard for Insulated Steel Door Systems;
(iv) ISDSI-102-84--Installation Standard for Insulated Steel Door
Systems;
(v) ISDSI-104-86--Water Penetration Performance Standard for
Insulated Steel Door Systems;
(vi) ISDSI-105-80--Test Procedure and Acceptance Criteria for
Physical Endurance for Steel Doors and Hardware Reinforcings;
(vii) ISDSI-106-80--Test Procedure and Acceptance Criteria for Prime
Painted Steel Surfaces for Steel Doors and Frames;
(viii) ISDSI-107-80--Thermal Performance Standard for Insulated
Steel Door Systems;
(ix) ASTM F476-84--(Reapproved 1991) Standard Test Methods for
Security of Swinging Door Assemblies.
(2) These standards have been approved by the Director of the
Federal Register for incorporation by reference. These standards are
available from the American Society for Testing and Materials, 1916 Race
Street, Philadelphia, PA 19103 or the Insulated Steel Door Institute,
712 Lakewood Center North, 14600 Detroit Avenue, Cleveland, OH 44107.
These standards are also available for inspection at the Office of the
Federal Register, 800 North Capitol Street, NW., 7th Floor, suite 700,
Washington, DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's certification of
compliance with the applicable standards is required to be on the
certification label issued by the administrator to the manufacturer.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) At least every four years, the administrator shall visit the
manufacturer's facility to select a sample of each certified exterior
insulated steel door system for testing by an approved laboratory in
accordance with the applicable standard.
(2) The administrator also shall review the quality assurance
procedures every year to assure that they are being followed by the
manufacturer.
[58 FR 67675, Dec. 22, 1993]
Sec. 200.950 Building product standards and certification program for solar water heating system.
(a) Applicable standards. (1) All solar water heating systems shall
be designed, manufactured, and tested in compliance with Solar Rating
and Certification Corporation (SRCC) Document OG-300-93, Operating
Guidelines and Minimum Standards for Certifying Solar Water Heating
Systems: An Optional SWH System Certification and Rating Program.
Section 10 of the SRCC standard has been omitted because it was
considered proprietary, since it describes an administrative program
specifically carried out by SRCC.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference. The standard is available from
the Solar Rating and Certification Corporation, 777 North Capitol
Street, NE., suite 805, Washington, DC 20002. This standard is also
available for inspection at the Office of the Federal Register, 800
North Capitol Street, NW., 7th Floor, suite 700, Washington, DC.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are required to be on the certification label issued by the
administrator to the manufacturer. Each solar water heating system shall
be marked as conforming to UM 100. The label shall include the
manufacturer's name and plant location.
(c) Periodic tests and quality assurance inspection. Under the
procedure set forth in Sec. 200.935(d)(8), testing and inspection shall
be conducted as follows:
(1) The Administrator shall visit the manufacturer's factory every
two years to assure that the initially accepted quality assurance
procedures are being followed.
(2) At least every four years, the administrator shall visit the
manufacturer's facility to select a sample of each
[[Page 72]]
certified solar water heating system for testing by a laboratory
approved by the administrator.
(d) Warranty. The manufacturer shall provide, at no cost, a full
five-year warranty against defects in material or workmanship, on the
absorber plate, cooling passages, and the collector (excluding any
glass), running from the date of installation of the solar water heating
system. The warranty also shall include the full costs of field
inspection, parts, and labor required to remedy the defects, and will
include the cost of replacement at the site if required. This warranty
is not required to cover defects resulting from exposure to harmful
materials, fire, flood, lightning, hurricane, tornado, hailstorms,
earthquakes, or other acts of God, vandalism, explosions, harmful
chemicals or other fluids, fumes or vapors. This exclusion will apply to
the operation of the collector under excessive pressures or excessive
flow rates, misuse, abuse, negligence, accidents, alterations, falling
objects or other causes beyond the control of the manufacturer.
Following the initial five years, the manufacturer shall provide a
limited no-cost five-year warranty for collector parts on a prorata
allowance basis.
[58 FR 67676, Dec. 22, 1993]
Sec. 200.952 Supplementary specific requirements under the HUD building product standards and certification program for particleboard interior stair treads.
(a) Applicable standards. (1) All interior particleboard stair
treads shall be designed, manufactured, and tested in compliance with
ANSI A208.1-1993 Particleboard, Grade M-3.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51, and is available from the American National
Standards Institute, Inc., 11 West 42nd Street, New York, NY 10036.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standard are required to be on the certification label issued by the
administrator to the manufacturer. Each interior particleboard stair
tread shall include the manufacturer's statement of conformance to UM
70b, a statement that this product is for interior use only, and the
manufacturer's name and plant location.
(c) Periodic tests and quality assurance. Under the procedures set
forth in Sec. 200.935(d)(8) concerning periodic tests and quality
assurance inspections, the frequency of testing for a product shall be
described in the specific building product certification program. In the
case of interior particleboard stair treads, testing and inspection
shall be conducted as follows:
(1) At least once every three months, the administrator shall visit
the manufacturer's facility to select a sample for testing in a
laboratory approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[63 FR 5424, Feb. 2, 1998]
Sec. 200.954 Supplementary specific requirements under the HUD building product standard and certification program for construction adhesives for wood floor
systems.
(a) Applicable standards. (1) All construction adhesives for field
glued wood floor systems shall be designed, manufactured, and tested in
compliance with the following American Society for Testing and Materials
(ASTM) standard: D 3498-93 Standard Specification for Adhesives for
Field-Gluing Plywood to Lumber Framing for Floor Systems except that the
mold and bacteria resistance tests shall not be included.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51, and is available from the American Society for
Testing & Materials Inc., 100 Barr Harbor Drive, West Conshohocken, PA.
19428.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standard are required to
[[Page 73]]
be on the certification label issued by the administrator to the
manufacturer. Each container shall be marked as being in compliance with
UM 60a. The label shall also include the manufacturer's name, plant
location, and shelf life.
(c) Periodic tests and quality assurance. Under the procedures set
forth in Sec. 200.935(d)(8) concerning periodic tests and quality
assurance inspections, the frequency of testing for a product shall be
described in the specific building product certification program. In the
case of construction adhesives for field glued wood floor systems,
testing and inspection shall be conducted as follows:
(1) At least every six months, the administrator shall visit the
manufacturer's facility to select a sample for testing in a laboratory
approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[63 FR 5424, Feb. 2, 1998]
Sec. 200.955 Supplementary specific requirements under the HUD building product standard and certification program for fenestration products (windows and
doors).
(a) Applicable standards. (1) All windows and doors shall be
designed, manufactured, and tested in compliance with American
Architectural Manufacturers Association (AAMA) standard, AAMA/NWWDA 101/
I.S.2-97 Voluntary Specifications for Aluminum, Vinyl (PVC) and Wood
Windows and Glass Doors.
(2) This standard has been approved by the Director of the Federal
Register for incorporation by reference in accordance with 5 U.S.C.
552(a) and 1 CFR part 51, and is available from the American
Architectural Manufacturers Association, 1827 Walden Office Square,
Suite 104, Schaumburg, IL 60173.
(b) Labeling. Under the procedures set forth in Sec. 200.935(d)(6)
concerning labeling of a product, the administrator's validation mark
and the manufacturer's certification of compliance with the applicable
standards are required to be on the certification label issued by the
administrator to the manufacturer. Each window or glass door shall
include the manufacturer's name, plant location, and statement of
compliance with UM 111.
(c) Periodic tests and quality assurance inspections. Under the
procedures set forth in Sec. 200.935(d)(8) concerning periodic tests and
quality assurance inspections, the frequency of testing for a product
shall be described in the specific building product certification
program. In the case of windows and glass doors, testing and inspection
shall be conducted as follows:
(1) At least once every four years, the administrator shall visit
the manufacturer's facility to select a commercial sample for testing in
a laboratory approved by the administrator.
(2) The administrator shall also review the quality assurance
procedures twice a year to assure that they are being followed by the
manufacturer.
[63 FR 5424, Feb. 2, 1998]
Subpart T--Social Security Numbers and Employer Identification Numbers;
Assistance Applicants and Participants
Sec. 200.1001 Cross-reference.
The provisions in subpart B of part 5 of this title apply to Social
Security Numbers and Employer Identification Numbers for assistance
applicants and participants.
[61 FR 11118, Mar. 18, 1996]
Subpart U--Social Security Numbers and Employer Identification Numbers;
Applicants in Unassisted Programs
Sec. 200.1101 Cross-reference.
The provisions in subpart B of part 5 of this title apply to Social
Security Numbers and Employer Identification Numbers for applicants in
unassisted programs.
[61 FR 11118, Mar. 18, 1996]
[[Page 74]]
Subpart V--Income Information; Assistance Applicants and Participants
Sec. 200.1201 Cross-reference.
The provisions in subpart B of part 5 of this title apply to income
information for assistance applicants and participants.
[61 FR 11118, Mar. 18, 1996]
Subpart W--Administrative Matters
Sec. 200.1301 Expiring Programs--Savings Clause.
No new loan assistance, additional participation, or new loans are
being insured under the programs listed below. Any existing loan
assistance, ongoing participation, or insured loans under these programs
will continue to be governed by the regulations in effect as they
existed immediately before October 11, 1995:
Part 205 Mortgage Insurance for Land Development [Title X]
Part 209 Individual Homes; War Housing Mortgage Insurance [Sec. 603]
Part 224 Armed Services Housing--Military Personnel [Sec. 803]
Part 225 Military Housing Insurance [Sec. 803]
Part 226 Armed Services Housing--Civilian Employees [Sec. 809]
Part 227 Armed Services Housing--Impacted Areas [Sec. 810]
Part 228 Individual Residences; National Defense Housing Mortgage
Insurance [Sec. 903]
Part 240 Mortgage Insurance on Loans for Fee Title Purchase
Part 277 Loans for Housing for the Elderly or Handicapped
Part 278 Mandatory Meals Program in Multifamily Rental or Cooperative
Projects for the Elderly or Handicapped
[60 FR 47262, Sept. 11, 1995]
Sec. 200.1302 Additional expiring programs--savings clause.
No new loan assistance, additional participation, or new loans are
being insured under the programs listed in this section.
(a) Any existing loan assistance, ongoing participation, or insured
loans under the following programs will continue to be governed by the
regulations in effect as they existed immediately before May 1, 1996:
Part 215 Rent Supplement Payments Program
Part 222 Serviceperson's Mortgage Insurance Program
Part 237 Special Mortgage Insurance for Low and Moderate Income
Families
(b) Any existing loan assistance, ongoing participation, or insured
loans under the following program will continue to be governed by the
regulations in effect as they existed immediately before December 26,
1996:
Part 233 Experimental Housing Mortgage Insurance Program
[61 FR 60160, Nov. 26, 1996]
Sec. 200.1303 Annual income exclusions for the rent supplement program.
The exclusions to annual income described in 24 CFR 5.609(c) apply
to those rent supplement contracts governed by the regulations at 24 CFR
part 215 in effect immediately before May 1, 1996 (contained in the
April 1, 1995 edition of 24 CFR, parts 200 to 219), in lieu of the
annual income exclusions described in 24 CFR 215.21(c) (contained in the
April 1, 1995 edition of 24 CFR, parts 200 to 219).
[61 FR 54503, Oct. 18, 1996]
Appendix A to Part 200--Standards incorporated by reference in the
Minimum Property Standards for Housing (HUD Handbook 4910.1)
The following publications are incorporated by reference in the HUD
Minimum Property Standards (MPS) in 24 CFR part 200. The MPS are
available for public inspection and can be obtained for appropriate use
at 490 L'Enfant Plaza East, Suite 3214, or at each HUD Regional, Area,
and Service Office. Copies are available for inspection at the Office of
the Federal Register, 800 North Capital Street, NW., Suite 700,
Washington, DC. The individual standards referenced in the MPS are
available at the address contained in the following table. They are also
available for public inspection at the HUD, Manufactured Housing and
Construction Standards Division, Suite 3214, 490 L'Enfant Plaza East,
Washington, DC 20024.
Air Conditioning Contractors of America 1513 16th Street, NW.,
Washington, DC 20036, (202) 483-9370.
[[Page 75]]
Load Calculation for Residential Winter and Summer Air Conditioning,
Manual J 1986
Aluminum Association, 900 19th Street, NW., Washington, DC 20006,
Telephone (202) 862-5100.
AA-ASM 35-80 Specifications for Aluminum Sheet Metal Work in Building
Construction
American Architectural Manufacturers Association, 1540 East Dundee
Road, Paletine, IL 60067, Telephone (708) 202-1350.
AAMA-800-92 Voluntary Specifications and Test Methods for Sealants
AAMA-1503.1-88 Voluntary Test Method for Thermal Transmittance and
Condensation Resistance of Windows, Doors and Glazed Wall Sections
AAMA 1504-88 Voluntary Standards for Thermal Performance of Windows,
Doors and Glazed Wall Sections
American Concrete Institute, P. O. Box 19150, Redford Station,
Detroit, Michigan 48219, Telephone (313) 532-2600.
ACI 211.1-89 Standard Practice for Selecting Proportions for Normal,
Heavyweight and Mass Concrete
ACI 211.2-91 Standard Practice for Selecting Proportions for Structural
Lightweight Concrete
ACI 213R-87 Guide for Structural Lightweight Aggregate Concrete
ACI 301-89 Specifications for Structural Concrete for Buildings
ACI 302.1R-80 Guide for Concrete Floor and Slab Construction
ACI 304R-89 Guide for Measuring, Mixing, Transporting and Placing
Concrete
ACI 305R-77 Hot Weather Concreting (Revised 1989)
ACI 306R-78 Cold Weather Concreting (Revised 1988)
ACI 311.4R-80 Guide for Concrete Inspection (Revised 1988)
ACI 315-80 Guide for Detailing of Concrete Reinforcement
ACI 318-89 Building Code Requirements for Reinforced Structural Plain
Concrete (Revised 1992)
ACI 322-72 Structural Plain Concrete
ACI 347-78 Recommended Practice for Concrete Formwork (Reapproved 1984)
ACI 504R-77 Guide to Joint Sealants for Concrete Structures
ACI 506-90 Recommended Practice for Shotcreting
ACI 515.1R-79 A Guide to the Use of Waterproofing, Dampproofing,
Protective and Decorative Barrier Systems for Concrete (Revised 1985)
ACI 533.1R-69 Quality Standards and Tests for Precast Concrete Wall
Panels
ACI 533.2R-69 Selection and Use of Materials for Precast Concrete Wall
Panels
ACI 533.3R-70 Fabrication, Handling and Erection of Precast Concrete
Wall Panels
American Forest & Paper Association, (formerly National Forest
Products Association), 1250 Connecticut Ave., NW., Washington, DC 20036.
National Design Specification for Wood Construction--1991.
American National Standards Institute, 11 West 42nd Street, New
York, NY 10036, Telephone (212) 642-4900.
ANSI A108.1A-92 Specifications for Installation of Ceramic Tile, in the
Wet Set Method with Portland Cement Mortar
ANSI A137.1-1988 Specifications for Ceramic Tile
ANSI/BHMA A156.2-1989 Standard for Bored and Preassembled Locks and
Latches
ANSI/NKCA A161.1-1985 Recommended Performance and Construction
Standards for Kitchen and Vanity Cabinets (Approved March 18, 1986)
ANSI A208.1-1989 Wood Particleboard
ANSI/AAMA 101-1988 Voluntary Specifications for Aluminum Prime Windows
and Sliding Glass Doors
ANSI/AAMA 1002.10-1983 Voluntary Specifications for Aluminum Insulating
Storm Products for Windows and Sliding Glass Doors
ANSI/AAMA 1102.7-1989 Voluntary Specifications for Aluminum Storm Doors
ANSI/AAMA 1402-1986 Standard Specifications for Aluminum Siding, Soffit
and Fascia (ANSI Approved 1989)
ANSI/ACI 214-77 Recommended Practice for Evaluation of Strength Test
Results of Concrete (Reapproved 1983)
ANSI/AHA A135.4-1982 Basic Hardboard (Reaffirmed 1988)
ANSI/AHA A135.6-1990 Hardboard Siding
ANSI/AHA A194.1-1985 Cellulosic Fiber Board
ANSI/APA 1-1984 Mosaic-Parquet Hardboard Slat Flooring
ANSI/NSPI-1-91 Standard for Public Swimming Pools
ANSI Z34.1-1987 American National Standard for Certification, Third-
Party Certification Program
ANSI Z124.5-1989 American National Standard for Plastic Toilet Seats
(Water Closet Seats)
American Society of Civil Engineers, 345 East 47th Street, New York,
NY 10017.
ASCE 7-88 Minimum Design Loads for Buildings and Other Structures
(Formerly ANSI A58.1)
American Society of Mechanical Engineers, 345 E 47th Street, New
York, NY 10017.
ASME/ANSI A17.1-87 Safety Code for Elevators and Escalators Including
the A17.1b-89 Addenda
ASME A 112.18.1M89 Plumbing Fixture Fittings
American Society for Testing and Materials, 1916 Race Street,
Philadelphia, PA 19103, Telephone (215) 299-5400.
[[Page 76]]
ASTM C 12-91 Standard Practice for Installing Vitrified Clay Pipe Lines
ASTM C 208-72 Insulating Board (Cellulosic Fiber), Structural and
Decorative (Reapproved 1982)
ASTM C 209-84 Standard Methods of Testing Insulating Board (Cellulosic
Fiber), Structural and Decorative
ASTM C 216-91c Standard Specification for Facing Brick (Solid Masonry
Units Made from Clay or Shale)
ASTM C 220-91 Standard Specification for Flat Asbestos-Cement Sheets
ASTM C 221-91 Standard Specification for Corrugated Asbestos-Cement
Sheets
ASTM C 223-91 Standard Specification for Asbestos-Cement Siding
ASTM C 509-91 Standard Specification for Elastomeric Cellular Preformed
Gasket and Sealing Material
ASTM C 516-80 Standard Specification for Vermiculite Loose Fill Thermal
Insulation (Reapproved 1985)
ASTM C 549-81 Standard Specification for Perlite Loose Fill Insulation
(Reapproved 1986)
ASTM C 578-92 Standard Specification for Rigid, Cellular Polystyrene
Thermal Insulation
ASTM C 640-83 Standard Specification for Insulation Board, Thermal
(Cork)
ASTM C 726-88 Standard Specification for Mineral Fiber and Roof
Insulation Board
ASTM C 739-91 Standard Specification for Cellulosic Fiber (Wood-Based)
Loose-Fill Thermal Insulation
ASTM C 754-88 Standard Specification for Installation of Steel Framing
Members to Receive Screw-Attached Gypsum
ASTM C 834-91 Standard Specification for Latex Sealants
ASTM C 841-90 Standard Specification for Installation of Interior
Lathing and Furring
ASTM C 842-85 Standard Specification for Application of Interior Gypsum
Plaster (Reapproved 1990)
ASTM C 843-92 Standard Specification for Application of Gypsum Veneer
Plaster
ASTM C 844-85 Standard Specification for Application of Gypsum Base to
Receive Gypsum Veneer Plaster
ASTM C 846-76 Standard Practice for Application of Structural
Insulating Board (Fiberboard) Sheathing (Reapproved 1982)
ASTM C 864-90 Standard Specification for Dense Elastomeric Compression
Seal Gaskets, Setting Blocks and Spacers.
ASTM C 926-90 Standard Specification for Application of Portland
Cement-Based Plaster
ASTM C 1036-91 Standard Specification for Flat Glass
ASTM D 1037-89 Standard Test Methods for Evaluating the Properties of
Wood-Base Fiber and Particle Panel Materials
ASTM C 1048-91 Standard Specification for Heat-Treated Flat Glass-Kind
HS, Kind FT Coated and Uncoated Glass
ASTM D 1557-91 Test Method for Laboratory Compaction Characteristics of
Soil Using the Modified Method (56,000 ft-lbf/ft3 (2,700 kN-
m/m3))
ASTM D 2316-75 Standard Recommended Practice for Installing Bituminized
Fiber Drain and Sewer Pipe (Reapproved 1984)
ASTM D 2321-89 Standard Practice for Underground Installation of
Thermoplastic Pipe for Sewers and Other Gravity-Flow Applications
ASTM D 3656-89 Standard Specifications for Insect Screening and Louver
Cloth Woven From Vinyl-Coated Glass Yarns
ASTM D 3679-92 Standard Specification for Rigid Poly (Vinyl Chloride)
(PVC) Siding
ASTM E 72-80 Standard Methods of Conducting Strength Tests of Panels
for Building Construction
ASTM E 283-91 Standard Test Method for Determining the Rate of Air
Leakage Through Exterior Windows, Curtain Walls, and Doors Under
Specified Pressure Differences Across the Spectrum
ASTM E 330-90 Standard Test Method for Structural Performance of
Exterior Windows, Curtain Walls, and Doors by Uniform Static Air
Pressure Difference
ASTM E 331-86 Standard Test Method for Water Penetration of Exterior
Windows, Curtain Walls, and Doors by Uniform Static Air Pressure
Difference
ASTM E 380-91a Standard Practices for Use of the International Systems
of Units (SI) (the Modernized Metric System)
American Society of Heating, Refrigerating and Air Conditioning
Engineers, 1791 Tullie Circle, NE, Atlanta, GA 30329. ASHRAE Handbook--
Fundamentals--1989. ASHRAE Cooling and Heating Load Calculation Manual--
GRP 158 1979. ASHRAE Handbook--Equipment--1988. ASHRAE Handbook--HVAC
Systems and Applications--1987.
American Welding Society, 550 NW Le Jeune Road, P. O. Box 351040,
Miami, FL 33126, Telephone (305) 443-9353. ANSI/AWS D1.1-90 Structural
Welding Code--Steel. ANSI/AWS D1.4-79 Structural Welding Code-
Reinforcing Steel.
The Asphalt Institute, Asphalt Institute Building, College Park, MD
20740 Telephone (301) 277-4258.
MSI-1-81 Thickness Design--Asphalt Pavements for Highways and Streets
Asphalt Roofing Manufacturers Association, 6288 Montrose Road,
Rockville, MD 20852, Telephone (301) 231-9050. Residential Asphalt
Roofing Manual--1988.
Carpet and Rug Institute, 310 Holiday Avenue, Box 2048, Dalton, GA
30722-0048, Telephone (404) 278-3176. How to Specify Commercial Carpet
Installation, 1984.
[[Page 77]]
Council of American Building Officials, Suite 708, 5203 Leesburg
Pike, Falls Church, VA 22041, Telephone (703) 931-4533. CABO One and Two
Family Dwelling Code 1992 edition with Errata Package and 1993
Amendments. CABO Model Energy Code 1992 edition CABO/ANSI A117.1-92
Accessible and Usable Buildings and Facilities.
Department of Agriculture, Publications Division, 14th and
Independence Avenue, SW., Washington, DC 20050, Telephone (202) 447-
3957.
Agriculture Handbook No. 73, Wood Frame House Construction
Home and Garden Bulletin No. 64. Subterranean Termites--Their Prevention
and Control in Buildings, October 1983
Home and Garden Bulletin No. 73, Wood Decay in Houses, How to Prevent
and Control It, May 1986
Department of Commerce, National Institute of Standards and
Technology, Gaithersburg, Maryland 20899, Telephone (301) 975-4025. PS
1-83 Product Standard for Construction and Industrial Plywood with
Typical APA Trademarks. PS 2-92 Performance Standard for Wood-Based
Structural-Use Panels.
Commercial Standards:
CS 138-55 Insect Wire Screening
CS 242-62 1 \3/4\'' Steel Doors & Frames
Department of Defense, Naval Publication and Forms Center, 5801
Taber Road, Philadelphia, PA 19120, Telephone (215) 697-2179.
Federal Specifications:
L-S-125B Screening, Insect, Non-metallic Febuary 3, 1972
L-F-001641 Floor Covering Translucent or Transparent Vinyl Surface with
Backing--1971 and Amendment 2--September 24, 1982
L-F-00450A Flooring, Vinyl Plastic (GSAFSS)--1970 and Amendment 1,
August 5, 1975
L-F-475A Floor Covering Vinyl, Surface Tile and Roll, with Backing
including Amendment 2--February 9, 1971
HH-I-521F Insulation Blankets, Thermal (Mineral Fiber--for Ambient
Temperatures--1980)
HH-I-526C Insulation Board, Thermal (Mineral Fiber)--1968
HH-I-529B Insulation Board, Thermal (Mineral Aggregate)--1971
HH-I-530B Insulation Board, Thermal, Unfaced, Polyurethane or
Polyisocyanurate and Interim I--1982
HH-I-551E Insulation Block and Boards, Thermal (Cellular Glass) Fiber,
for Ambient Temperatures, 1974
HH-I-558B Insulation Blocks, Boards, Blankets, Felts Sleeving (Pipe and
Tube Covering), and Pipe Fitting Covering, Thermal (Mineral Fiber,
Insulation Type) and Amendment 3--1976
HH-I-574B Insulation, Thermal (Perlite) and Interim Amendment--1976
HH-I-585C Insulation, Thermal (Vermiculite) and Interim Amendment 1--
1976
HH-I-1030B Insulation, Thermal (Mineral Fiber, for Pneumatic or Poured
Application)--1980
HH-I-1252B Insulation, Thermal Reflective, (Aluminum Foil) and Interim
Amendment 1--1976
HH-I-1972 Insulation Board, Thermal, Faced, Gen; 1, 2, 3, Polyurethane
and Polyisocyanurate and 4, 5 & 6 Amendments--1985
LLL-I-535B Insulation Board, Thermal, Cellulosic Fiber, 1977
SS-S-346C Siding (Shingles, Clapboards, and Sheets) 1968
SS-T-312B Tile, Floor: Asphalt, Rubber, Vinyl-Composition and Interim
Amendment--1979
Department of Housing and Urban Development, 451 Seventh Street,
SW., Mail Room B-133, Washington, DC 20410, Telephone (202) 755-7440.
Handbooks:
4940.2-1973 Minimum Design Standards for Community Water Supply Systems
4940.3-1992 Minimum Design Standards for Community Sewerage Systems
(Rev. 1-92)
4950.1-1988 Technical Suitability of Products Program, Technical and
Processing Procedures (Rev. 2 which includes revisions and changes
through October 24, 1991)
4930.2-1989 HUD Intermediate MPS Supplement, Solar Heating & Domestic
Hot Water Systems
Use of Materials Bulletins:
25d Power Driven, Mechanically Driven and Manually Driven Fasteners--9/
5/73
38h Grademarking of Lumber--7/31/79
44c HUD/FHA Standard for Carpet and Carpet Certification Program--2/22/
78 (Plus Addendum 1 & 2)
48 Labels of Independent Programs for Certifying Pressure-Treated
Lumber and Plywood (Plus 5 Supplements--11/15/67)
52a Quality Certification and Labeling for Wood Flush Doors--10/7/75)
58a Acrylic Plastic Sheets for Glazing--9/2/75
60 Field Glued Plywood & Wood Frame Structural Floor Systems--12/9/70
62a Factory-Applied Laminated Roofing Systems Based on Chlorosulfonated
Polyethylene (CPSE)--11/16/72
65 Controlled Density Cellular Concrete Floor Fill--10/11/73
67 Polycarbonate Plastic Sheets for Glazing--9/3/75
70a Particleboard Interior Stair Treads and Certification Program--5/
19/82
71 Polystyrene Foam Insulation Sheathing Board--1/10/77
72 HUD Standard for Carpet Cushion--2/6/80
[[Page 78]]
76 Chlorinated Poly (Vinyl Chloride) CPVC and Polybutylene (PB) Hot and
Cold Water Distribution--4/25/78
77a Cast Iron Sanitary Drainage System with Hubless Pipe and Fittings--
3/28/80
78 Polyethylene (PE), Acrylonitrile-Butadiene-Styrene (ABS), Poly Vinyl
Chloride (PVC) and Polybutylene (PB) Plastic Piping for Domestic Cold
Water Service--4/25/78
79a Acrylonitrile-Butadiene-Styrene (ABS) and Poly (Vinyl Chloride)
(PVC) Plastic Drain, Waste and Vent Pipe and Fittings--3/7/82
80 Spray Applied Cellulosic Thermal Insulation--10/31/79
101 HUD Building Product Standards and Certification Program for
Exterior Wall Insulation and Finish Systems, July 26, 1993
Environmental Protection Agency, Office of Drinking Water, 401 M
Street, SW., Washington, DC 20460, Telephone (202) 382-5533.
EPA 570/9-82-004 Manual of Individual Water Supply (NTIS-PB 85242279)
Systems (October 1982)
Flat Glass Marketing Association, White Lakes Professional, Building
3310 Harrison Street, Topeka, KS 66611, Telephone (913) 266-7013. FGMA
Glazing Manual--1986. FGMA Sealant Manual--1990.
Hardwood Plywood Manufacturers Association, P.O. Box 2789, 1825
Michael Faraday Drive, Reston, VA 22090, Telephone (703) 435-2900. ANSI/
HPMA LHF-1987 Laminated Hardwood Flooring.
Insect Screening Weavers Assn., 2000 Maple Hill Street, P.O. Box
309, Yorktown Heights, NY 10598. IWS-089 Insect Wire Screening (Wire
Fabric).
National Academy of Sciences, 2101 Constitution Avenue, NW.,
Washington, DC 20418. Publication 1571 Criteria for Selection and Design
of Residential Slabs-on-Ground, Report #33, Building Research Advisory
Board (BRAB), 1968.
National Association of Home Builders, Research Center, 400 Prince
Georges Boulevard, Upper Marlboro, MD 20772, Telephone (301) 249-4000.
Insulation Manual, Homes and Apartments--1979.
National Association of Plumbing-Heating-Cooling Contractors, P.O.
Box 6808, Falls Church, VA 22046, Telephone (703) 237-8100. National
Standard Plumbing Code--1993.
National Fire Protection Association, Batterymarch Park, Quincy, MA
02269, Telephone 1-800-344-3555.
ANSI/NFPA 58-89 Standard for the Storage and Handling of Liquefied
Petroleum Gases
NFPA 54-88 National Fuel Gas Code (ANSI Z223.1-1988) NFPA 70-93
National Electrical Code
National Institute of Building Sciences, 1201 L Street, NW.,
Washington, DC 20005. Metric Guide for Federal Construction--1992.
National Oak Flooring Manufacturers Association, 22 North Front
Street, Memphis, TN 38103. Official Grading Rules, Oak, Beech, Birch,
Hard Maple, Pecan (OFGR/Vol. 1, No. 1/1986 and the 1989 Addendum).
Hardwood Flooring Finishing/Refinishing Manual, 1986. Hardwood Flooring
Installation Manual, 1986.
National Roofing Contractors Association, One O'Hare Centre, 6250
River Road, Rosemont, IL 60018, Telephone (708) 318-6722. NRCA Roofing
and Waterproofing Manual, 1989.
National Terrazzo and Mosaic Association, 3166 Des Plaines Avenue,
Suite 132, Des Plaines, IL 60018, Telephone (708) 635-7744. NTMA
Specifications, Details and Technical Data, ``Terrazzo Ideas & Design
Guide'', 1990.
National Wood Window and Door Association, 205 West Touhy Avenue,
Park Ridge, IL 60018, Telephone (708) 299-5200.
ANSI/NWWDA IS 1-87 Industry Standard for Wood Flush Doors
ANSI/NWWDA IS 2-87 Industry Standard for Wood Windows
NWWDA IS 3-88 Industry Standard for Wood Sliding Patio Doors
ANSI/NWWDA IS 6-86 Industry Standard for Wood Stile and Rail Doors
Post-tensioning Institute, 301 West Osborn, Suite 3500, Phoenix, AZ
85013, Telephone (602) 870-7540. Design and Construction of Post-
tensioned Slabs-on-Ground--1980.
Prestressed Concrete Institute, 175 West Jackson Boulevard, Suite
1859, Chicago, IL 60604, Telephone (312) 786-0353.
PCI MNL 116 Manual for Quality Control for Plants and Production for
Precast Prestressed Concrete Products--1985 PCI MNL 117 Manual for
Quality Control for Plants and Production of Architectural Precast
Concrete Products--1977
Resilient Floor Covering Institute, 966 Hungerford Drive, Suite 12-
B, Rockville, MD 20850, Telephone (301) 340-8580. Recommended
Installation Specifications for Vinyl Composition, Solid Vinyl and
Asphalt Tile Floorings, 1987.
Safety Glazing Certification Council, c/o ETL Testing Laboratories,
Industrial Park, Route 11, Cortland, New York 13045, Telephone (607)
753-6711. Certified Products Directory--1990.
Southern California Association of Cabinet Manufacturers, 1933 South
Broadway, L. 39, Los Angeles, CA 90007, Telephone (213) 749-4355.
Certified Construction Standards and Specifications, Guide for Uniform
Cabinet Specifications--1973 (Revised 1985).
Steel Door Institute, 30200 Detroit Road, Cleveland, OH 44145,
Telephone (216) 899-0010. ANSI/SDI A123.1-82 Nomenclature for Steel
Doors and Steel Door Frames.
Tile Council of America, Inc., Box 326, Princeton, NJ 08542-0326,
Telephone (609) 921-
[[Page 79]]
7050. Handbook for Ceramic Tile Installation--1993.
Underwriters Laboratories, 333 Pfingsten Road, Northbrook, IL 60062,
Telephone (708) 272-8800. Electrical Appliance and Utilization Equipment
Directory, 1992.
Water Quality Association, 4151 Naperville Road, Lisle, IL 60532.
Telephone (708) 396-1600.
WQA S-100 Household Commericial and Portable Exchange Water Softeners--
1985
WQA S-200 Household and Commercial Water Filters--1988
WQA S-300 Point-of-Use, Low Pressure Reverse Osmosis Drinking Water
Systems--1984
WQA S-400 Point-of-Use Distillation Drinking Water Systems--1986
Wood Moulding and Millwork Producers, P.O. Box 25278, Portland, OR
97225, Telephone (503) 292-9288.
WM 3-79 Exterior Wood Door Frames
[58 FR 60250, Nov. 15, 1993]
[[Page 80]]
SUBCHAPTER B--MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL
HOUSING ACT AND OTHER AUTHORITIES
PART 201--TITLE I PROPERTY IMPROVEMENT AND MANUFACTURED HOME LOANS--Table of Contents
Subpart A--General
Sec.
201.1 Purpose.
201.2 Definitions.
201.3 Applicability of the regulations.
201.4 Rules of construction.
201.5 Waivers.
201.6 Disclosure and verification of Social Security and Employer
Identification Numbers.
Subpart B--Loan and Note Provisions
201.10 Loan amounts.
201.11 Loan maturities.
201.12 Requirements for the note.
201.13 Interest and discount points.
201.14 Payments on the loan.
201.15 Late charges to borrowers.
201.16 Default provision.
201.17 Prepayment provision.
201.18 Modification agreement or repayment plan.
201.19 Refinanced and assumed loans.
Subpart C--Eligibility and Disbursement Requirements
201.20 Property improvement loan eligibility.
201.21 Manufactured home loan eligibility.
201.22 Credit requirements for borrowers.
201.23 Borrower's initial payment.
201.24 Security requirements.
201.25 Charges to borrower to obtain loan.
201.26 Conditions for loan disbursement.
201.27 Requirements for dealer loans.
201.28 Flood and hazard insurance, and Coastal Barriers properties.
201.29 Ineligible participants.
Subpart D--Insurance of Loans
201.30 Reporting of loans for insurance.
201.31 Insurance charge.
201.32 Insurance coverage reserve account.
Subpart E--Loan Administration
201.40 Post-disbursement loan requirements.
201.41 Loan servicing.
201.42 Bankruptcy, insolvency or death of borrower.
201.43 Administrative reports and examinations.
Subpart F--Default Under the Loan Obligation
201.50 Lender efforts to cure the default.
201.51 Proceeding against the loan security.
201.52 Acquisition by voluntary conveyance or surrender.
201.53 Disposition of manufactured home loan property.
201.54 Insurance claim procedure.
201.55 Calculation of insurance claim payment.
Subpart G--Debts Owed to the United States Under Title I
201.60 General.
201.61 Claims against debtors--principal amount of debt.
201.62 Claims against debtors--interest, penalties, and administrative
costs.
201.63 Claims against lenders.
Authority: 12 U.S.C. 1703 and 3535(d).
Source: 50 FR 43523, Oct. 25, 1985, unless otherwised noted.
Subpart A--General
Sec. 201.1 Purpose.
These regulations implement the provisions of section 2 of title I
of the National Housing Act (12 U.S.C. 1703). They contain the
requirements under which an approved financial institution may obtain
insurance on loans made for the alteration, repair or improvement of
property, for the purchase of a manufactured home and/or the lot on
which to place such home, for the purchase and installation of fire
safety equipment in existing health care facilities, and for the
preservation of historic structures. The insurance granted by the
Secretary of Housing and Urban Development shall be available only for
loans involving property located within a State, as that term is defined
in Sec. 201.2. The insurance can cover up to 10 percent of the amount of
all insured Title I loans in the financial institution's portfolio, as
reflected in the total amount of insurance coverage
[[Page 81]]
contained at any time in an insurance coverage reserve account
established by the Secretary, less amounts for insurance claims paid. As
limited by the amount of insurance coverage in such a reserve account,
the insurance can cover up to 90 percent of the loss of any individual
loan.
[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19795, May 2, 1996]
Sec. 201.2 Definitions.
As used in the regulations in this part the term:
Act means the National Housing Act, 12 U.S.C. 1703.
Actuarial method means the method of allocating payments made on a
loan between the outstanding balance of the principal amount borrowed
and the interest due on a loan obligation, under which a payment is
applied first to the accrued interest, and any remainder is subtracted
from, or any deficiency is added to, the unpaid balance of the
obligation.
Borrower means one who applies for and receives a loan insured under
this part. The term may also include any co-maker or co-signer or any
assumptor who is obligated for the repayment of a loan obligation
insured under this part.
Combination loan means a loan made for the purchase or refinancing
in a single transaction of a manufactured home and a manufactured home
lot, and may also include a garage, patio, carport, or other comparable
appurtenance.
Dealer means, in the case of property improvement loans, a seller,
contractor, or supplier of goods or services. In the case of
manufactured home loans, dealer means one who engages in the business of
manufactured home retail sales.
Dealer loan means a loan where a dealer, having a direct or indirect
financial interest in the transaction between the borrower and the
lender, assists the borrower in preparing the credit application or
otherwise assists the borrower in obtaining the loan from the lender.
The lender may disburse the loan proceeds solely to the dealer or the
borrower, or jointly to the borrower and the dealer or other parties to
the transaction.
Debtor means the borrower, any co-maker or co-signer, and any
assumptor who is liable for the repayment of a defaulted loan obligation
insured under this part.
Default means a failure by the borrower to make any payment due
under the note, when such failure continues for a period of 30 days. For
the purpose of these regulations, the ``date of default'' shall be
considered as 30 days after the first failure to make an installment
payment on the note which is not covered by subsequent payments, when
applied to the overdue installments in the order in which they became
due.
Direct loan means a loan for which a borrower makes application
directly to a lender without any assistance from a dealer. The credit
application, signed by the borrower, may be filled out by the borrower
or by a person acting at the direction of the borrower who does not have
a financial interest in the loan transaction. The lender may disburse
the loan proceeds solely to the borrower or jointly to the borrower and
other parties to the transaction. If a dealer takes legal action
required by State law in order for the lender to obtain a valid and
enforceable lien against the property, such action by the dealer will
not convert an otherwise direct loan to a dealer loan.
Discount points means a fee charged by the lender, separate from
interest but part of the total finance charges on the loan, that is part
of the lender's total yield on the loan needed to maintain a competitive
position with other types of investments. One discount point equals one
percent of the principal amount of the loan. As discount points on the
loan increase, the interest rate can be expected to decrease in a fairly
consistent relationship.
Existing structure means a dwelling, including a manufactured home,
that was completed and occupied at least 90 days prior to an application
for a Title I loan, or a nonresidential structure that was a completed
building with a distinctive functional use prior to an application for a
Title I loan. However, these occupancy and completion requirements shall
not apply to:
(1) Loans having a principal obligation of $1000 or less; or
[[Page 82]]
(2) Residential structures which have been damaged by conditions
determined by the President to warrant relief under the provisions of
title 42, chapter 68, of the United States Code.
Fire safety equipment loan means a loan made to finance the purchase
and installation of any device or construction feature which is
recognized in the latest edition of the Department of Housing and Urban
Development's Minimum Property Standards for Care Type Housing (HUD
Handbook 4920.1) or the Fire Safety Code of the National Fire Protection
Association, and which is designed to reduce the risk of death, personal
injury, or property damage resulting from a fire in a health care
facility.
Furniture means movable articles of personal property relating to a
home or dwelling, such as beds, chairs, sofas, lamps, tables, rugs,
etc.; however, furniture does not include:
(1) Items built into the home or dwelling such as wall-to-wall
carpeting or heating or cooling equipment; or
(2) Large appliances such as refrigerators, ovens, ranges,
dishwashers, clothes washers or clothes dryers.
Health care facility means a proprietary facility or facility of a
private nonprofit corporation or association, licensed or regulated by
the State or by the municipality or other political subdivision in which
the facility is located, and operated as one or more of the following:
(1) A nursing home for the accommodation of convalescents or other
persons who are not acutely ill and not in need of hospital care, but
who require skilled nursing care and related medical services performed
under the general direction of persons licensed by the law of the State
where the facility is located to provide such care or services;
(2) An intermediate health care facility for the accommodation of
persons who, because of incapacitating infirmities, require minimum but
continuous care, but not continuous medical care or nursing services;
(3) An extended health care facility for inpatient care for
convalescents or chronic disease patients who require skilled nursing
care and related medical services; or
(4) Other comparable health care facility.
Historic preservation loan means a loan to finance the preservation
(restoration or rehabilitation) of an historic residential structure
which is listed on the National Register of Historic Places or which is
certified by the Secretary of the Interior as conforming with National
Register criteria.
Lender means a financial institution that:
(1) Holds a valid Title I contract of insurance and is approved by
the Secretary under 24 CFR part 202 to originate, purchase, hold,
service, and/or sell loans insured under this part; or
(2) Is under suspension or holds a Title I contract of insurance
that has been terminated, but that remains responsible for servicing or
selling Title I loans that it holds and is authorized to file insurance
claims on such loans. For purposes of loan origination under subparts A,
B, and C of this part, the term ``lender'' also includes a ``loan
correspondent'' as defined in this section.
Loan means a disbursement of proceeds (funds) or an advance of
credit to or for the benefit of a borrower who promises to repay the
principal amount of such disbursement or advance, plus interest, if any,
at a stated annual rate over time, with the borrower's obligation
evidenced by the borrower's execution of a note. Loan also means a
purchase by a lender of a note evidencing such obligation, or a
refinancing of an existing obligation with or without an additional
disbursement of proceeds or advance of credit.
Loan correspondent means a financial institution approved by the
Secretary to originate Title I direct loans for sale or transfer to a
sponsoring lending institution which holds a valid Title I contract of
insurance and is not under suspension.
Manufacturer's invoice means a document issued by a manufacturer and
provided with a manufactured home to a retail dealer which separately
details the wholesale (base) prices at the factory for specific models
or series of manufactured homes and itemized options (large appliances,
built-in items and equipment), plus actual itemized charges for freight
from the factory to
[[Page 83]]
the dealer's lot or the homesite (including any rental of wheels and
axles) and for any sales taxes to be paid by the dealer. The invoice may
recite such prices and charges on an itemized basis or by stating an
aggregate price or charge, as appropriate, for each category. The
manufacturer shall certify on the invoice, or on a supplement which is
attached to and made a part of the invoice, as follows:
The undersigned certifies under applicable criminal and civil
penalties for fraud and misrepresentation that: (1) The wholesale (base)
prices for the manufactured home and itemized options, the charges for
freight and dealer-paid sales taxes, and all other statements in this
invoice are true and accurate; (2) all such prices reflect the actual
dealer costs at the factory, as quoted in the applicable current
manufacturer's wholesale (base) price list; (3) except for any payments
of volume incentives or special benefits related to this transaction,
all such prices and charges exclude any costs of trade association fees
or charges, discounts, bonuses, refunds, rebates, prizes, loan discount
points or other financing charges, or anything else of more than nominal
value which will inure to the benefit of the dealer and/or home
purchaser at any date; and (4) the manufacturer has not made and will
not make any payments to or for the benefit of the dealer and/or home
purchaser that are not disclosed on this invoice or invoice supplement.
Manufactured home means a transportable structure, comprised of one
or more modules, each built on a permanent chassis, with or without a
permanent foundation, designed for occupancy as a principal residence by
a single family. A new manufactured home shall comply with the minimum
property standards prescribed by the Secretary to assure its livability
and durability that are published as the Manufactured Home Construction
and Safety Standards implementing the National Manufactured Housing
Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-5426, at
24 CFR part 3280. To qualify for a manufactured home loan insured under
this part, an existing manufactured home must have been constructed in
accordance with standards published at 24 CFR part 3280 and must meet
standards similar to the minimum property standards applicable to
existing homes insured under title II of the Act, as prescribed by the
Secretary.
Manufactured home improvement loan means a loan made to finance the
alteration, repair or improvement of an existing manufactured home which
is classified as personalty by the State or locality in which the
property is located. The proceeds of a manufactured home improvement
loan may also be used for improvements to the homesite, as long as the
borrower is the owner of the home and the underlying real estate.
Manufactured home loan means a loan for the purchase or refinancing
of a manufactured home and/or the lot on which to place such home.
Unless otherwise indicated, the term includes manufactured home purchase
loans, manufactured home lot loans, and combination loans.
Manufactured home lot loan means a loan for the purchase or
refinancing of a portion of land acceptable to the Secretary as a
manufactured home lot. A manufactured home lot may consist of platted or
unplatted land, a lot in a recorded or unrecorded subdivision or in an
improved area of such subdivision, or a lot in a planned unit
development. A manufactured home lot may also consist of an interest in
a manufactured home condominium project (including any interest in the
common areas) or a share in a cooperative association which owns and
operates a manufactured home park.
Manufactured home purchase loan means a loan for the purchase or
refinancing of a manufactured home exclusive of any lot or site, and may
also include a garage, patio, carport, or other comparable appurtenance.
Multifamily property improvement loan means a loan to finance the
alteration, repair, improvement, or conversion of an existing structure
used or to be used as an apartment house or a dwelling for two or more
families. The multifamily structure may not be owned by a corporation,
partnership, or trust, unless the prior approval of the Secretary is
obtained for an exception to this requirement.
Nonresidential property improvement loan means a loan made to
finance the construction of a new exclusively nonresidential structure
or the alteration, repair or improvement of an existing structure that
is nonresidential. Such
[[Page 84]]
a structure may be temporarily used for residential purposes while the
borrower constructs a new dwelling to replace a dwelling previously
occupied by the borrower that was destroyed or damaged by conditions
determined by the President to warrant relief under the provisions of
title 42, chapter 68, of the U.S.C., provided that the credit
application is filed within one year from the date of such a
determination.
Note means the written instrument evidencing the borrower's
signature to a promise to repay the principal indebtedness and to pay
any interest due on a loan, whether the instrument is separate from or
included within another document, and unless otherwise specified means
also any security instrument with respect to that loan obligation.
Owner means a person, including a borrower, who has title in whole
or in part to the property which is the subject of a loan transaction.
Principal residence means a home where the borrower expects to live
at least nine months of the year.
Property improvement loan means a loan made to finance actions or
items that substantially protect or improve the basic livability or
utility of a property. Unless otherwise indicated, the term includes
single family, multifamily and nonresidential property improvement
loans; manufactured home improvement loans where the home is classified
as personalty; historic preservation loans; and fire safety equipment
loans in existing health care facilities.
Rehabilitation means the process of returning an historic
residential structure to a state of utility, through repair or
alteration, which makes possible an efficient contemporary use. In
rehabilitation, those portions of the property important in illustrating
historic, architectural and cultural values are preserved or restored.
Restoration means the process of accurately recovering the form and
details of an historic residential structure as it appeared at a
particular period of time by removing later work and by replacing
missing original work.
Security instrument means a properly recorded chattel mortgage, real
estate mortgage or deed of trust, or conditional sales contract.
Single family property improvement loan means a loan to finance
alterations, repairs and improvements to or in connection with an
existing structure used or to be used as a single family residence,
including an existing one-family manufactured home that qualifies as
real property in that the home is placed on a permanent foundation, the
home and lot are classified as realty by the State or locality in which
the property is located, and any loans on the property are secured by
mortgages or deeds of trust covering the home and lot.
Solar energy system means any addition, alteration or improvement to
an existing structure for single family or multifamily residential use
which is designed to utilize wind or solar energy to reduce the energy
requirements of that structure from other energy sources, and which
complies with standards prescribed by the Secretary.
Special benefits means benefits other than volume incentives for
dealers which a home manufacturer funds from general corporate revenues
by charging them against corporate overhead and profit without changing
the wholesale (base) price of a manufactured home (or series of homes),
as reflected in the manufacturer's published wholesale (base) price
list, and which are limited to payments by the manufacturer directly to:
(1) A financial institution to buy down or reduce the interest rate,
discount points, or other fees or charges related to a lending agreement
for a dealer's manufactured home inventory or floor plan financing
needs; or
(2) One or more advertising media for all or part of the costs of
advertising the manufacturer's homes, one or more dealer's services, and
related manufactured home materials and products in such media.
State means any State of the United States, Puerto Rico, the
District of Columbia, Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, or the United States Virgin Islands.
Volume incentives means specified dollar benefits to dealers under a
published marketing and promotional
[[Page 85]]
plan, payable by a home manufacturer in cash or in kind in amounts or
levels relating to the volume of sales of manufactured homes to dealers,
other than benefits of a nominal value of less than $10 per home, which:
(1) The manufacturer funds from general corporate revenues by
including them in the prices quoted in the manufacturer's wholesale
(base) price list and charging them against corporate overhead and
profit;
(2) Whether or not available on an optional basis, do not increase
or decrease the wholesale (base) prices for the sale of a specific home
or options or the charges for freight and dealer-paid sales taxes as
detailed in the manufacturer's invoice, for a specific sale to a retail
dealer;
(3) The manufacturer provides without creating a special product
line where the cost of the benefits is the only substantive difference
between the special product line and other essentially similar homes;
(4) Whether or not also of benefit to the ultimate purchaser, do not
increase or decrease the retail price of the home;
(5) Are available to any dealer in a particular market area doing
business with the manufacturer;
(6) The manufacturer provides only for volume sales of manufactured
homes to dealers over a specified period of time;
(7) The plan provides in escalating and different amounts or levels
related to either the number of homes (or modules) sold or the dollar
value of such sales to a dealer, or some combination of such elements,
in a specified period of time;
(8) Are structured so that only some of the dealer participants are
expected to be paid the maximum benefits under the program, with
substantial numbers of participants expected to receive less than the
maximum amount or level of benefits; and
(9) Accrue for volume sales to a dealer over a specified period of
time which is at least quarterly in length, and are paid not more
frequently than quarterly.
Wholesale (base) price list means the price list or lists, as
periodically amended, which are published and distributed by a home
manufacturer to all retail dealers in a given marketing area, quoting
the actual wholesale (base) prices at the factory for specific models or
series of manufactured homes and itemized options offered for sale to
such dealers during a specified period of time. The wholesale (base)
prices may include the manufacturer's projected costs of providing
volume incentives and special benefits related to sales to dealers
during the period. All such wholesale (base) prices shall exclude any
costs of trade association fees or charges, discounts, bonuses, refunds,
rebates, prizes, loan discount points or other financing charges, or
anything else of more than nominal value which will inure to the benefit
of a dealer and/or home purchaser at any date. Each price list and
amendment shall be retained by the manufacturer for a minimum period of
six years from the date of publication so as to be available to HUD and
other Federal agencies upon request.
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 36263, Aug. 31, 1989;
56 FR 52428, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992; 57 FR 45246,
Sept. 30, 1992; 60 FR 13836, Mar. 14, 1995; 61 FR 5206, Feb. 9, 1996; 61
FR 19795, May 2, 1996]
Sec. 201.3 Applicability of the regulations.
The regulations in this part may be amended by the Secretary at any
time. Such amendment shall not adversely affect the insurance privileges
of a lender on any loan that has been made or for which a loan
application has been approved before the effective date of the
amendment.
[61 FR 19796, May 2, 1996]
Sec. 201.4 Rules of construction.
As used in this part, and unless the context indicates otherwise,
words in the singular include the plural, and words in the plural
include the singular.
[56 FR 52429, Oct. 18, 1991]
Sec. 201.5 Waivers.
Waiver of lender's noncompliance. The Secretary may waive a lender's
noncompliance with any provision of this part, subject to statutory
limitations, when it is determined that enforcement of the regulations
would impose
[[Page 86]]
an injustice upon a lender which has substantially complied with the
regulations in good faith and refunded or credited any excess charge
made, and when such waiver does not involve an increase in the
Secretary's obligation beyond that which would have been involved if the
lender was in full compliance with the regulations.
[56 FR 52429, Oct. 18, 1991, as amended at 61 FR 5206, Feb. 9, 1996]
Sec. 201.6 Disclosure and verification of Social Security and Employer Identification Numbers.
To be eligible for loan insurance under this part, the borrower must
meet the requirements for the disclosure and verification of Social
Security and Employer Identification Numbers, as provided by part 200,
subpart U, of this chapter.
(Approved by the Office of Management and Budget under control number
2502-0059)
[54 FR 39692, Sept. 27, 1989. Correctly designated at 55 FR 420, Jan. 5,
1990]
Subpart B--Loan and Note Provisions
Sec. 201.10 Loan amounts.
(a) Property improvement loans. (1) The total principal obligation
for a property improvement loan shall not exceed the actual cost of the
project plus any applicable fees and charges authorized at
Sec. 201.25(b), up to the following maximum loan amounts:
(i) Single family property improvement loans--$25,000, except that a
loan for a manufactured home that qualifies as real property shall be
limited to $17,500.
(ii) Multifamily property improvement loans--$60,000 or an average
of $12,000 per dwelling unit, whichever is less.
(iii) Nonresidential property improvement loans--$25,000.
(iv) Manufactured home improvement loans--$7,500.
(v) Historic preservation loans--the lesser of $15,000 per dwelling
unit in a residential structure or $45,000 per residential structure.
(vi) Fire safety equipment loans--$50,000.
(2) No property improvement loan shall be approved where the total
outstanding balance of all title I property improvement loans on the
same property exceeds the maximum loan amount prescribed for that type
of loan. If more than one type of property improvement loan is involved,
the total outstanding balance of such loans on a particular property
shall not exceed the maximum loan amount prescribed for the larger type
of loan.
(b) Manufactured home purchase loans. (1) The total principal
obligation for a loan to purchase a new manufactured home shall not
exceed the sum of the following itemized amounts, up to a maximum of
$48,600:
(i) 130 percent of the sum of the wholesale (base) prices of the
home and any itemized options and the charge for freight, as detailed in
the manufacturer's invoice;
(ii) The charge for any sales taxes to be paid by the dealer, as
detailed in the manufacturer's invoice;
(iii) The actual dealer's cost of transportation to the homesite,
set-up and anchoring, including the rental of wheels and axles (if not
included in the freight charges);
(iv) The actual dealer's cost of skirting;
(v) The actual dealer's cost of a garage, carport, patio or other
comparable appurtenance to the manufactured home, as approved by the
Secretary;
(vi) The actual dealer's cost of purchasing and installing a central
air conditioning system or heat pump, if not installed by the
manufacturer; and
(vii) Any applicable charges authorized at Sec. 201.25(b).
(2) The total principal obligation for a loan to purchase an
existing manufactured home shall not exceed the lesser of the following
amounts, up to a maximum of $48,600:
(i) 95 percent of the appraised value of the home as equipped and
furnished (as determined by a HUD-approved appraisal) and 95 percent of
any itemized amounts allowed under paragraphs (b)(1)(iii) through (vii)
of this section, if incurred; or
(ii) 95 percent of the purchase price of the home.
[[Page 87]]
(3) The purchase price of a manufactured home financed with a
manufactured home purchase loan shall include the retail cost to the
borrower of all items set forth in the purchase contract, including any
applicable charges authorized under Sec. 201.25(b).
(c) Manufactured home lot loans. The total principal obligation for
a loan to purchase and, if necessary, develop a lot suitable for a
manufactured home, including on-site water and utility connections,
sanitary facilities, site improvements and landscaping, shall not exceed
95 percent of either the appraised value of the developed lot (as
determined by a HUD-approved appraisal) or the total of the purchase
price and development costs, whichever is less, up to a maximum of
$16,200.
(d) Combination loans. (1) The total principal obligation for a loan
to purchase a new manufactured home and a lot on which to place the home
shall not exceed the sum of the following itemized amounts, up to a
maximum of $64,800:
(i) 130 percent of the sum of the wholesale (base) prices of the
home and any itemized options and the charge for freight, as detailed in
the manufacturer's invoice;
(ii) The charge for any sales taxes to be paid by the dealer, as
detailed in the manufacturer's invoice;
(iii) The actual dealer's cost of transportation to the homesite,
set-up and anchoring, including the rental of wheels and axles (if not
included in the freight charge);
(iv) The actual dealer's cost of purchasing and installing a central
air conditioning system or heat pump, if not installed by the
manufacturer;
(v) The appraised value of the developed manufactured home lot (as
determined by a HUD-approved appraisal, including on-site water and
utility connections, sanitary facilities, site improvements and
landscaping) or the purchase price, whichever is less;
(vi) The actual dealer's cost of appurtenances to the home such as a
permanent foundation, garage, carport or patio; and
(vii) Any applicable charges authorized at Sec. 201.25(b).
(2) The total principal obligation for a loan to purchase an
existing manufactured home and lot shall not exceed the lesser of the
following amounts, up to a maximum of $64,800:
(i) 95 percent of the total appraised value of the home, the lot,
and any appurtenances (as determined by a HUD-approved appraisal), plus
95 percent of any applicable charges authorized at Sec. 201.25(b); or
(ii) 95 percent of the purchase price of the home, the lot, and any
appurtenances.
(3) The purchase price of a manufactured home and a lot financed
with a combination loan shall include the retail cost to the borrower of
all items set forth in the purchase contract or contracts, including any
applicable charges authorized under Sec. 201.25(b).
(e) Manufactured home loan limits in high-cost areas. (1) The
maximum loan amounts otherwise applicable under paragraphs (b), (c) and
(d) of this section may be increased by an amount not to exceed 40
percent where the manufactured home and/or lot is purchased and located
in Alaska, Guam or Hawaii.
(2) The maximum loan amounts otherwise applicable under paragraphs
(c) and (d) of this section may be increased for any geographical area
except Alaska, Guam or Hawaii to the extent deemed necessary by the
Secretary; however, any increased loan amount may not exceed the lesser
of (i) 185 percent of the dollar amounts specified in paragraphs (c) and
(d) of this section; or (ii) the dollar amounts specified in paragraphs
(c) and (d) of this section, as increased by the same percentage by
which 95 percent of the median 1-family house price in the area (as
determined by the Secretary for purposes of Sec. 203.18) exceeds
$67,500.
(f) Loan refinancing. (1) The total principal obligation of a loan
made to refinance a borrower's existing insured property improvement
loan shall not exceed the maximum loan amount permitted under this
section for the particular type of loan, provided that any amount in
excess of the cost to the borrower of prepaying the existing loan shall
be made available only to finance additional property improvements
meeting the requirements of this part.
[[Page 88]]
(2) The total principal obligation of a loan made to refinance a
borrower's existing insured manufactured home loan shall not exceed the
lesser of the cost to the borrower of prepaying the existing loan or the
maximum loan amount permitted under this section for the particular type
of loan.
(3) The total principal obligation of a loan made to refinance a
borrower's existing uninsured manufactured home loan shall not exceed
the cost to the borrower of prepaying the existing loan or the appraised
value of the property (as determined by a HUD-approved appraisal),
whichever is less, up to the maximum loan amount permitted under this
section for the particular type of loan.
(4) When a borrower's existing manufactured home lot is being
refinanced in connection with the purchase of a manufactured home, the
total principal obligation of the combination loan shall be determined
in accordance with paragraph (d)(1) or (d)(2) of this section.
(5) When a borrower's existing manufactured home is being refinanced
in connection with the purchase of a manufactured home lot, the total
principal obligation of the combination loan shall not exceed the lesser
of the following amounts, up to a maximum of $64,800:
(i) The cost to the borrower of prepaying any existing loan on the
home, plus the purchase price of the lot; or
(ii) The appraised value of the home and lot (as determined by a
HUD-approved appraisal).
(g) Minimum loan amount. A lender may not require, as a condition of
providing a loan insured under this part, that the principal amount of
the loan exceed a minimum amount established by the lender.
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33406, Sept. 3, 1987;
53 FR 8880, Mar. 18, 1988; 54 FR 10537, Mar. 14, 1989; 54 FR 36264, Aug.
31, 1989; 56 FR 52429, Oct. 18, 1991; 57 FR 45246, Sept. 30, 1992; 58 FR
41001, July 30, 1993; 59 FR 9084, Feb. 25, 1994; 61 FR 19796, May 2,
1996; 62 FR 20082, Apr. 24, 1997]
Sec. 201.11 Loan maturities.
(a) Property improvement loans. The term of a property improvement
loan shall be not less than six months and not more than 20 years and 32
days from the date of the loan, except that:
(1) The maximum term for a single family property improvement loan
on a manufactured home that qualifies as real property shall not exceed
15 years and 32 days from the date of the loan;
(2) The maximum term for a manufactured home improvement loan shall
not exceed 12 years and 32 days from the date of the loan; and
(3) The maximum term for an historic preservation loan shall not
exceed 15 years and 32 days from the date of the loan.
(b) Manufactured home loans. The term of a manufactured home loan
shall be not less than six months and not more than 20 years and 32 days
from the date of the loan, except that:
(1) The maximum term for a manufactured home lot loan shall not
exceed 15 years and 32 days from the date of the loan; and
(2) The maximum term for a multi-module manufactured home and lot in
combination shall not exceed 25 years and 32 days from the date of the
loan.
(c) Loan refinancing. A loan to be refinanced under this part may be
refinanced for an extended period.
(1) The term of a loan to refinance a borrower's existing insured
property improvement or manufactured home loan shall not exceed the
maximum term permitted under paragraph (a) or (b) of this section for
the particular type of loan. In addition, the total time period from the
date of the original loan to the final maturity of the refinanced loan
shall not exceed:
(i) In the case of a property improvement loan, the maximum term
permitted under paragraph (a) of this section plus 9 years and 11
months; and
(ii) In the case of manufactured home loan, the maximum term
permitted under paragraph (b) of this section plus 4 years and 11
months.
(2) The term of a loan made to refinance a borrower's existing
uninsured manufactured home loan shall not exceed the maximum term
permitted under paragraph (b) of this section for the particular type of
loan.
(3) When a borrower's existing manufactured home lot is being
refinanced in connection with the purchase of a manufactured home, the
term of the
[[Page 89]]
combination loan shall not exceed the maximum term permitted under
paragraph (b) of this section for the particular type of loan.
(4) When a borrower's existing manufactured home is being refinanced
in connection with the purchase of a manufactured home lot, the term of
the combination loan shall not exceed the maximum term permitted under
paragraph (b) of this section for the particular type of loan.
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33406, Sept. 3, 1987;
54 FR 10537, Mar. 14, 1989; 56 FR 52430, Oct. 18, 1991; 57 FR 45246,
Sept. 30, 1992; 61 FR 19796, May 2, 1996]
Sec. 201.12 Requirements for the note.
The note shall bear the genuine signature of each borrower and of
any co-maker or co-signer, be valid and enforceable against the borrower
and any co-maker or co-signer, and be complete and regular on its face.
The borrower and any co-maker or co-signer shall execute the note for
the full amount of the loan obligation. Although the note may be
executed by the borrower on an earlier date, the date of the loan shall
be the date that the loan proceeds are disbursed by the lender. Such
date shall be entered on the note when disbursement occurs. The note
shall separately recite the principal amount and any interest at an
agreed annual rate that comprises the borrower's payment obligation. The
lender shall assure that the note and all other documents evidencing the
loan transaction are in compliance with applicable Federal, State, and
local laws. If the note is executed on behalf of a corporation,
partnership, or trust by an authorized representative, it shall create a
binding obligation on such entity.
[61 FR 19797, May 2, 1996]
Sec. 201.13 Interest and discount points.
The interest rate for any loan shall be negotiated and agreed to by
the borrower and the lender, and such interest rate shall be fixed for
the full term of the loan and recited in the note. Interest on the loan
shall accrue from the date of the loan, and shall be calculated on a
simple interest basis. The lender and the borrower may negotiate the
amount of discount points, if any, to be paid by the borrower as part of
the borrower's initial payment. The lender shall not require or allow
any party other than the borrower to pay any discount points or other
financing charges in connection with the loan transaction.
[61 FR 19797, May 2, 1996]
Sec. 201.14 Payments on the loan.
The note normally shall provide for equal installment payments due
weekly, biweekly, semi-monthly or monthly. The note may provide for
either or both of the first and final payments to vary in amount but not
to exceed 1\1/2\ times the regular installment. Where the borrower has
an irregular flow of income, the note may be payable at quarterly or
semi-annual intervals corresponding with the borrower's flow of income.
The first scheduled payment after the borrower's initial payment shall
be due no later than two months from the date of the loan. Multiple
payment schedules may not be used in connection with any loan.
Sec. 201.15 Late charges to borrowers.
(a) Imposition of late charge. The note may provide for imposition
of a late charge unless precluded by State law. The late charge may be
imposed only for installments of principal and interest which are in
arrears for the greater of 15 calendar days or the number of days
required by applicable State law before such a charge may be imposed.
Late charges must be billed to the borrower or reflected in the payment
coupon, and evidence of any late charges that have been paid must be in
the loan file if an insurance claim is made.
(b) Amount of late charge. The late charge shall not exceed the
lesser of five percent of each installment of principal and interest, up
to a maximum of $10 per installment for any property improvement loan
and $15 per installment for any manufactured home loan, or the maximum
amount permitted by applicable State law.
(c) Method of payment. Payment of any late charge cannot be deducted
from the monthly payment for principal and interest, but must be an
additional charge to the borrower.
(d) Daily interest in lieu of late charges. In lieu of late charges,
the note may
[[Page 90]]
provide for interest to accrue on installments in arrears on a daily
basis at the interest rate in the note.
[54 FR 36264, Aug. 31, 1989]
Sec. 201.16 Default provision.
The loan note shall contain a provision for acceleration of
maturity, at the option of the holder, upon a default by the borrower.
Sec. 201.17 Prepayment provision.
The note shall contain a provision permitting full or partial
prepayment of the loan without penalty, except that the borrower may be
assessed reasonable and customary charges for recording a release of the
lender's security interest in the property, if permitted by State law.
[61 FR 19797, May 2, 1996]
Sec. 201.18 Modification agreement or repayment plan.
(a) Modification agreement or repayment plan. A written but
unrecorded modification agreement acceptable to the lender and executed
by the borrower may be used in lieu of refinancing of a delinquent or
defaulted loan to reduce or increase the monthly payment, but not to
increase the term or the interest rate, so as to assure that the
delinquent or defaulted loan is brought current before or by the end of
the loan term. A modification agreement may also be used in lieu of
refinancing in connection with a loan that is current to effect a
reduction in the interest rate, and in the monthly payment, for the
remainder of the loan term. When a modification agreement is used, no
insurance reporting is required under Sec. 201.30.
(b) Repayment plan. The lender may elect to negotiate an informal
repayment plan with the borrower to enable a temporary delinquency to be
cured within a short period of time. The lender may document the terms
of the repayment plan by sending a letter to the borrower reciting the
terms of their agreement. When a repayment plan is used, no insurance
reporting is required under Sec. 201.30.
[52 FR 33406, Sept. 3, 1987, as amended at 54 FR 10537, Mar. 14, 1989]
Sec. 201.19 Refinanced and assumed loans.
(a) Conditions on refinancing. (1) An existing insured property
improvement loan or manufactured home loan may be refinanced without an
advance of funds only under the following conditions:
(i) A loan that is in default may not be refinanced for an amount
greater than the original principal balance of the loan;
(ii) The refinancing of a loan for the original borrower shall be
subject to all of the requirements of this part, except Secs. 201.20(b)
and (c), 201.21(b) through (e), 201.22, 201.23, and 201.26;
(iii) If there are co-makers or co-signers on the original note, the
lender shall require the same co-makers or co-signers on the refinanced
note, unless the lender obtains the Secretary's approval to release a
co-maker or co-signer from liability under the note in accordance with
Sec. 201.24(e); and
(iv) A loan that was assumed in accordance with paragraph (c) of
this section may be refinanced, subject to all of the requirements of
this part except Secs. 201.20(b) and (c), 201.21(b) through (e), 201.22,
201.23, and 201.26, as long as the original borrower and any intervening
assumptors were released from liability for repayment of the loan at the
time the loan was assumed. A lender may not refinance a previously
assumed loan under any other circumstances, unless the requirements of
Sec. 201.22 are also met and the Secretary has approved a release of the
original borrower and any intervening assumptors in accordance with
Sec. 201.24(e).
(2) An existing insured property improvement loan may be refinanced
with an advance of funds for additional improvements only under the
following conditions:
(i) The existing insured loan must not be in default; and
(ii) The refinancing shall be subject to all of the requirements of
this part applicable to the particular type of loan and to the
additional improvements being financed.
(3) An existing uninsured manufactured home loan may be refinanced
only for the original borrower and only under the following conditions:
[[Page 91]]
(i) The existing uninsured loan must not be in default;
(ii) Refinancing of an existing uninsured manufactured home purchase
loan or combination loan shall be subject to all the requirements of
this part applicable to the particular type of loan except Secs. 201.23
and 201.26(b)(4);
(iii) Refinancing of an existing uninsured manufactured home lot
loan in connection with the purchase of a manufactured home shall be
subject to all of the requirements of this part; and
(iv) Refinancing of an existing uninsured manufactured home purchase
loan in connection with the purchase of a manufactured home lot shall be
subject to all of the requirements of this part except
Sec. 201.26(b)(4).
(b) Note and security requirements for refinanced loans. (1)
Refinancing of a loan requires the execution of a new note and
cancellation of the old note.
(2) Refinancing of a loan that was secured when originated,
regardless of the principal balance of the note at the time of
refinancing, is required to be secured.
(3) Refinancing of a loan that was not secured when originated is
not required to be secured if no additional funds are advanced.
(4) When a refinanced loan is secured, the lender shall obtain and
record a new security instrument in accordance with Sec. 201.24 and
shall release the original lien, unless State law permits a renewal and
extension of the original lien.
(5) Copies of all documents pertaining to the original loan must be
retained in the loan file for the refinanced loan.
(c) Assumed loans. (1) At the option of the lender, an existing
insured property improvement loan or manufactured home loan may be
assumed, subject to the following conditions:
(i) A determination by the lender that the assumptor is eligible
under Sec. 201.20(a) or 201.21(a) and meets the requirements of
Sec. 201.22; and
(ii) The execution of an assumption agreement that is satisfactory
to the lender and is signed by the assumptor and the original borrower
or previous assumptor at the time of assumption.
(2) The lender shall not permit an assumption under any
circumstances other than those contained in this section, and shall
include appropriate provisions in any note or security agreement to
enforce this requirement.
(3) Prior to the execution of the assumption agreement, the lender
shall provide the assumptor with a written notice, to be signed by the
assumptor and retained in the loan file, that:
(i) States that the loan being assumed is insured by HUD, and
describes the actions the Secretary may take to recover the debt if the
assumptor defaults on the loan and an insurance claim is paid; and
(ii) Constitutes the assumptor's agreement to pay penalties and
administrative costs imposed by HUD as authorized by 31 U.S.C. 3717.
(4) If the other requirements of paragraph (c) of this section are
met, the lender at its option may release the original borrower and any
intervening assumptors from liability for the repayment of a loan
obligation insured under this part. The prior approval of the Secretary
under Sec. 201.24(e) is not required. The lender shall retain
documentation of the release in the loan file.
[52 FR 33406, Sept. 3, 1987, as amended at 56 FR 52430, Oct. 18, 1991]
Subpart C--Eligibility and Disbursement Requirements
Sec. 201.20 Property improvement loan eligibility.
(a) Borrower eligibility. (1) To be eligible for a property
improvement loan (other than a manufactured home improvement loan), the
borrower shall have at least a one-half interest in one of the
following:
(i) Fee simple title to the real property;
(ii) Lease of the real property for a fixed term which expires not
less than six calendar months after the final maturity of the loan; or
(iii) A properly recorded land installment contract for the purchase
of the real property.
(2) To be eligible for a manufactured home improvement loan, the
borrower shall have at least a one-half interest in the manufactured
home, and the home must be the principal residence of the borrower.
[[Page 92]]
(b) Eligible use of the loan proceeds. (1) The loan proceeds shall
be used only for the purposes disclosed in the loan application. If the
borrower plans to use a dealer or contractor to carry out the
improvement work, the lender shall obtain a copy of a proposal or
contract that describes in detail the work to be performed and the
estimated or actual cost. If the borrower plans to carry out the
improvement work without the services of a dealer or contractor, the
borrower shall be required to furnish a detailed written description of
the work to be performed, the materials to be furnished, and their
estimated cost.
(2) The loan proceeds shall be used only to finance property
improvements that substantially protect or improve the basic livability
or utility of the property. The Secretary will establish a list of items
and activities that may not be financed with the proceeds of any
property improvement loan. If a lender has any doubt as to the
eligibility of any item or activity, it shall request a specific ruling
by the Secretary before making a loan.
(3) The loan proceeds shall only be used to finance property
improvements that are started after loan approval, unless:
(i) The prior approval of the Secretary is obtained for an exception
to this requirement; or
(ii) The property is located in a major disaster area declared by
the President, and the lender determines that emergency action is needed
to repair damage resulting from the disaster.
(c) Special pre-application requirements. (1) Where the proceeds are
to be used for an historic preservation loan, the proposed improvements
shall be reviewed and approved by the State Historic Preservation
Officer (or other person authorized by the Secretary of the Interior to
make such reviews) prior to making application for a loan. The purpose
of the review is to determine that (i) the structure is an historic
residential structure listed on the National Register of Historic Places
or certified by the Secretary of the Interior as conforming with
National Register criteria, and (ii) the proposed improvements comply
with criteria set by the Secretary of the Interior for the preservation
of historic structures.
(2) Where the proceeds are to be used for a fire safety equipment
loan, the proposed improvements shall be reviewed and approved by the
State or local agency having primary jurisdiction over the fire safety
requirements of health care facilities prior to making application for a
loan.
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52430, Oct. 18, 1991;
61 FR 19797, May 2, 1996; 62 FR 65181, Dec. 10, 1997]
Sec. 201.21 Manufactured home loan eligibility.
(a) Borrower eligibility. To be eligible for a manufactured home
loan (whether a manufactured home purchase loan, a manufactured home lot
loan, or a combination loan), the borrower must become the owner of the
particular property which is to be financed with such a loan. Where the
loan involves a manufactured home which is classified as realty,
ownership of the home must be in fee simple. Where the loan involves a
manufactured home lot, ownership of the lot must be in fee simple,
except where the lot consists of a share in a cooperative association
which owns and operates a manufactured home park.
(b) Eligible use of loan proceeds. (1) The loan proceeds may be used
for the purchase or refinancing of a manufactured home, a suitably
developed lot on which to place a manufactured home already owned by the
borrower, or a manufactured home and a suitably developed lot for the
home in combination. The loan proceeds may also be used to refinance an
existing manufactured home already owned by the borrower in connection
with the purchase of a manufactured home lot, or to refinance a lot
already owned by the borrower in connection with the purchase of a
manufactured home. Where the proceeds are for a manufactured home
purchase loan or combination loan, the home must be the borrower's
principal residence. Where the proceeds are for a manufactured home lot
loan, the borrower's manufactured home must be placed on the lot and
occupied as the borrower's principal residence within six months after
the date of the loan.
[[Page 93]]
(2) A manufactured home financed with an insured loan under this
part may be either:
(i) A new home, which is one that is purchased by the borrower
within 18 months after the date of manufacture and has not been
previously occupied; or
(ii) An existing home, which is one that does not meet the criteria
for a new home. In order to be eligible for financing with an insured
loan under this part, the manufactured home, its warranty and the site
on which the home is placed must meet the requirements of paragraphs (c)
through (e) of this section.
(3) The proceeds of a loan to purchase a new manufactured home or a
new manufactured home and lot shall not be used to purchase furniture or
wheels and axles, and the cost of these items shall not be included in
the total principal obligation calculated under Sec. 201.10 (b)(1) or
(d)(1).
(4) The proceeds of a manufactured home purchase loan may be used
for the purchase, construction or installation of a garage, carport,
patio or other comparable appurtenance to the manufactured home, as
stated in the retail purchase contract and as approved by the Secretary.
The proceeds of a combination loan may be used for the purchase,
construction or installation of a permanent foundation, garage, carport,
patio or other comparable appurtenance to the manufactured home.
(5) The Secretary will establish a list of items and activities that
may not be financed with the proceeds of any manufactured home loan. If
a lender has any doubt as to the eligibility of any item or activity, it
shall request a specific ruling by the Secretary before making a loan.
(c) Construction, transportation and installation requirements. (1)
The manufactured home shall be certified by the manufacturer under
applicable criminal and civil penalties for fraud and misrepresentation
to have been constructed in compliance with the National Manufactured
Housing Construction and Safety Standards Act of 1974, 42 U.S.C. 5401-
5426, so as to conform to all applicable Federal construction and safety
standards, as evidenced by a label or tag affixed to the manufactured
home in accordance with 24 CFR 3280.8.
(2) During any period of transportation from the factory to the
borrower's homesite, the structural integrity of the manufactured home
shall be maintained so that it will be livable and durable.
(3) The installation or erection of the manufactured home on the
homesite shall comply with the manufacturer's requirements for
anchoring, support, stability and maintenance. Any permanent foundation
shall be constructed in accordance with the current edition of HUD's
Permanent Foundations Guide for Manufactured Housing (HUD Handbook
4930.3).
(4) For any manufactured home purchase loan or combination loan
involving a sale of the manufactured home by a dealer, the dealer shall
inspect the manufactured home, as installed or erected on the homesite,
for structural damage or other defects resulting from the transportation
and installation of the home. The dealer shall also test the performance
of the home's plumbing, mechanical and electrical systems to assure that
they are fully operational.
(d) Manufacturer's warranty requirements. (1) To induce the
Secretary to insure a title I loan under this part for the purchase of a
new manufactured home and to induce a borrower to purchase such a home,
the home manufacturer shall furnish the borrower with a written
warranty, duly executed by an authorized representative of the
manufacturer on a HUD-approved form. The warranty shall be provided
without cost to the borrower. The effective date of the warranty shall
be the date of delivery of the manufactured home to the borrower,
regardless of when the warranty was executed by the manufacturer or was
delivered to the borrower.
(2) The warranty shall obligate the home manufacturer to take
appropriate action to correct any nonconformity with the standards
prescribed in paragraph (c)(1) of this section or any defects in
materials or workmanship which become evident within one year after the
date of delivery. This warranty shall be in addition to, and not in
derogation of, all other rights and privileges which the borrower may
[[Page 94]]
have under any other law or instrument during such period or thereafter.
A copy of the warranty shall be retained in the lender's loan file.
(3) Prior to making a loan involving a new manufactured home, the
lender shall investigate whether the home manufacturer is substantially
complying with its warranty obligations on other homes financed by the
lender under any program. If the lender knows, because of consumer
complaints, dealer comments or other information concerning the
manufacturer received in the course of business, that consumers have
complained about warranty performance, the lender shall ascertain
whether such complaints have been resolved. The lender's findings shall
be documented in the loan file. Such documentation may reference
information or materials contained in other files of the lender,
provided that the file contains a written certification signed by a
responsible loan officer under applicable criminal and civil penalties
for fraud and misrepresentation that the lender's findings are supported
by such other information or materials.
(4) If the lender concludes under paragraph (d)(3) of this section
that a manufacturer may not be honoring its warranties, the lender shall
immediately notify the Secretary in writing, with documentation of the
facts and circumstances.
(e) Manufactured homesite standards. (1) To assure the suitability
of the homesite, the manufactured home shall be placed on a leased site
in a manufactured home park or on an individual manufactured home lot or
other site owned or leased by the borrower that meets the following
standards. A manufactured home may be placed on a site within Indian
trust or otherwise restricted lands if the borrower owns or leases the
site, or if the borrower obtains written permission acceptable to the
Secretary from the trustee or the tribal authority who controls the use
of the site.
(2) The manufactured homesite shall be served by adequate public or
community water and sewerage systems, unless appropriate local officials
certify that either or both such systems are unavailable to provide an
adequate level of service to the manufactured homesite. If either or
both such systems are not available, the manufactured homesite shall
comply with local or State minimum lot area requirements for the
provision of onsite water supply and/or sewage disposal.
(3) When the manufactured home is to be placed on a leased site in a
manufactured home park, the lender shall obtain certifications from the
appropriate State or local government officials that the park complies
with minimum standards relating to vehicular access, water supply,
sewage disposal, utility connections, and other aspects of park
development. Where minimum State and local standards for park
development are not established or enforced, the lender shall obtain a
certification from a registered civil engineer that the park meets
minimum standards for park development prescribed by the Secretary.
(4) When the manufactured home is to be placed on an individual
manufactured home lot or other site owned or leased by the borrower (or
on an Indian land site under paragraph (e)(1) of this section), the
lender shall obtain certifications from the appropriate local government
officials that:
(i) The site complies with local zoning ordinances and regulations,
if any;
(ii) Adequate vehicular access from a public right-of-way is
available to the site;
(iii) Adequate water supply and sewage disposal facilities are
available to or on the site; and
(iv) Any other minimum local standards and requirements for site
suitability are met. Where minimum local standards for water supply and
sewage disposal are not established or enforced, the lender shall obtain
a certification from a registered civil engineer that the site meets
minimum standards for water supply and sewage disposal prescribed by the
Secretary.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985; 51 FR 1496, Jan. 14, 1986, as amended at 54
FR 36264, Aug. 31, 1989; 56 FR 52431, Oct. 18, 1991; 61 FR 19797, May 2,
1996]
[[Page 95]]
Sec. 201.22 Credit requirements for borrowers.
(a) Credit application and review. (1) Before making a loan insured
under this part, the lender shall exercise prudence and diligence to
determine whether the borrower and any co-maker or co-signer is solvent
and an acceptable credit risk, with a reasonable ability to make
payments on the loan obligation. All documentation supporting this
determination and relating to the lender's review of the credit of the
borrower and of any co-maker or co-signer shall be retained in the loan
file.
(2) The lender shall obtain a separate dated credit application on a
HUD-approved form, executed by the borrower and any co-maker or co-
signer under applicable criminal and civil penalties for fraud and
misrepresentation, for each loan made. The lender shall verify that the
borrower's Social Security Number is valid, through such documentation
as may be prescribed by the Secretary.
(3) The lender shall conduct a credit investigation based on the
credit application, and shall obtain written verification of or
otherwise document the current employment and current income of the
borrower and any co-maker or co-signer. If the borrower or any co-maker
or co-signer has changed employment within the past two years, the
lender shall obtain written verification of or otherwise document the
person's prior employment and prior income during the two-year period.
If the borrower or any co-maker or co-signer was self-employed during
any period of the previous two years, the lender shall obtain
documentation of the person's income during such period of self-
employment.
(4) The lender shall also determine the total amount of the
borrower's existing and proposed title I loans to ensure that the loan
amounts in Sec. 201.10 are not exceeded.
(5) As part of its credit investigation, the lender shall obtain a
consumer credit report stating the credit accounts and payment history
of the borrower and of any co-maker or co-signer. Subject to state or
local law, the lender shall check with the inquirers concerning all
credit inquiries reported within the previous 90 days to determine
whether the borrower or the co-maker or co-signer has incurred debts not
listed on the credit application. If a consumer credit report is not
available or is incomplete, the loan file shall contain other
documentation of the lender's diligent investigation of the credit of
the borrower or of the co-maker or co-signer.
(6) If the consumer credit report does not contain the necessary
information, the lender shall obtain written verification that the
borrower is not over 30 days delinquent on any senior mortgages or deeds
of trust on the property being improved with a property improvement
loan.
(7) The lender shall verify, in such manner as the Secretary may
prescribe, whether the borrower is in default or a claim has been paid
in connection with any loan obligation owed to or insured or guaranteed
by the Federal Government.
(8) For any loan with a total principal balance in excess of $5,000,
the lender shall obtain written verification of the source of all funds
of the borrower required for the borrower's initial payment, if such
payment will be in excess of five percent of the loan.
(9) Before making a final determination on the creditworthiness of
the borrower, the lender shall conduct a face-to-face or telephone
interview with the borrower and any co-maker or co-signer to resolve any
discrepancies in the information on the credit application and to assure
that the information is accurate and complete.
(10) After a thorough credit investigation and in the absence of
information to the contrary, the lender may rely upon all statements of
fact made by the borrower or any co-maker or co-signer in a credit
application.
(b) Income requirements. (1) For any Title I loan, the credit
application and review must establish that the borrower's income will be
adequate to meet the periodic payments required by the loan, as well as
the borrower's other housing expenses and recurring charges. For a
borrower's income to be considered adequate, housing expenses and total
fixed expenses generally may not exceed maximum percentages of effective
gross income established by the
[[Page 96]]
Secretary. If these expense-to-income ratios are exceeded, the
borrower's income may be considered adequate only if the lender
determines and documents in the loan file the existence of compensating
factors concerning the borrower's creditworthiness that support approval
of the loan.
(2) In determining whether the borrower's income is adequate, the
following definitions are applicable:
(i) Effective gross income is defined as continuing income from all
sources that is reasonably expected to be available during the first two
years of the loan obligation, without any deduction for income taxes or
other items.
(ii) Total fixed expenses is the sum of the borrower's housing
expenses and other recurring charges.
(iii) Housing expenses includes all payments for principal,
interest, loan or mortgage insurance charges, ground rent or leasehold
charges, real estate taxes, hazard insurance, and homeowners association
or condominium fees, but does not include utility costs.
(iv) Other recurring charges include all payments on automobile
loans, furniture loans, student loans, installment loans, revolving
charge accounts, alimony or child support, and any other debt for which
the obligation is expected to continue for six months or more.
(c) Evidence of delinquency, default or misrepresentation. Except
with the prior approval of the Secretary the lender shall not approve a
loan if the lender has knowledge of any of the following circumstances:
(1) The borrower is past due more than 30 days as to the payment of
principal or interest under the original terms of a loan obligation owed
to or insured or guaranteed by the Federal Government, unless the debt
has since been discharged or satisfied; or
(2) The borrower has previously made material misstatements of fact
on applications for loans or other assistance.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
54 FR 10537, Mar. 14, 1989; 56 FR 52431, Oct. 18, 1991; 57 FR 6480, Feb.
25, 1992; 61 FR 19797, May 2, 1996]
Sec. 201.23 Borrower's initial payment.
(a) General requirement. The borrower shall be responsible for the
payment in cash of any costs that will not be paid, or are not eligible
to be paid, from the proceeds of the loan. Such costs payable by the
borrower may include any required downpayment, any discount points to be
paid by the borrower to the lender, any other fees and charges that may
not be financed, and any other costs in excess of the loan amount. No
part of such costs payable by the borrower may be loaned, advanced, or
paid to or for the benefit of the borrower by the dealer, the
manufacturer, or any other party to the loan transaction. If the
borrower obtains all or any part of such costs through a gift or a loan
from some other source, the borrower must disclose the source of such
gift or loan on the credit application. Any such loan must be secured by
property or collateral owned by the borrower independently of the
property securing repayment of the Title I loan, unless the prior
approval of the Secretary is obtained for an exception to this
requirement. The lender shall consider any such loan obligation in
performing the credit investigation. Documentation of any initial
payment shall be retained by the lender in the loan file.
(b) Manufactured home purchase loans. In the case of a manufactured
home purchase loan, the borrower shall make a minimum cash downpayment
of at least five percent of the purchase price of the home. The
borrower's equity in an existing manufactured home and any movable
appurtenances may be traded-in on a new home and accepted in lieu of
full or partial cash downpayment, but without any cash payment to the
borrower. The existing manufactured home being traded-in shall be
clearly identified, and the borrower's equity in the home shall be based
upon the retail value of the home and appurtenances (as determined by a
HUD-approved appraisal), less the total of all loans outstanding on the
home and appurtenances.
(c) Manufactured home lot loans. In the case of a manufactured home
lot loan, the borrower shall make a minimum cash downpayment of at least
[[Page 97]]
five percent of the total of the purchase price and development costs
for the lot.
(d) Combination loans. In the case of a combination loan, the
borrower shall make a minimum cash downpayment of at least five percent
of the purchase price of the manufactured home and lot. If the borrower
already owns a manufactured home or a lot on which a manufactured home
is to be placed, the borrower's equity in such home or lot may be
accepted in lieu of full or partial cash downpayment on a combination
loan, but without any cash payment to the borrower.
[61 FR 19798, May 2, 1996]
Sec. 201.24 Security requirements.
(a) Property improvement loans. (1) Any property improvement loan in
excess of $7,500 shall be secured by a recorded lien on the improved
property. The lien shall be evidenced by a mortgage or deed of trust,
executed by the borrower and all other owners in fee simple. If the
borrower is a lessee, the borrower and all owners in fee simple must
execute the mortgage or deed of trust. If the borrower is purchasing the
property under a land installment contract, the borrower, all owners in
fee simple, and all intervening contract sellers must execute the
mortgage or deed of trust. The lien need not be a first lien on the
property; however, the lien securing the Title I loan must have priority
over any lien securing an uninsured loan made at the same time and in
connection with the same property, unless the uninsured loan is a first
mortgage loan for the purchase or refinancing of the property.
(2) Any property improvement loan for $7,500 or less (other than a
manufactured home improvement loan) shall be similarly secured if,
including such loan, the total amount of all Title I loans on the
improved property is more than $7,500.
(3) Manufactured home improvement loans need not be secured.
(b) Manufactured home loans. Any manufactured home loan shall be
secured by a recorded lien on the home (or lot or home and lot, as
appropriate), its furnishings, equipment, accessories, and
appurtenances. The lien shall be a first lien, superior to any other
lien on that property, and shall be evidenced by a properly recorded
financing statement, a properly recorded security instrument executed by
the borrower and any other owner of the property, or another acceptable
instrument, such as a certificate of title issued by the State and
containing a recitation of the lender's lien interest in the
manufactured home.
(c) Recording and perfection of security. The lender shall assure
that the legal description of the property as recited in the security
instrument is accurate, and that the security instrument creates a valid
and enforceable lien on the property in the jurisdiction in which the
property is located. The security instrument shall be recorded and
perfected in the manner specified by applicable State law in the State
where the property is located.
(d) Substitution or subordination of security. The Secretary may
approve substitution or subordination of security where the security
value will not be impaired or reduced.
(e) Release of liability or lien. The lender shall not release the
borrower or any co-maker or co-signer from any liability under a note or
from any lien securing a loan insured under this part without the prior
approval of the Secretary.
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
54 FR 36265, Aug. 31, 1989; 61 FR 19798, May 2, 1996]
Sec. 201.25 Charges to borrower to obtain loan.
(a) Fees and charges that may be financed in a property improvement
loan. The Secretary will establish a list of fees and charges that may
be included in a property improvement loan. Such fees and charges shall
have been incurred in connection with the origination of the loan, and
their inclusion shall not increase the total principal obligation beyond
the maximum loan amounts in Sec. 201.10.
(b) Fees and charges that may be financed in a manufactured home
loan. The Secretary will establish a list of fees and charges that may
be included in a manufactured home loan. Such fees and charges shall
have been incurred in connection with the origination of the loan, and
their inclusion shall not increase the total principal
[[Page 98]]
obligation beyond the maximum loan amounts in Sec. 201.10.
(c) Fees and charges that may not be financed. The Secretary will
establish a list of fees and charges incurred by the lender that may be
collected from the borrower in the initial payment, but may not be
included in the loan amount or otherwise financed or advanced by the
dealer, the manufacturer, or any other party to the loan transaction.
(d) Fees and charges that may not be paid. Neither the lender nor
the borrower may pay a referral fee to any dealer, home manufacturer,
contractor, supplier, real estate broker, loan broker, or any other
party in connection with the origination of a loan insured under this
part.
[61 FR 19798, May 2, 1996]
Sec. 201.26 Conditions for loan disbursement.
(a) Property improvement loans. The lender shall comply with the
following applicable requirements before disbursing the proceeds of a
property improvement loan.
(1) The lender shall ensure that the following conditions are met:
(i) The borrower is eligible for a property improvement loan in
accordance with Sec. 201.20(a) (1) or (2); and
(ii) The interest of the borrower in the property is valid, through
such title or other evidence as are generally acceptable to prudent
lending institutions and leading attorneys in the community in which the
property is situated.
(2) The proposed use of the loan proceeds shall be documented in
accordance with the requirements of Sec. 201.20(b)(1).
(3) Where the proceeds are to be used for an historic preservation
loan, the lender shall ensure that the proposed improvements have been
approved by the State Historic Preservation Officer in accordance with
Sec. 201.20(c).
(4) Where the proceeds are to be used for a fire safety equipment
loan, the lender shall ensure that the proposed improvements have been
approved by the State or local agency having jurisdiction over the fire
safety requirements of health care facilities in accordance with
Sec. 201.20(c).
(5) In the case of a dealer loan, the lender shall obtain a
completion certificate, on a HUD-approved form and signed by the
borrower and the dealer under applicable criminal and civil penalties
for fraud and misrepresentation, certifying that
(i) the improvements are eligible and have been completed in general
accordance with the contract or cost estimate furnished to the lender,
and
(ii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, sales commission, or
anything of more than nominal value from the dealer as an inducement for
the consummation of the transaction.
(6) For any property improvement loan, the lender shall provide the
borrower with a written notice, to be signed by the borrower and
retained in the loan file, that:
(i) States that the loan will be insured by HUD and describes the
actions the Secretary may take to recover the debt if the borrower
defaults on the loan and an insurance claim is paid;
(ii) Constitutes the borrower's agreement to pay penalties and
administrative costs imposed by HUD as authorized by 31 U.S.C. 3717; and
(iii) In the case of a direct loan, constitutes an acknowledgement
of the borrower's postdisbursement obligation to furnish a completion
certificate and to permit an on-site inspection by the lender or its
agent in accordance with Secs. 201.40(b) and (c).
(7) The lender shall assure that the loan file is complete and
contains the note, security instrument, and copies of all other
documents relating to the property improvement loan transaction.
(b) Manufactured home loans. The lender shall comply with the
following applicable requirements before disbursing the proceeds of a
manufactured home loan.
(1) The lender shall ensure that the borrower is eligible for a
manufactured home loan in accordance with Sec. 201.21(a).
(2) The lender shall assure that the loan file is complete, and
shall obtain the following documents for retention in the loan file:
[[Page 99]]
(i) A signed copy of the purchase contract between the borrower and
the dealer or seller;
(ii) A copy of the manufacturer's invoice, where the loan involves
the purchase of a new manufactured home;
(iii) Copies of itemized statements of other costs, fees and
charges, whether paid by the borrower or financed with the loan
proceeds; and
(iv) The note and security instrument and copies of all other
documents relating to the loan transaction.
(v) The note, security instrument and copies of all other documents
relating to the loan transaction.
(3) The lender shall obtain certifications from the borrower under
applicable criminal and civil penalties for fraud and misrepresentation
that:
(i) The manufactured home being financed with a manufactured home
purchase loan or combination loan will be occupied as the borrower's
principal residence;
(ii) Where the proceeds are for a manufactured home lot loan, the
borrower's manufactured home will be placed on the lot and will be
occupied as the borrower's principal residence within six months after
the date of the loan;
(iii) The initial payment required under Sec. 201.23 was made, and
no part of the initial payment was borrowed from or otherwise advanced
or paid to or for the benefit of the borrower by the dealer or seller,
the manufacturer, or any other party to the transaction, and if any part
of the initial payment was obtained through a gift or loan, the source
of the gift or loan and the security for any such loan was disclosed on
the credit application;
(iv) While any portion of the loan obligation on a manufactured home
purchase loan is unpaid, the manufactured home may be moved only to a
new site in compliance with Sec. 201.21 (c) and (e), and only with the
lender's prior approval;
(v) While any portion of the loan obligation on a combination loan
is unpaid, the manufactured home will not be moved to a new site;
(vi) The borrower has paid the remaining unpaid balance on any other
manufactured home loan secured by a different property, unless the prior
approval of the Secretary is obtained for an exception to this
requirement; and
(vii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, or anything of more than
nominal value from the manufacturer or dealer as an inducement for the
consummation of the transaction.
(4) For any manufactured home purchase loan or combination loan
involving the sale of a manufactured home by a dealer, the lender shall
obtain a placement certificate, on a HUD-approved form and signed by the
dealer under applicable criminal and civil penalties for fraud and
misrepresentation, certifying that:
(i) The manufactured homesite meets the requirements of
Sec. 201.21(e);
(ii) The structural integrity of the manufactured home was
maintained during the process of transporting the home to the borrower's
homesite;
(iii) The manufactured home has been installed or erected on the
homesite in accordance with the manufacturer's requirements for
anchoring, support, stability and maintenance;
(iv) If the manufactured home is placed on a permanent foundation,
such foundation has been constructed in accordance with the requirements
of Sec. 201.21(c)(3);
(v) The dealer has performed the inspection and tests required under
Sec. 201.21(c)(4) and has determined that the manufactured home has
sustained no structural damage or other defects resulting from its
transportation or installation, and all plumbing, mechanical and
electrical systems are fully operational;
(vi) Any initial payment required under Sec. 201.23 was made by the
borrower, and no part of the initial payment was loaned, advanced, or
paid to or for the benefit of the borrower by the manufacturer, dealer,
or any other party to the loan transaction; and
(vii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, or anything of more than
nominal value from the manufacturer or dealer as an inducement for the
consummation of the transaction.
(5) The lender shall obtain and file the certifications by local
officials or a
[[Page 100]]
civil engineer which are required under Sec. 201.21(e) to document the
suitability of the manufactured homesite.
(6) For any direct manufactured home purchase loan or combination
loan involving the relocation of the manufactured home to a new homesite
owned or leased by the borrower, the lender (or an agent of the lender
that is not a manufactured home dealer) shall conduct a site-of-
placement inspection to verify that:
(i) States that the loan will be insured by HUD and describes the
actions the Secretary may take to recover the debt if the borrower
defaults on the loan and an insurance claim is paid;
(ii) The manufactured home and any itemized options and
appurtenances included in the purchase price of the home or to be
financed with the loan proceeds have been delivered and installed; and
(iii) The manufactured home has been properly erected or installed
on the homesite without any apparent structural damage or other serious
defects resulting from its transportation or installation, and all
plumbing, mechanical and electrical systems are fully operational.
(7) The lender shall provide the borrower with a written notice, to
be signed by the borrower and retained in the loan file, that:
(i) States that the loan will be insured by the HUD and describes
the actions the Secretary may take to recover the debt if the borrower
defaults on the loan and an insurance claim is paid; and
(ii) Constitutes the borrower's agreement to pay penalties and
administrative costs imposed by HUD as authorized by 31 U.S.C. 3717.
(8) Where a manufactured home purchase loan involves a manufactured
home which is to be located on Indian trust or otherwise restricted
lands, the lender shall obtain written permission from the trustee or
the tribal authority who controls the site for the lender to repossess
the home in the event of default by the borrower and acceleration of the
loan.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
54 FR 36265, Aug. 31, 1989; 56 FR 52432, Oct. 18, 1991, 57 FR 6480, Feb.
25, 1992; 61 FR 19798, May 2, 1996; 62 FR 65181, Dec. 10, 1997]
Sec. 201.27 Requirements for dealer loans.
(a) Dealer approval and supervision. (1) The lender shall approve
only those dealers which, on the basis of experience and information,
the lender considers to be reliable, financially responsible, and
qualified to satisfactorily perform their contractual obligations to
borrowers and to comply with the requirements of this part. However, in
no case shall the lender approve a dealer that is unable to meet the
following minimum qualifications:
(i) A property improvement dealer shall have and maintain a net
worth of not less than $25,000 in assets acceptable to the Secretary,
and shall have demonstrated business experience as a property
improvement contractor or supplier; and
(ii) A manufactured home dealer shall have and maintain a net worth
of not less than $50,000 in assets acceptable to the Secretary, and
shall have demonstrated business experience in manufactured home retail
sales.
(2) The lender's approval of a dealer shall be documented on a HUD-
approved form, signed and dated by the dealer and the lender under
applicable criminal and civil penalties for fraud and misrepresentation,
and containing information supplied by the dealer on its trade name,
places of business, type of ownership, type of business, and names and
employment history of the owners, principals, officers, and
salespersons. The dealer shall furnish a current financial statement
prepared by someone who is independent of the dealer and is qualified by
education and experience to prepare such statements, together with such
other documentation as the lender deems necessary to support its
approval of the
[[Page 101]]
dealer. The lender shall obtain a commercial credit report on the dealer
and consumer credit reports on the owners, principals, and officers of
the dealership.
(3) The lender shall require each dealer to apply annually for
reapproval. The dealer shall furnish the same documentation as is
required under paragraph (a)(2) of this section to support its
application for reapproval. In no case shall the lender reapprove a
dealer that is unable to meet the minimum net worth requirements in
paragraph (a)(1) of this section.
(4) The lender shall supervise and monitor each approved dealer's
activities with respect to loans insured under this part. The lender
shall visit each approved dealer's places of business at least once in
every six months to review its Title I performance and compliance. The
lender shall maintain a file on each approved dealer which contains the
executed dealer approval form and supporting documentation required
under paragraph (a)(2) of this section, together with information on the
lender's experience with Title I loans involving the dealer. Each dealer
file shall contain information about borrower defaults on Title I loans
over time, records of completion or site-of-placement inspections
conducted by the lender or its agent, copies of letters concerning
borrower complaints and their resolution, and records of the lender's
periodic review visits to the dealer's premises. The lender may also
require that the dealer furnish records on individual loan transactions,
if needed to enable the lender to review the dealer's Title I
performance and compliance.
(5) If a dealer does not satisfactorily perform its contractual
obligations to borrowers, does not comply with Title I program
requirements, or is unresponsive to the lender's supervision and
monitoring requirements, the lender shall terminate the dealer's
approval and immediately notify the Secretary with written documentation
of the facts. A dealer whose approval is terminated under these
circumstances shall not be reapproved without prior written approval
from the Secretary. The lender may in its discretion terminate the
approval of a dealer for other reasons at any time.
(6) The lender shall require each approved (or reapproved) dealer to
provide written notification of any material change in its trade
name(s), place(s) of business, type of ownership, type of business, or
principal individuals who control or manage the business. The dealer
shall furnish such notification to the lender within 30 days after the
date of any material change.
(7) As a condition of manufactured home dealer approval (or
reapproval), the lender may require a manufactured home dealer to
execute a written agreement that, if requested by the lender, the dealer
will resell any manufactured home repossessed by the lender under a
title I insured manufactured home purchase loan approved by the lender
as a dealer loan involving that dealer.
(b) Provision for full or partial recourse. In the case of a dealer-
originated manufactured home purchase loan or combination loan, the
lender and the dealer may agree to a provision in the loan documents for
partial or full recourse against the dealer, to reduce or eliminate the
lender's loss in the event of foreclosure or repossession. Such recourse
provision shall specify that, for a default occurring within a period of
not more than three years from the date of the loan, the dealer shall
reimburse the lender for a fixed percentage of the unpaid amount of the
loan obligation, after deducting the proceeds from the sale of the
property and any amounts received or retained by the lender after the
date of default. However, the extent of the dealer's liability may not
exceed 100 percent of the unpaid amount of the loan obligation prior to
such deductions. When a claim is filed, the lender shall notify the
Secretary if the loan was subject to a recourse agreement and whether
the recourse agreement has been honored. If without the lender's
approval a dealer
[[Page 102]]
has failed to honor its recourse obligation, the lender shall notify the
Secretary and shall assign the recourse obligation to the Secretary in
filing an insurance claim.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52433, Oct. 18, 1991;
61 FR 19799, May 2, 1996]
Sec. 201.28 Flood and hazard insurance, and Coastal Barriers properties.
(a) Flood insurance. No property improvement loan or manufactured
home loan shall be eligible for insurance under this part if the
property securing repayment of the loan is located in a special flood
hazard area identified by the Federal Emergency Management Agency
(FEMA), unless flood insurance on the property is obtained by the
borrower in compliance with section 102 of the Flood Disaster Protection
Act of 1973 (42 U.S.C. 4012a). Such insurance shall be obtained at any
time during the term of the loan that the lender determines that the
secured property is located in a special flood hazard area identified by
FEMA, and shall be maintained by the borrower for the remaining term of
the loan, or until the lender determines that the property is no longer
in a special flood hazard area, or until the property is repossessed or
foreclosed upon by the lender. The amount of such insurance shall be at
least equal to the unpaid balance of the Title I loan, and the lender
shall be named as the loss payee for flood insurance benefits.
(b) Hazard insurance. No manufactured home purchase loan or
combination loan shall be eligible for insurance under this part unless
hazard insurance on the manufactured home is obtained by the borrower
and the lender is named as a loss payee of insurance benefits. Such
insurance shall be maintained by the borrower for the full term of the
loan or until the property is repossessed or foreclosed by the lender,
and in an amount at least equal to the unpaid balance of the loan,
except that the amount of insurance coverage shall be not less that the
actual cash value of the home where State law precludes a higher amount.
If the borrower fails to maintain such insurance, the lender shall
obtain it at the borrower's expense. If the home is not insured against
hazards and sustains damage which would normally be covered by such
insurance during the borrower's ownership, the appraised value of the
home for claim purposes will be adjusted in accordance with
Sec. 201.51(b)(3). Upon acquiring title to the property through
repossession or foreclosure, the lender shall maintain hazard insurance
upon the property in the amount prescribed above until its disposition
and sale.
(c) Coastal barriers properties. No title I insurance shall be made
available under this part for any property improvement loan or
manufactured home loan except pursuant to a loan application approved
before October 18, 1982, with respect to any property within the Coastal
Barriers Resources System established by the Coastal Barriers Resources
Act (16 U.S.C. 3501).
[50 FR 43523, Oct. 25, 1985, as amended at 51 FR 32060, Sept. 9, 1986;
53 FR 10537, Mar. 14, 1989; 54 FR 36265, Aug. 31, 1989; 61 FR 19799, May
2, 1996]
Sec. 201.29 Ineligible participants.
No loan may be insured under this part where the lender has been
advised in writing by HUD or otherwise knows that any participant in the
transaction as a dealer, home manufacturer, contractor, supplier, or
broker, or as its agent or representative, has been suspended or
debarred, or has otherwise been determined by HUD to be ineligible to
participate in the title I program.
Subpart D--Insurance of Loans
Sec. 201.30 Reporting of loans for insurance.
(a) Date of reports. The lender shall transmit a loan report on the
prescribed form to the Secretary within 31 days from the date of the
loan's origination or purchase from a dealer or loan correspondent. Any
loan refinanced under this part shall similarly be reported on the
prescribed form within 31 days from the date of refinancing. When a loan
insured under
[[Page 103]]
this part is transferred to another lender without recourse, guaranty,
guarantee, or repurchase agreement, a report on the prescribed form
shall be transmitted to the Secretary within 31 days from the date of
the transfer. No report is required when a loan insured under this part
is transferred with recourse or under a guaranty, guarantee, or
repurchase agreement.
(b) Late reports. The Secretary may accept a late report on a loan
where the lender certifies that the obligation is not in default.
(c) Electronic loan reporting. With the prior approval of the
Secretary, the lender may use electronic transmission to report loans
for insurance in accordance with paragraph (a) of this section.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52434, Oct. 18, 1991]
Sec. 201.31 Insurance charge.
(a) Insurance charge. For each eligible property improvement loan
and manufactured home loan reported and acknowledged for insurance, the
lender shall pay to the Secretary an insurance charge equal to 0.50
percent of the loan amount, multiplied by the number of years of the
loan term. The insurance charge shall be paid in the manner prescribed
in paragraph (b) of this section; however, no charge shall be made for a
period of 14 days or less, and a charge for a full month shall be made
for a period of more than 14 days. There shall be no abatement or refund
of an insurance charge except as provided in paragraph (e) of this
section.
(b) Payment of insurance charge. (1) For any loan having a maturity
of 25 months or less, payment of the entire insurance charge prescribed
in paragraph (a) of this section is due on the 25th calendar day after
the date the Secretary acknowledges the loan report.
(2) For any loan having a maturity in excess of 25 months, payment
of the insurance charge shall be made in annual installments, with the
first installment due on the 25th calendar day after the date the
Secretary acknowledges the loan report, and the second and succeeding
installments due on the 25th calendar day after the date of billing by
the Secretary. Annual installments shall be paid according to the
following schedule:
(i) For any property improvement loan having a maturity in excess of
25 months, payment shall be made in annual installments of 0.50 percent
of the loan amount until the insurance charge is paid.
(ii) For any manufactured home loan having a maturity in excess of
25 months but not more than 144 months, payment shall be made in annual
installments of 1.00 percent of the loan amount for the first three
years of the loan term, 0.75 percent of the loan amount for the next two
years, and 0.50 percent of the loan amount for all succeeding years
until the insurance charge is paid.
(iii) For any manufactured home loan having a maturity in excess of
144 months but not more than 192 months, payment shall be made in annual
installments of 1.00 percent of the loan amount for the first four years
of the loan term, 0.75 percent of the loan amount for the next three
years, and 0.50 percent of the loan amount for all succeeding years
until the insurance charge is paid.
(iv) For any manufactured home loan having a maturity in excess of
192 months, payment shall be made in annual installments of 1.00 percent
of the loan amount for the first five years of the loan term, 0.75
percent of the loan amount for the next four years, and 0.50 percent of
the loan amount for all succeeding years until the insurance charge is
paid.
(3) All insurance charges are considered earned when paid.
(4) The Secretary may require that loan insurance charges be
remitted electronically. Instructions implementing this requirement
shall be communicated to all affected lenders.
(c) Penalty charge and interest. Insurance charges not received from
the lender by the due date specified in paragraph (b) of this section
shall be assessed a penalty charge of four percent of the amount of the
payment. Insurance charges received from the lender more than 30 days
after the due date specified in paragraph (b) of this section shall also
be assessed daily interest at the current United States
[[Page 104]]
Treasury value of funds rate, as published periodically in the Federal
Register. However, no penalty charge or daily interest shall be assessed
if the Secretary fails to acknowledge receipt of the loan report or
fails to issue a proper billing to the lender for the insurance charges.
(d) Adjustment on notes transferred. Where there is a transfer of
loan obligations between lenders and the insurance charges on such
obligations have already been paid, any adjustment of such charges shall
be made by the lenders involved. Any unpaid installments of the
insurance charge shall be paid by the purchasing lender.
(e) Refund or abatement of insurance charges. A lender shall be
entitled to a refund or abatement of insurance charges only in the
following instances:
(1) Where the loan obligation has been refinanced, the unearned
portion of the charge on the original obligation shall be credited to
the charge on the refinanced loan.
(2) Where the loan obligation is prepaid in full or an insurance
claim is filed, charges falling due after such prepayment or claim shall
be abated.
(3) When a loan (or portion thereof) is found to be ineligible for
insurance, charges paid on the ineligible portion shall be refunded,
except where the Secretary determines that there was fraud or
misrepresentation by the lender in the loan transaction. Such refund
shall be made only if a claim is denied by the Secretary or the
ineligibility is reported by the lender promptly upon discovery and
confirmed by the Secretary. In no event shall a charge be refunded on
the basis of loan ineligibility where the application for refund is made
after the loan is paid in full. If a loan or claim has been denied and
is subsequently resubmitted, the refunded amount of the insurance charge
plus any accrued insurance charge shall be repaid.
(f) Lender passing insurance charge on to borrower. The insurance
charge may be passed on to the borrower, provided that such charge is
fully disclosed to the borrower.
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 36265, Aug. 31, 1989;
60 FR 13855, Mar. 14, 1995]
Sec. 201.32 Insurance coverage reserve account.
(a) Establishment. The Secretary shall establish an insurance
coverage reserve account for each lender. The amount of insurance
coverage in each reserve account shall equal 10 percent of the amount
disbursed, advanced, or expended by the lender in originating or
purchasing eligible loans registered for insurance under this part, less
the amount of all insurance claims approved for payment in connection
with losses on such loans.
(b) Transfer of insured loans. The lender shall not sell, assign or
otherwise transfer any insured loan or loan reported for insurance to a
transferee lender not approved to originate and purchase title I loans
under a valid title I contract of insurance. Nothing contained herein
shall be construed to prevent the pledging of such a loan as collateral
security under a trust agreement, or otherwise, in connection with a
bona fide loan transaction.
(c) Transfer of insurance coverage. Not more than $5,000 in
insurance coverage shall be transferred to or from a lender's reserve
account during any fiscal year (October 1 through September 30) without
the prior approval of the Secretary. Except in cases involving the sale,
assignment or transfer of loans sold with recourse or under a guaranty,
guarantee or repurchase agreement, the Secretary shall transfer
insurance coverage to or from a lender's reserve account to accompany
the loan transfers reported by lenders under Sec. 201.30.
(1) In all cases involving the sale, assignment or transfer of loans
sold without recourse, guaranty, guarantee, or repurchase agreement, the
Secretary shall transfer insurance coverage to the reserve account
established for the transferee lender in an amount equal to 10 percent
of the actual purchase price or the net unpaid principal balance,
whichever is lesser, but not to exceed the amount of insurance coverage
in the transferor lender's reserve account prior to the transfer.
Insurance coverage shall be added to the existing amount of insurance
coverage in the transferee lender's reserve account. The Secretary may
transfer insurance
[[Page 105]]
coverage with earmarking when a determination is made that it is in the
Secretary's interest to do so.
(2) In cases involving the transfer of loans sold with recourse or
under a guaranty, guarantee or repurchase agreement, no insurance
coverage will be transferred and no reports will be required.
(3) An existing insured property improvement loan or manufactured
home loan may not be refinanced by a lender different from the
originating or purchasing lender of record, unless the loan has been
sold, assigned, or transferred to the new lender under paragraph (c) of
this section and the Secretary has transferred insurance coverage for
the loan under the applicable requirements of this paragraph.
(d) Recovery shall not affect insurance coverage reserve account.
Amounts which may be recovered by the Secretary after payment of an
insurance claim shall not be added to the amount of insurance coverage
remaining in a lender's reserve account.
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33407, Sept. 3, 1987;
54 FR 10537, Mar. 14, 1989; 56 FR 52434, Oct. 18, 1991; 61 FR 19799, May
2, 1996]
Subpart E--Loan Administration
Sec. 201.40 Post-disbursement loan requirements.
(a) Discovery of misstatements of fact. If, after a loan has been
made, the lender discovers any material misstatement of fact or that the
loan proceeds have been misused by the borrower, dealer or any other
party, it shall promptly report this to the Secretary. In such case, the
insurance of the loan shall not be affected unless such material
misstatement of fact or misuse of loan proceeds was caused by or was
knowingly sanctioned by the lender or its employees (see
Sec. 201.31(e)(3)), provided that the validity of any lien on the
property has not been impaired.
(b) Requirements on property improvement loans. (1) After receiving
the proceeds of a direct property improvement loan, and after the work
is completed to the borrower's satisfaction, the borrower shall submit a
completion certificate to the lender, on a HUD-approved form and signed
by the borrower under applicable criminal and civil penalties for fraud
and misrepresentation, certifying that:
(i) The improvements have been completed,
(ii) the amount borrowed has been spent on improvements eligible
under Sec. 201.20(b) and in accordance with the contract or cost
estimate furnished to the lender prior to disbursement of the loan
proceeds, and
(iii) The borrower has not obtained the benefit of and will not
receive any cash payment, rebate, cash bonus, sales commission, or
anything of more than nominal value from any contractor or supplier as
an inducement for the consummation of the loan transaction.
(2) The borrower shall submit the completion certificate promptly
upon the work's completion, but not later than six months after the
disbursement of the loan proceeds, with one six-month extension if
necessary. If the borrower fails to submit the completion certificate
within these time limits, an on-site inspection shall be conducted in
accordance with paragraph (c) of this section.
(3) The borrower is not required to submit a completion certificate
when the property improvement loan is made by or on behalf of a State or
local government agency or a nonprofit organization, the loan proceeds
are held in an escrow account pending completion of the improvements,
and the loan proceeds are disbursed from the escrow account in stages,
with the written approval of the borrower and based upon the percentage
of work completed.
(c) Inspection requirement on property improvement loans. The lender
or its agent shall conduct an on-site inspection on any property
improvement loan where the principal obligation is $7,500 or more, and
on any direct property improvement loan where the borrower fails to
submit a completion certificate as required under paragraph (b) of this
section. On a dealer loan, the inspection shall be completed within 60
days after the date of disbursement. On a direct loan, the inspection
shall be completed within 60 days after receipt of the completion
certificate, or as soon
[[Page 106]]
as the lender determines that the borrower is unwilling to cooperate in
submitting the completion certificate. The purpose of the inspection is
to verify the eligibility of the improvements and whether the work has
been completed. If the borrower will not cooperate in permitting an on-
site inspection, the lender shall report this fact to the Secretary.
(d) Inspection requirement on dealer manufactured home loans. For
any manufactured home purchase loan or combination loan involving the
sale of a manufactured home by a dealer, the lender (or an agent of the
lender that is not a manufactured home dealer) shall conduct a site-of-
placement inspection within 60 days after the date of disbursement to
verify that:
(1) The terms and conditions of the purchase contract have been met;
(2) The manufactured home and any itemized options and appurtenances
included in the purchase price of the home or financed with the loan
proceeds have been delivered and installed; and
(3) The placement certificate executed by the borrower and the
dealer is in order.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 56 FR 52434, Oct. 18, 1991;
61 FR 19799, May 2, 1996]
Sec. 201.41 Loan servicing.
(a) Generally. The lender shall service loans in accordance with
accepted practices of prudent lending institutions. It shall have
adequate facilities for contacting the borrower in the event of default,
and shall otherwise exercise diligence in collecting the amount due. The
lender shall remain responsible to the Secretary for proper collection
efforts, even though actual loan servicing and collection may be
performed by an agent of the lender. The lender shall have an organized
means of identifying, on a periodic basis, the payment status of
delinquent loans to enable collection personnel to initiate and follow-
up on collection activities, and shall document its records to reflect
its collection activities on delinquent loans.
(b) Partial payments. The lender shall accept any partial payment
(inclusive of late charges) under an executed modification agreement or
an acceptable repayment plan, and either apply it to the borrower's
account or hold it in a trust account pending disposition. When partial
payments held for disposition aggregate a full monthly installment, they
shall be applied to the borrower's account, thus advancing the date of
the oldest unpaid installment. If a partial payment is received more
than 60 days after the date of default and was not submitted under a
repayment plan or a modification agreement, the partial payment may be
returned to the borrower, with a letter of explanation.
Sec. 201.42 Bankruptcy, insolvency or death of borrower.
(a) Bankruptcy or insolvency. The lender shall file a proof of claim
with the court having jurisdiction when the lender has timely
information that a borrower is involved in bankruptcy or insolvency
proceedings, except that a proof of claim need not be filed if the court
notifies the lender that the borrower has no assets and a proof of claim
should not be filed. The notice of bankruptcy and a copy of the proof of
claim (or the notice from the court that a proof of claim is not
required) shall be retained in the loan file.
(b) Death of a borrower. The lender shall file a proof of claim with
the court having jurisdiction when the lender has timely information
that a borrower is deceased, unless the lender determines that there
will not be a probate proceeding. A copy of the proof of claim (or
documentation as to why a proof of claim was not filed) shall be
retained in the loan file.
(c) Responsibility of the lender after insurance claim is filed.
After the Secretary pays an insurance claim, the Secretary will notify
the bankruptcy or probate court, as appropriate, that the loan has been
assigned to the United States and will request substitution as the party
to whom the claim is owed. Until the insurance claim is paid, the lender
shall take all steps necessary to protect the interests of
[[Page 107]]
the holder of the note in any bankruptcy or probate proceeding.
[54 FR 36266, Aug. 31, 1989]
Sec. 201.43 Administrative reports and examinations.
The Secretary may call upon a lender for any reports deemed
necessary in connection with the regulations in this part and may
inspect the loan files, records, books and accounts of the lender as
they pertain to the loans reported for insurance.
Subpart F--Default Under the Loan Obligation
Sec. 201.50 Lender efforts to cure the default.
(a) Personal contact with the borrower before acceleration and
foreclosure or repossession. The lender shall undertake foreclosure or
repossession of the property securing a Title I loan that is in default
only after the lender has serviced the loan in a timely manner and with
diligence in accordance with the requirements of this part, and has
taken all reasonable and prudent measures to induce the borrower to
bring the loan account current. Before taking action to accelerate the
maturity of the loan, the lender or its agent shall contact the borrower
and any co-maker or co-signer, either in a face-to-face meeting or by
telephone, to discuss the reasons for the default and to seek its cure.
If the borrower and the co-makers or co-signers cannot be located, will
not discuss the default, or will not agree to its cure, the lender may
proceed to take action under paragraph (b) of this section. The lender
shall document the results of its efforts to contact the borrower and
any co-maker or co-signer, and shall place in the loan file a copy of
any modification agreement or repayment plan that has been offered.
(b) Notice of default and acceleration. Unless the borrower cures
the default or agrees to a modification agreement or repayment plan, the
lender shall provide the borrower with written notice that the loan is
in default and that the loan maturity is to be accelerated. In addition
to complying with applicable State or local notice requirements, the
notice shall be sent by certified mail and shall contain:
(1) A description of the obligation or security interest held by the
lender;
(2) A statement of the nature of the default and of the amount due
to the lender as unpaid principal and earned interest on the note as of
the date 30 days from the date of the notice;
(3) A demand upon the borrower either to cure the default (by
bringing the loan current or by refinancing the loan) or to agree to a
modification agreement or a repayment plan, by not later than the date
30 days from the date of the notice;
(4) A statement that if the borrower fails either to cure the
default or to agree to a modification agreement or a repayment plan by
the date 30 days from the date of the notice, then, as of the date 30
days from the date of the notice, the maturity of the loan is
accelerated and full payment of all amounts due under the loan is
required;
(5) A statement that if the default persists the lender will report
the default to an appropriate credit reporting agency; and
(6) Any other requirements prescribed by the Secretary.
(c) Reinstatement of the loan. The lender may rescind the
acceleration of maturity after full payment is due and reinstate the
loan only if the borrower brings the loan current, executes a
modification agreement, or agrees to an acceptable repayment plan.
(d) Notice to credit reporting agency. If the loan maturity is
accelerated and the loan is not reinstated, the lender shall report the
default to an appropriate credit reporting agency.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 52 FR 33407, Sept. 3, 1987;
56 FR 52434, Oct. 18, 1991; 57 FR 6480, Feb. 25, 1992]
Sec. 201.51 Proceeding against the loan security.
(a) Property improvement loans. (1) After acceleration of maturity
on a secured property improvement loan, the lender may either proceed
against the loan security under its title I security instrument or make
claim under its
[[Page 108]]
contract of insurance. If the lender proceeds against the loan security,
it may submit an insurance claim only if it complies with the
requirements of paragraph (a)(2) of this section.
(2) The lender may proceed against the secured property under its
Title I security instrument and later submit a claim under its contract
of insurance only with the prior approval of the Secretary. The
Secretary's decision will be based upon all relevant factors, including
but not limited to the appraised value and the amount of all outstanding
loan obligations on the property, the estimated costs of foreclosure and
disposition, and the anticipated time to dispose of the property. In
proceeding against the secured property, the lender shall comply with
all applicable State and local laws, and shall take all actions
necessary to preserve its rights, if any, to obtain a valid and
enforceable deficiency judgment against the borrower.
(3) After acceleration of maturity on a defaulted unsecured property
improvement loan, the lender may submit a claim under its contract of
insurance.
(b) Manufactured home loans. (1) After acceleration of maturity on a
defaulted manufactured home loan, the lender shall proceed against the
loan security by foreclosure or repossession, as appropriate, in
compliance with all applicable State and local laws, and shall acquire
good, marketable title to the property securing the loan. The lender
shall also take all actions necessary under State and local law to
preserve its rights, if any, to obtain a valid and enforceable
deficiency judgment against the borrower.
(2) Prior to foreclosure or repossession, the lender or its agent
shall make a visual inspection of the property and prepare a report on
its condition for placement in the loan file. If the lender determines
that the property has been abandoned, the lender shall take such steps
as are permitted under State or local law to repossess or foreclose upon
the property, without waiting for the notice period under Sec. 201.50(b)
to run.
(3) The lender shall obtain a HUD-approved appraisal of the property
as soon after repossession as possible, or earlier with the permission
of the borrower. This appraisal shall be performed on the homesite,
unless the site owner requires that the home be removed before the
appraisal can be performed, and it should reflect the retail value of
comparable manufactured homes in similar condition and in the same
geographic area where the repossession occurred. When the manufactured
home is without hazard insurance and has sustained, at any time prior to
the sale or disposition of the home, damage which would normally be
covered by such insurance, the lender shall report this situation in
submitting an insurance claim, and the appraised value shall be based
upon the retail value of comparable homes in good condition and in the
same geographic area, without any deduction for such damage.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 10537, Mar. 14, 1989;
54 FR 36266, Aug. 31, 1989; 56 FR 52435, Oct. 18, 1991]
Sec. 201.52 Acquisition by voluntary conveyance or surrender.
The lender may accept a voluntary conveyance of title to or
ownership of the property securing a manufactured home loan which is in
default, provided that (a) the lender accepts the conveyance in full
satisfaction of the borrower's obligation, and (b) no claim is submitted
under its contract of insurance. The lender may accept voluntary
surrender of the property without satisfaction of the borrower's
obligation, provided that if the lender intends thereafter to submit a
claim under its contract of insurance, the lender shall acquire title to
or ownership of the property and then dispose of and sell the property
in compliance with State and local law, so as to assure that it can
assign a valid and enforceable obligation, including any deficiency
against the borrower, to the Secretary when submitting its claim. If the
lender accepts a voluntary conveyance of title or a voluntary surrender
of the property, the notice of default and acceleration under
Sec. 201.50(b) shall not be required.
[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19799, May 2, 1996]
[[Page 109]]
Sec. 201.53 Disposition of manufactured home loan property.
Where the lender obtains title to property securing a manufactured
home loan by repossession or foreclosure, the property shall be sold for
the best price obtainable before making an insurance claim. In the case
of a combination loan, the manufactured home and lot shall be sold in a
single transaction and the manufactured home may not be removed from the
lot, unless the prior approval of the Secretary is obtained for a
different procedure. The best price obtainable shall be the greater of:
(a) The actual sales price of the property, after deducting the cost
of repairs, furnishings, and equipment needed to make the property
marketable, and after deducting the cost of transportation, set-up, and
anchoring if the manufactured home is moved to a new homesite; or
(b) The appraised value of the property before repairs (as
determined by a HUD-approved appraisal obtained in accordance with
Sec. 201.51(b)(3)).
[50 FR 43523, Oct. 25, 1985, as amended at 61 FR 19799, May 2, 1996]
Sec. 201.54 Insurance claim procedure.
(a) Claim application. A claim for reimbursement for loss on any
eligible loan shall be made on a HUD-approved form, executed by a duly
qualified officer of the lender under applicable criminal and civil
penalties for fraud and misrepresentation. The insurance claim shall be
fully documented and itemized, and shall be accompanied by all documents
and materials required by the Secretary for claim review. The claim
submission shall contain original copies of all notes, security
instruments, assumption agreements, releases of liability for repayment
of the loan, judgments obtained by the lender against the borrower, and
any related documents and forms, except where State or local law
requires their retention by the lender or a governmental body such as a
court. As appropriate, the claim application shall be supported by the
following:
(1) Documentation of the lender's efforts to effect recourse against
any dealer in accordance with any recourse agreement under
Sec. 201.27(b) between the lender and the dealer and contained in the
loan documents;
(2) Certification under applicable criminal and civil penalties for
fraud and misrepresentation that the lender has complied with all
applicable State and local laws in carrying out any foreclosure or
repossession, including copies of all notices served upon the borrower
or published in connection with such foreclosure or repossession; and
(3) Where a borrower has declared bankruptcy or insolvency or is
deceased, copies of the documentation required to be retained in the
loan file under Sec. 201.42.
(b) Maximum claim period. (1) An insurance claim shall be filed not
later than the following dates:
(i) For property improvement loans--nine months after the date of
default.
(ii) For manufactured home loans--three months after the date of
sale of the property securing the loan, but not to exceed 18 months
after the date of default.
(2) The Secretary may extend the claim filing period in a particular
case, but only if the lender shows clear evidence that the delay in
claim filing was in the interest of the Secretary or was caused by one
of the following:
(i) Litigation related to the loan;
(ii) Management control of the lender or the Title I loan portfolio
was assumed by a Federal or State agency; or
(iii) The borrower had experienced a loss of income or other
financial difficulties directly attributable to a major disaster
declared by the President, and additional time was needed to provide
forbearance on a property improvement loan.
(3) If a borrower is a ``person in military service'' as that term
is defined in the Soldiers' and Sailors' Civil Relief Act of 1940 and is
in default on a loan insured under this part, any period of military
service after the date of default shall be excluded in computing the
maximum time period for filing an insurance claim.
(c) Resubmitted and supplemental claims. (1) Any insurance claim
which is resubmitted with an appeal of a claim denial or a request for a
waiver of the regulations in accordance with Sec. 201.5(b) shall be
filed within six
[[Page 110]]
months after the date of the claim denial.
(2) Any supplemental insurance claim shall be filed within six
months after the date of payment on the initial claim. A reprocessing
fee, in an amount prescribed by the Secretary, will be charged for any
supplemental claim.
(d) Assignment of lender's rights to the United States. Upon the
filing of the insurance claim, the lender shall assign its entire
interest in the loan note (or in a judgment in lieu of the note), in any
security held, and in any claim filed in probate, bankruptcy or
insolvency proceedings, to the United States of America. The assignment
shall be made in the form provided in paragraph (f) of this section,
provided that if this form is not valid or generally acceptable in the
jurisdiction involved, a form which is valid and generally acceptable in
the jurisdiction where the judgment or security was taken shall be used.
If the security interest has been assigned to the United States, the
assignment shall be recorded in that jurisdiction prior to filing the
insurance claim, unless the Secretary determines that recordation by the
lender in that jurisdiction is impractical.
(e) Valid and enforceable obligation when assigned. The loan
obligation evidenced by the note must be both valid and enforceable
against the debtor at the time the note is assigned to the United States
of America. If the Secretary has reason to believe that the obligation
may not be either valid or enforceable against the borrower, the
Secretary may either deny the claim and reassign the loan note to the
lender, or require the lender to repurchase the paid claim and accept
reassignment of the note. The lender will be notified of the reasons for
the claim denial or repurchase. If the lender subsequently obtains a
valid and enforceable judgment against the borrower for the unpaid
balance of the loan, the lender may resubmit the claim with an
assignment of the judgment.
(f) Form of assignment. A lender shall use the following form of
assignment, or one generally acceptable in the jurisdiction involved,
properly dated, to assign the lender's entire interest in a loan note,
judgment, real estate mortgage, deed of trust, conditional sales
contract, chattel mortgage, mechanic's lien, or any security, in making
an insurance claim:
All right, title, and interest of the undersigned is hereby assigned
(without warranty, except that the loan qualifies for insurance) to the
United States of America (HUD).
(Financial Institution)_________________________________________________
By:_____________________________________________________________________
Title:__________________________________________________________________
Date:___________________________________________________________________
If the assignment does not appear on the note or other instrument that
is assigned, it shall be duly executed on an allonge which is attached
to such note or other instrument.
(g) Denial of insurance claim. The Secretary may deny a claim for
insurance in whole or in part based upon a violation of these
regulations, unless a waiver of compliance with the regulations is
granted under Sec. 201.5.
(h) Incontestability of insurance claim payment. Any insurance claim
payment on a title I loan shall be final and incontestable after two
years from the date the claim was certified for payment by the
Secretary, in the absence of fraud or misrepresentation on the part of
the lender, unless a demand for repurchase of the loan obligation is
made on behalf of the United States prior to the expiration of the two-
year period.
(Approved by the Office of Management and Budget under control number
2502-0328)
[50 FR 43523, Oct. 25, 1985; 51 FR 5068, Feb. 11, 1986, as amended at 51
FR 32060, Sept. 9, 1986; 56 FR 52435, Oct. 18, 1991; 57 FR 6480, Feb.
25, 1992; 61 FR 19800, May 2, 1996]
Sec. 201.55 Calculation of insurance claim payment.
The lender will be reimbursed in an amount not to exceed 90 percent
of its loss on any eligible loan up to the amount of insurance coverage
in the lender's insurance coverage reserve account established by the
Secretary under Sec. 201.32, if the insurance claim is made in
accordance with the requirements of this part. The amount of the
insurance claim payment shall be computed as follows:
(a) Property improvement loans. For property improvement loans, the
insurance claim payment shall be 90 percent of the following amounts:
[[Page 111]]
(1) The unpaid amount of the loan obligation (net unpaid principal
and the uncollected interest earned to the date of default, calculated
according to the terms of the note executed for any loan application
that is approved prior to the effective date of these regulations, and
calculated according to the actuarial method for all loans for which
loan applications are approved on or after the effective date of these
regulations). Where the lender has proceeded against the secured
property under Sec. 201.51(a)(2), the unpaid amount of the loan
obligation shall be reduced by the proceeds received from the property's
sale or disposition, after deducting the following:
(i) The balances due on any obligations senior to the Title I loan
obligation; and
(ii) Customary and reasonable expenses for foreclosure and
disposition, as determined by the Secretary.
(2) Interest on the unpaid amount of the loan obligation from the
date of default to the date of the claim's initial submission for
payment plus 15 calendar days, calculated at the rate of seven percent
per annum. However, interest shall not be paid for any period greater
than nine months from the date of default.
(3) The amount of uncollected court costs, including fees paid for
issuing, serving, and filing a summons.
(4) The amount of attorney's fees on an hourly or other basis for
time actually expended and billed, not to exceed $500.
(5) The amount of expenses for recording the assignment of the
security to the United States.
(b) Manufactured home loans. For manufactured home loans, the
insurance claim payment shall be 90 percent of the sum of the following
amounts:
(1) The unpaid amount of the loan obligation (net unpaid principal
and the uncollected interest earned to the date of default, calculated
according to the actuarial method), after deducting the following
amounts:
(i) The best price obtainable for the property after lawful
repossession or foreclosure, as determined in accordance with
Sec. 201.53;
(ii) All amounts to which the lender is entitled after the date of
default from any source relating to the property, including but not
limited to such items as rent, other income, recourse recovery against
the dealer, hazard insurance benefits, secured interest protection
insurance benefits, and rebates on prepaid insurance premiums; and
(iii) Amounts retained by the lender after the date of default,
including amounts held or deposited to the account of the borrower or to
which the lender is entitled under the loan transaction, and which have
not been applied in reduction of the borrower's indebtedness.
(2) Interest on the unpaid amount of the loan obligation from the
date of default to the date of the claim's initial submission for
payment plus 15 calendar days, calculated at the rate of seven percent
per annum. However, interest shall not be paid for any period greater
than nine months from the date of default.
(3) For manufactured home purchase loans, the amount of costs paid
to a dealer or other third party to repossess and preserve the
manufactured home and other property securing repayment of the loan
(including the costs of site inspection, property appraisal, hazard
insurance premiums, personal property taxes, and site rental, as
appropriate), plus actual costs not to exceed $1,000 per module for
removing and transporting the home to a dealer's lot or other off-site
location.
(4) The amount of a sales commission paid to a dealer, real estate
agent or other third party for the resale of the repossessed or
foreclosed manufactured home and/or lot. Where the home is resold on-
site, the commission shall not exceed 10 percent of the sales price.
Where the home is resold off-site, the commission shall not exceed seven
percent of the sales price.
(5) For manufactured home lot loans, and for combination loans where
both the foreclosed manufactured home and lot are classified as realty,
the amount of:
(i) State or local real estate taxes, ground rents, and municipal
water and sewer fees or liens, prorated to the date of disposition of
the property;
(ii) Special assessments which are noted on the loan application or
which become liens after the insurance is
[[Page 112]]
issued, prorated to the date of disposition of the property;
(iii) Premiums for hazard insurance on the manufactured home,
prorated to the date of disposition of the property; and
(iv) Transfer taxes imposed upon any deeds or other instruments by
which the property was acquired by the lender.
(6) The amount of uncollected court costs, including fees paid for
issuing, serving, and filing a summons.
(7) The amount of attorney's fees on an hourly or other basis for
time actually expended and billed, not to exceed $1,000.
(8) The amount of expenses for recording the assignment of the
security to the United States, and for costs of repossession or
foreclosure other than attorney's fees and those incurred under
paragraph (b)(3), but not to exceed costs which are customary and
reasonable in the jurisdiction where the repossession or foreclosure
takes place, as determined by the Secretary.
[50 FR 43523, Oct. 25, 1985, as amended at 54 FR 10537, Mar. 14, 1989;
54 FR 36266, Aug. 31, 1989; 56 FR 52435, Oct. 18, 1991; 57 FR 30395,
July 9, 1992; 61 FR 19800, May 2, 1996]
Subpart G--Debts Owed to the United States Under Title I
Source: 58 FR 47379, Sept. 9, 1993, unless otherwise noted.
Sec. 201.60 General.
(a) Applicability. The provisions in this subpart apply to the
collection of debts owed to the United States arising out of the Title I
program. These debts include, but are not limited to:
(1) Amounts owed on loans assigned to the United States by insured
lenders as the result of defaults by borrowers;
(2) Unpaid insurance charges owed by lenders; and
(3) Unpaid obligations of lenders arising from repurchase demands.
(b) Departmental debt collection regulations. Except as modified by
this subpart, collection of debts arising out of the Title I program is
subject to the Department's debt collection regulations in subpart C of
24 CFR part 17.
Sec. 201.61 Claims against debtors--principal amount of debt.
(a) Liability. A debtor is liable to the Secretary for the principal
amount of the debt, as described in paragraphs (b), (c), or (d) of this
section, as appropriate.
(b) Property improvement notes. In the case of an assigned note for
a property improvement loan, the principal amount of the debt is the
unpaid amount of the loan obligation, as defined in Sec. 201.55(a)(1) of
this part, plus amounts described in Secs. 201.55(a) (3), (4), (5).
(c) Manufactured home notes. In the case of an assigned note for a
manufactured home loan, the principal amount of the debt is the unpaid
amount of the loan obligation, as defined in Sec. 201.55(b)(1) of this
part, plus amounts described in Secs. 201.55(b) (3) through (8).
(d) Assigned judgments. In the case of a judgment obtained by the
lender on a property improvement loan or a manufactured home loan and
assigned to the Secretary, the principal amount of the debt is the
amount of the judgment.
Sec. 201.62 Claims against debtors--interest, penalties, and administrative costs.
(a) Interest. In addition to the principal amount of the debt, the
debtor is liable for the payment of interest. Interest accrues on the
principal amount of the debt as of the date of default, as defined in
Sec. 201.2(h) of this part, as follows:
(1) In the case of a debt based upon the assignment of a defaulted
note, interest is assessed at the lesser of the rate specified in the
note or the United States Treasury's current value of funds rate in
effect on the date the Title I insurance claim was paid.
(2) In the case of a debt based upon the assignment of a judgment,
interest is assessed at the lesser of the rate specified in the judgment
or the United States Treasury's current value of funds rate in effect on
the date the Title I insurance claim was paid.
(b) Penalties and administrative costs. The Secretary shall assess
reasonable administrative costs and penalties as authorized in 31 U.S.C.
3717, unless there is no provision in the note providing for such
charges and the debtor
[[Page 113]]
has not otherwise consented to liability for such charges.
Sec. 201.63 Claims against lenders.
Claims against lenders for money owed to the Department, including
unpaid insurance charges and unpaid repurchase demands, shall be
collected in accordance with 24 CFR part 17, subpart C.
PART 202--APPROVAL OF LENDING INSTITUTIONS AND MORTGAGEES--Table of Contents
Subpart A--General Requirements
Sec.
202.1 Purpose.
202.2 Definitions
202.3 Approval status for lenders and mortgagees.
202.4 Request for determination of compliance.
202.5 General approval standards.
Subpart B--Classes of Lenders and Mortgagees
202.6 Supervised lenders and mortgagees.
202.7 Nonsupervised lenders and mortgagees.
202.8 Loan correspondent lenders and mortgagees.
202.9 Investing lenders and mortgagees.
202.10 Governmental institutions, Government-sponsored enterprises,
public housing agencies and State housing agencies.
Subpart C--Title I and Title II Specific Requirements
202.11 Title I.
202.12 Title II.
Authority: 12 U.S.C. 1703, 1709 and 1715b; 42 U.S.C. 3535(d).
Source: 62 FR 20082, Apr. 24, 1997, unless otherwise noted.
Subpart A--General Requirements
Sec. 202.1 Purpose.
This part establishes minimum standards and requirements for
approval by the Secretary of lenders and mortgagees to participate in
the Title I and Title II programs.
Sec. 202.2 Definitions.
Act means the National Housing Act (12 U.S.C. 1702 et seq.)
Claim means a single family insured mortgage for which the Secretary
pays an insurance claim within 24 months after the mortgage is insured.
Default means a single family insured mortgage in default for 90 or
more days within 24 months after the mortgage is insured.
Lender or Title I lender means a financial institution that:
(a) Holds a valid Title I Contract of Insurance and is approved by
the Secretary under this part as a supervised lender under Sec. 202.6, a
nonsupervised lender under Sec. 202.7, an investing lender under
Sec. 202.9 or a governmental or similar institution under Sec. 202.10;
(b) Is under suspension or held a Title I contract that has been
terminated but remains responsible for servicing or selling Title I
loans that it holds and is authorized to file insurance claims on such
loans; or
(c) Is a loan correspondent approved for Title I programs only under
Sec. 202.8.
Loan or Title I loan means a loan authorized for insurance under
Title I of the Act.
Mortgage, Title II mortgage or insured mortgage means a mortgage or
loan insured under Title II or Title XI of the Act.
Mortgagee or Title II mortgagee means a mortgage lender which is
approved to participate in the Title II programs as a supervised
mortgagee under Sec. 202.6, a nonsupervised mortgagee under Sec. 202.7,
a loan correspondent under Sec. 202.8, an investing mortgagee under
Sec. 202.9 or a governmental or similar institution under Sec. 202.10.
Multifamily mortgagee means a mortgagee approved to participate only
in multifamily Title II programs, except that for purposes of
Sec. 202.8(b)(1) the term also means a mortgagee approved to participate
in both single family and multifamily Title II programs.
Normal rate means the rate of defaults and claims on insured
mortgages for the geographic area served by a HUD field office, or other
area designated by the Secretary, in which a mortgagee originates
mortgages.
Origination approval agreement means the Secretary's agreement that
a mortgagee is approved to originate single family insured mortgages.
Title I program(s) means an insurance program or programs authorized
by Title I of the Act.
[[Page 114]]
Title II program(s) means an insurance program or programs
authorized by Title II or Title XI of the Act.
[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 65181, Dec. 10, 1997]
Sec. 202.3 Approval status for lenders and mortgagees.
(a) Initial approval. A lender or mortgagee may be approved for
participation in the Title I or Title II programs upon filing a request
for approval on a form prescribed by the Secretary and signed by the
applicant. The approval form shall be accompanied by such documentation
as may be prescribed by the Secretary.
(1) Approval is signified by:
(i) The Secretary's agreement that the lender or mortgagee is
considered approved under the Title I or Title II programs, except as
otherwise ordered by the Mortgagee Review Board or an officer or
subdivision of the Department to which the Mortgagee Review Board has
delegated its power, unless the lender or mortgagee voluntarily
relinquishes its approval;
(ii) Consent by the lender or mortgagee to comply at all times with
the general approval requirements of Sec. 202.5, and with additional
requirements governing the particular class of lender or mortgagee for
which it was approved as described under subpart B at Secs. 202.6-
202.10; and
(iii) Under the Title I program, the issuance of a Contract of
Insurance or approval as a loan correspondent lender which constitutes
an agreement between the Secretary and the lender and which governs
participation in the Title I program.
(2) Limitations on approval:
(i) Separate approval as lender or mortgagee is required for
participation in the Title I or Title II programs, respectively.
Application must be made, and approval will be granted, on the basis of
one or both categories of programs, as is appropriate.
(ii) Separate approval as mortgagee is required for the Single
Family Mortgage Insurance Programs and for the Multifamily Mortgage
Insurance Programs. Application must be made, and approval will be
granted, on the basis of either or both categories, as is appropriate.
(iii) In addition to the requirements for approval as a Title II
mortgagee, the Secretary may from time to time issue eligibility
requirements for participation in specific programs, such as the Direct
Endorsement program.
(iv) A Title II mortgagee may be approved to operate either on a
nationwide basis or on a geographically restricted basis in only those
areas designated by the Secretary.
(v) A Title I lender may originate loans or purchase advances of
credit only within a geographic lending area approved by the Secretary.
Expansion of this lending area shall be subject to a determination by
the Secretary that the lender is able to originate loans in compliance
with part 201 of this chapter within such expanded area.
(3) Authorized agents. A mortgagee approved under Sec. 202.6,
Sec. 202.7 or Sec. 202.10 as a nonsupervised mortgagee, supervised
mortgagee or governmental or similar institution may, with the approval
of the Secretary, designate a nonsupervised or supervised mortgagee as
authorized agent for the purpose of submitting applications for mortgage
insurance in its name and on its behalf.
(b) Recertification. On each anniversary of the approval of a lender
or mortgagee, the Secretary will determine whether recertification,
i.e., continued approval, is appropriate. The Secretary will review the
yearly verification report required by Sec. 202.5(n)(2) and other
pertinent documents, ascertain that all application and annual fees have
been paid, and request any further information needed to decide upon
recertification.
(c) Termination--(1) Termination of the Title I Contract of
Insurance--(i) Notice. A Contract of Insurance may be terminated in
accordance with its terms by the Secretary or by the Secretary's
designee upon giving the lender at least 5 days prior written notice.
(ii) Informal meeting. If requested, and before expiration of the 5-
day notice period, a lender shall be entitled to an informal meeting
with the Department official taking action to terminate the Contract of
Insurance.
(iii) Effect of termination. Termination of a Contract of Insurance
shall not affect:
[[Page 115]]
(A) The Department's obligation to provide insurance coverage with
respect to eligible loans originated before the termination, unless
there was fraud or misrepresentation;
(B) A lender's obligation to continue to pay insurance charges or
premiums and meet all other obligations, including servicing, associated
with eligible loans originated before termination; or
(C) A lender's right to apply for and be granted a new Title I
Contract of Insurance, provided that the requirements for approval under
this part are met.
(2) Termination of the origination approval agreement--(i) Scope and
frequency of review. Every three months, the Secretary will review the
number of defaults and claims on mortgages originated by each mortgagee
in the geographic area served by a HUD field office. For this purpose
and for all other purposes under paragraph (c) of this section, a
mortgage is considered to be originated in the same Federal fiscal year
in which it is insured. The Secretary may also review the performance of
a mortgagee's branch offices individually and may impose the sanctions
provided for in this section on a branch as well as on a mortgagee's
overall operation.
(ii) Effect of default and claim rate determination. (A) The
Secretary may notify a mortgagee that its origination approval agreement
will terminate 60 days after notice is given, if the mortgagee had a
rate of defaults and claims on insured mortgages originated in an area
which exceeded 200 percent of the normal rate, and exceeded the national
default and claim rate for insured mortgages. The notice may be given
without action by the Mortgagee Review Board even if the Secretary
previously had the right to issue a credit watch notice to the mortgagee
under this section but did not do so.
(B) Before the Secretary sends the termination notice, the Secretary
shall review the census tract area concentrations of the defaults and
claims. If the Secretary determines that the excessive rate is the
result of mortgage lending in under-served areas, the Secretary may
determine not to terminate the origination approval agreement.
(C) Prior to termination the mortgagee may request an informal
conference with the Deputy Assistant Secretary for Single Family Housing
or that official's designee. After considering relevant reasons and
factors beyond the mortgagee's control that contributed to the excessive
default and claim rates, the Deputy Assistant Secretary for Single
Family Housing or designee may withdraw the termination notice and
notify the mortgagee that it is being placed on credit watch status.
(iii) Credit watch status. The Secretary may notify a mortgagee that
it is on credit watch status if the mortgagee had a rate of defaults and
claims on insured mortgages originated in an area which exceeded 150
percent, but not 200 percent, of the normal rate. Before the credit
watch notice is sent, the Secretary shall review the census tract area
concentrations of the defaults and claims. If the Secretary determines
that the excessive rate is the result of mortgage lending in under-
served areas, the Secretary may determine not to place the mortgagee on
credit watch status.
(iv) Effect of credit watch status. Insured mortgages originated
during a 6 month period from the date of the credit watch notice will be
reviewed for excessive default rates. A mortgagee will be removed from
credit watch status if the rate of defaults and claims for the 6 month
tracking period decreases to 150 percent or less of the normal rate 1
year after that 6 month tracking period. The origination approval
agreement for a mortgagee on credit watch status may be terminated if
the mortgagee's rate of defaults and claims on insured mortgages
originated in an area during the 6 month tracking period is more than
150 percent of the normal rate 1 year after that 6 month tracking
period. The Secretary shall provide 60 days notice and an opportunity
for an informal conference, as required by paragraph (c)(2)(ii)(C) of
this section, to a mortgagee which will have its origination approval
agreement terminated subsequent to a credit watch.
(v) Rights and obligations in the event of termination. If a
mortgagee's origination approval agreement is terminated,
[[Page 116]]
it may not originate single family insured mortgages unless a new
origination approval agreement is accepted by the Secretary,
notwithstanding any other provision of this part except
Sec. 202.3(c)(2)(v)(A). Termination of the origination approval
agreement shall not affect:
(A) The eligibility of the mortgage for insurance, absent fraud or
misrepresentation, if the mortgagor and all terms and conditions of the
mortgage had been approved before the termination by the Direct
Endorsement or Lender Insurance mortgagee or were covered by a firm
commitment issued by the Secretary; however, no other mortgages
originated by the mortgagee shall be insured unless a new originated
approval agreement is accepted by the Secretary;
(B) A mortgagee's obligation to continue to pay insurance premiums
and meet all other obligations, including servicing, associated with
insured mortgages;
(C) A mortgagee's right to apply for a new origination approval
agreement if it continues to be an approved mortgagee meeting the
general standards of Sec. 202.5 and the specific requirements of
Secs. 202.6. 202.7. 202.8 or 202.10, and 202.12, if the mortgagee has
had no origination approval agreement for at least 6 months, and if the
Secretary determines that the underlying causes for termination have
been satisfactorily remedied; or
(D) A mortgagee's right to purchase insured mortgages or to service
its own portfolio or the portfolios of other mortgagees with which it
has a servicing contract.
(d) Withdrawal and suspension of approval. Lender or mortgagee
approval may be suspended or withdrawn by the Mortgagee Review Board as
provided in part 25 of this title.
[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 30225, June 2, 1997; 62
FR 65181, Dec. 10, 1997]
Sec. 202.4 Request for determination of compliance.
Pursuant to section 539(a) of the Act, any person may file a request
that the Secretary determine whether a lender or mortgagee is in
compliance with Sec. 202.12(a) or with provisions of this chapter
implementing sections 223(a)(7) and 535 of the Act such as
Secs. 201.10(g), 203.18d and 203.43(c)(5) of this chapter (only section
535 applies to lenders). The request for determination shall be made to
the following address: Department of Housing and Urban Development,
Office of Lender Activities and Program Compliance, 451 Seventh Street
SW., Washington, DC, 20410. The Secretary shall inform the requestor of
the disposition of the request. The Secretary shall publish in the
Federal Register the disposition of any case referred by the Secretary
to the Mortgagee Review Board.
Sec. 202.5 General approval standards.
To be approved for participation in the Title I or Title II
programs, and to maintain approval, a lender or mortgagee shall meet and
continue to meet the general requirements of paragraphs (a)-(n) of this
Sec. 202.5 (except as provided in Sec. 202.10(b)) and the requirements
for one of the eligible classes of lenders or mortgagees in Secs. 202.6
through 202.10.
(a) Business form. The lender or mortgagee shall be a corporation or
other chartered institution, a permanent organization having succession
or a partnership. A partnership must meet the requirements of paragraphs
(a)(1) through (4) of this section.
(1) Each general partner must be a corporation or other chartered
institution consisting of two or more persons.
(2) One general partner must be designated as the managing general
partner. The managing general partner shall comply with the requirements
of paragraphs (b), (c) and (f) of this section. The managing general
partner must have as its principal activity the management of one or
more partnerships, all of which are mortgage lenders or property
improvement or manufactured home lenders, and must have exclusive
authority to deal directly with the Secretary on behalf of each
partnership. Newly admitted partners must agree to the management of the
partnership by the designated managing general partner. If the managing
general partner withdraws or is removed from the partnership for any
[[Page 117]]
reason, a new managing general partner shall be substituted, and the
Secretary shall be immediately notified of the substitution.
(3) The partnership agreement shall specify that the partnership
shall exist for the minimum term of years required by the Secretary. All
insured mortgages and Title I loans held by the partnership shall be
transferred to a lender or mortgagee approved under this part prior to
the termination of the partnership. The partnership shall be
specifically authorized to continue its existence if a partner
withdraws.
(4) The Secretary must be notified immediately of any amendments to
the partnership agreement which would affect the partnership's actions
under the Title I or Title II programs.
(b) Employees. The lender or mortgagee shall employ competent
personnel trained to perform their assigned responsibilities in consumer
or mortgage lending, including origination, servicing and collection
activities, and shall maintain adequate staff and facilities to
originate and service mortgages or Title I loans, in accordance with
applicable regulations, to the extent the mortgagee or lender engages in
such activities.
(c) Officers. All employees who will sign applications for mortgage
insurance on behalf of the mortgagee or report loans for insurance shall
be corporate officers or shall otherwise be authorized to bind the
lender or mortgagee in the origination transaction. The lender or
mortgagee shall ensure that an authorized person reports all
originations, purchases, and sales of Title I loans or Title II
mortgages to the Secretary for the purpose of obtaining or transferring
insurance coverage.
(d) Escrows. The lender or mortgagee shall not use escrow funds for
any purpose other than that for which they were received. It shall
segregate escrow commitment deposits, work completion deposits, and all
periodic payments received under loans or insured mortgages on account
of ground rents, taxes, assessments, and insurance charges or premiums,
and shall deposit such funds with one or more financial institutions in
a special account or accounts that are fully insured by the Federal
Deposit Insurance Corporation or the National Credit Union
Administration, except as otherwise provided in writing by the
Secretary.
(e) Servicing. A lender shall service or arrange for servicing of
the loan in accordance with the requirements of part 201 of this
chapter. A mortgagee shall service or arrange for servicing of the
mortgage in accordance with the servicing responsibilities contained in
subpart C of part 203 and in part 207 of this chapter, with all other
applicable regulations contained in this title, and with such additional
conditions and requirements as the Secretary may impose.
(f) Business changes. The lender or mortgagee shall provide prompt
notification to the Secretary of all changes in its legal structure,
including, but not limited to, mergers, terminations, name, location,
control of ownership, and character of business.
(g) Financial statements. The lender or mortgagee shall, upon
request by the Secretary, furnish a copy of its latest financial
statement, furnish such other information as the Secretary may request,
and submit to an examination of that portion of its records which
relates to its Title I and/or Title II program activities.
(h) Quality control plan. The lender or mortgagee shall implement a
written quality control plan, acceptable to the Secretary, that assures
compliance with the regulations and other issuances of the Secretary
regarding loan or mortgage origination and servicing.
(i) Fees. The lender or mortgagee, unless approved under
Sec. 202.10, shall pay an application fee and annual fees, including
additional fees for each branch office authorized to originate Title I
loans or submit applications for mortgage insurance, at such times and
in such amounts as the Secretary may require. The Secretary may identify
additional classes or groups of lenders or mortgagees that may be exempt
from one or more of these fees.
(j) Ineligibility. Neither the lender or mortgagee, nor any officer,
partner, director, principal or employee of the lender or mortgagee
shall:
(1) Be suspended, debarred or otherwise restricted under part 24 or
part 25
[[Page 118]]
of this title, or under similar procedures of any other Federal agency;
(2) Be indicted for, or have been convicted of, an offense which
reflects upon the responsibility, integrity or ability of the lender or
mortgagee to participate in the Title I or Title II programs;
(3) Be subject to unresolved findings as a result of HUD or other
governmental audits or investigations; or
(4) Be engaged in business practices that do not conform to
generally accepted practices of prudent mortgagees or that demonstrate
irresponsibility.
(k) Branch offices. A lender may, upon approval by the Secretary,
maintain branch offices for the origination of Title I loans. A branch
office of a mortgagee must be registered with the Department in order to
originate mortgages or submit applications for mortgage insurance. The
lender or mortgagee shall remain fully responsible to the Secretary for
the actions of its branch offices.
(l) Conflict of interest. A mortgagee may not pay anything of value,
directly or indirectly, in connection with any insured mortgage
transaction or transactions to any person or entity if such person or
entity has received any other consideration from the mortgagor, seller,
builder, or any other person for services related to such transactions
or related to the purchase or sale of the mortgaged property, except
that consideration approved by the Secretary may be paid for services
actually performed. The mortgagee shall not pay a referral fee to any
person or organization.
(m) Reports. Each lender and mortgagee must submit a yearly
verification report on a form prescribed by the Secretary. Upon
application for approval and with each annual recertification, each
lender and mortgagee must submit a certification that it has not been
refused a license and has not been sanctioned by any State or States in
which it will originate insured mortgages or Title I loans. In addition,
each mortgagee shall file the following:
(1) An audited or unaudited financial statement, within 30 days of
the end of each fiscal quarter in which the mortgagee experiences an
operating loss of 20 percent of its net worth, and until the mortgagee
demonstrates an operating profit for two consecutive quarters or until
the next recertification, whichever is the longer period; and
(2) A statement of net worth within 30 days of the commencement of
voluntary or involuntary bankruptcy, conservatorship, receivership or
any transfer of control to a Federal or State supervisory agency.
(n) Net worth. (1) Each supervised or nonsupervised lender or
mortgagee approved under Secs. 202.6 and 202.7 shall have a net worth of
not less than $250,000 in assets acceptable to the Secretary. Each
supervised or nonsupervised mortgagee, except a multifamily mortgagee,
shall have additional net worth in excess of $250,000 of not less than
one percent of the mortgage volume exceeding $25,000,000 in value, but
total net worth is not required to exceed $1,000,000. Mortgage volume is
calculated as of the end of the fiscal year being audited and equals the
sum of:
(i) The aggregate original amount of insured mortgages that the
mortgagee originated and that were insured during the fiscal year, or
that the mortgagee purchased as a sponsor from its loan correspondent(s)
during the fiscal year; and
(ii) The aggregate principal amount, as of the end of the fiscal
year, of all mortgages that are serviced by the mortgagee at the end of
the fiscal year but were not counted as mortgages originated by the
mortgagee or purchased from its loan correspondent(s).
(2) Net worth requirements for loan correspondent lenders or
mortgagees approved under Sec. 202.8 are described in that section.
[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 65181, Dec. 10, 1997;
63 FR 9742, Feb. 26, 1998]
Subpart B--Classes of Lenders and Mortgagees
Sec. 202.6 Supervised lenders and mortgagees.
(a) Definition. A supervised lender or mortgagee is a financial
institution which is a member of the Federal Reserve System or an
institution whose accounts are insured by the Federal Deposit Insurance
Corporation or the
[[Page 119]]
National Credit Union Administration. A supervised mortgagee may submit
applications for mortgage insurance. A supervised lender or mortgagee
may originate, purchase, hold, service or sell loans or insured
mortgages, respectively.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, a supervised lender or mortgagee shall meet
the following requirements:
(1) Net worth. The net worth requirements appear in Sec. 202.5(n).
(2) Liquid assets. A Title II mortgagee shall have liquid assets
consisting of cash or its equivalent acceptable to the Secretary in the
amount of 20 percent of its net worth, up to a maximum liquidity
requirement of $100,000.
(3) Notification. A lender or mortgagee shall promptly notify the
Secretary in the event of termination of its supervision by its
supervising agency.
(4) Fidelity bond. A Title II mortgagee shall have fidelity bond
coverage and errors and omissions insurance acceptable to the Secretary
and in an amount required by the Secretary, or alternative insurance
coverage approved by the Secretary, that assures the faithful
performance of the responsibilities of the mortgagee.
Sec. 202.7 Nonsupervised lenders and mortgagees.
(a) Definition. A nonsupervised lender or mortgagee is a lending
institution which has as its principal activity the lending or investing
of funds in real estate mortgages, consumer installment notes, or
similar advances of credit, or the purchase of consumer installment
contracts, and which is not approved under any other section of this
part. A nonsupervised mortgagee may submit applications for mortgage
insurance. A nonsupervised lender or mortgagee may originate, purchase,
hold, service or sell insured loans or mortgages, respectively.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, a nonsupervised lender or mortgagee shall
meet the following requirements:
(1) Net worth. The net worth requirements appear in Sec. 202.5(n).
(2) Liquid assets. The mortgagee shall have liquid assets consisting
of cash or its equivalent acceptable to the Secretary in the amount of
20 percent of its net worth, up to a maximum liquidity requirement of
$100,000.
(3) Credit source--(i) Title I. A lender shall have and maintain a
reliable warehouse line of credit or other funding program acceptable to
the Secretary of not less than $500,000 for use in originating or
purchasing Title I loans.
(ii) Title II. Except for multifamily mortgagees, a mortgagee shall
have a warehouse line of credit or other mortgage funding program
acceptable to the Secretary which is adequate to fund the mortgagee's
average 60 day origination operations, but in no event shall the
warehouse line of credit or funding program be less than $1,000,000.
(4) Audit report. (i) A lender or mortgagee shall file an audit
report with the Secretary within 90 days of the close of its fiscal year
(or within an extended time if an extension is granted in the sole
discretion of the Secretary) and at such other times as may be
requested. Audit reports shall be based on audits performed by a
certified public accountant, or by an independent public accountant
licensed by a regulatory authority of a state or other political
subdivision of the United States on or before December 31, 1970, and
shall include:
(A) A financial statement in a form acceptable to the Secretary,
including a balance sheet and a statement of operations and retained
earnings, an analysis of the mortgagee's net worth adjusted to reflect
only assets acceptable to the Secretary, and an analysis of escrow
funds; and
(B) Such other financial information as the Secretary may require to
determine the accuracy and validity of the audit report.
(ii) A mortgagee must submit a report on compliance tests prescribed
by the Secretary.
(5) Fidelity bond. A Title II mortgagee shall have fidelity bond
coverage and errors and omissions insurance acceptable to the Secretary
and in an amount required by the Secretary, or alternative insurance
coverage approved by the Secretary, that assures the faithful
[[Page 120]]
performance of the responsibilities of the mortgagee.
[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 65182, Dec. 10, 1997;
63 FR 9742, Feb. 26, 1998; 63 FR 44361, Aug. 18, 1998]
Sec. 202.8 Loan correspondent lenders and mortgagees.
(a) Definitions.
Loan correspondent. (1) A loan correspondent lender does not hold a
Title I Contract of Insurance and may not purchase or hold loans but may
be approved to originate Title I direct loans for sale or transfer to a
sponsor or sponsors which holds a valid Title I Contract of Insurance
and is not under suspension.
(2) A loan correspondent mortgagee is a mortgagee that has as its
principal activity the origination of mortgages for sale or transfer to
its sponsor or sponsors or that meets the definition of a supervised
mortgagee in Sec. 202.6(a) but applies for approval as a loan
correspondent mortgagee. A loan correspondent mortgagee may originate
mortgages and submit applications for mortgage insurance but it may not
hold, purchase or service insured mortgages, except that a loan
correspondent mortgagee meeting the definition of a supervised mortgagee
in Sec. 202.6(a) may service insured mortgages in its own portfolio.
Sponsor. (1) With respect to Title I programs, a sponsor is a lender
that holds a valid Title I Contract of Insurance and meets the net worth
requirement for the class of lender to which it belongs.
(2) With respect to Title II programs, a sponsor is a mortgagee
which holds a valid origination approval agreement, is approved to
participate in the Direct Endorsement program, and meets the net worth
requirement for the class of mortgagee to which it belongs.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, a loan correspondent lender or mortgagee
shall meet the following requirements:
(1) Net worth. A loan correspondent lender or mortgagee shall have a
net worth of not less than $50,000 in assets acceptable to the
Secretary, plus an additional $25,000 for each branch office authorized
by the Secretary, up to a maximum requirement of $250,000, except that a
multifamily mortgagee shall have a net worth of not less than $250,000
in assets acceptable to the Secretary.
(2) Notification. A loan correspondent lender or mortgagee and each
of its sponsors shall provide prompt notification to the Secretary if
their loan correspondent agreement is terminated.
(3) Audit report. A loan correspondent lender or mortgagee shall
file an audit report with the Secretary within 90 days of the close of
its fiscal year (or within such extended time as may be granted by in
the sole discretion of the Secretary), and at such other times as the
Secretary may request, except that a loan correspondent mortgagee
meeting the definition of Sec. 202.6(a) need not file annual audit
reports. Audit reports shall be based on audits performed by a certified
public accountant, or by an independent public accountant licensed by a
regulatory authority of a state or other political subdivision of the
United States on or before December 31, 1970, and shall include:
(i) A financial statement, in a form acceptable to the Secretary,
including a balance sheet, statement of operations and retained
earnings, an analysis of the net worth adjusted to reflect only assets
acceptable to the Secretary and an analysis of escrow funds; and
(ii) Such other financial information as the Secretary may require
to determine the accuracy and validity of the audit report.
(4) Liquid assets. A loan correspondent mortgagee shall maintain
liquid assets consisting of cash or its equivalent acceptable to the
Secretary in the amount of 20 percent of its net worth, up to a maximum
liquidity requirement of $100,000.
(5) A loan correspondent lender or mortgagee may sell or transfer
loans or mortgages only to its sponsors, although a loan correspondent
mortgagee may sell to a mortgagee that is not a sponsor with the
Secretary's approval. There is no limitation on the number of sponsors
that a loan correspondent lender or mortgagee may have and no limitation
on the number of loan correspondents that a lender or mortgagee may
sponsor.
[[Page 121]]
(6) Each sponsor must obtain approval of its loan correspondent
lenders or mortgagees from the Secretary.
(7) Each sponsor shall be responsible to the Secretary for the
actions of its loan correspondent lenders or mortgagees in originating
loans or mortgages, unless applicable law or regulation requires
specific knowledge on the part of the party to be held responsible. If
specific knowledge is required, the Secretary will presume that a
sponsor has knowledge of the actions of its loan correspondent lenders
or mortgagees in originating loans or mortgages and the sponsor is
responsible for those actions unless it can rebut the presumption with
affirmative evidence.
(8) A loan correspondent mortgagee shall comply with the warehouse
line of credit requirements of Sec. 202.7(b)(3)(ii), unless there is a
written agreement by its sponsor to fund all mortgages originated by the
loan correspondent mortgagee.
(9) For mortgages processed through Direct Endorsement under
Secs. 203.5 and 203.255(b) of this chapter, or through Lender Insurance
under Secs. 203.6 and 203.255(f) of this chapter, underwriting shall be
the responsibility of the Direct Endorsement sponsor or Lender Insurance
sponsor (respectively), and the mortgage shall be closed in the loan
correspondent mortgagee's own name or the name of the sponsor that will
purchase the loan. For mortgages not processed through Direct
Endorsement or through Lender Insurance, the mortgage must be both
underwritten and closed in the loan correspondent's own name.
(10) A loan correspondent lender shall close all loans in its own
name prior to sale or transfer of the loans to its sponsor.
[62 FR 20082, Apr. 24, 1997, as amended at 62 FR 30225, June 2, 1997]
Sec. 202.9 Investing lenders and mortgagees.
(a) Definition. An investing lender or mortgagee is an organization
that is not approved under any other section of this part. An investing
lender or mortgagee may purchase, hold or sell Title I loans or Title II
mortgages, respectively, but may not originate Title I loans or Title II
mortgages in its own name or submit applications for the insurance of
mortgages. An investing lender or mortgagee may not service Title I
loans or Title II mortgages without prior approval of the Secretary. An
investing lender or mortgagee is not required to meet a net worth
requirement.
(b) Additional requirements. In addition to the general approval
requirements in Sec. 202.5, an investing lender or mortgagee shall meet
the following requirements:
(1) Funding arrangements. An investing lender or mortgagee shall
have, or have made arrangements for, funds sufficient to support a
projected investment of at least $1,000,000 in property improvement,
manufactured home or real estate loans or mortgages.
(2) Officers and staff. In lieu of the staffing and facilities
requirements in Sec. 202.5(b), an investing lender or mortgagee shall
have officers or employees who are capable of managing its activities in
purchasing, holding, and selling Title I loans or Title II mortgages.
(3) Fidelity bond. An investing mortgagee shall maintain fidelity
bond coverage and errors and omissions insurance acceptable to the
Secretary and in an amount required by the Secretary, or alternative
insurance coverage approved by the Secretary, that assures the faithful
performance of the responsibilities of the mortgagee.
[62 FR 20082, Apr. 24, 1997, as amended at 63 FR 9742, Feb. 26, 1998]
Sec. 202.10 Governmental institutions, Government-sponsored enterprises, public housing agencies and State housing agencies.
(a) Definition. A Federal, State or municipal governmental agency, a
Federal Reserve Bank, a Federal Home Loan Bank, the Federal Home Loan
Mortgage Corporation, or the Federal National Mortgage Association may
be an approved lender or mortgagee. A mortgagee approved under this
section may submit applications for Title II mortgage insurance. A
lender or mortgagee approved under this section may originate, purchase,
service or sell
[[Page 122]]
Title I loans and insured mortgages, respectively. A mortgagee or lender
approved under this section is not required to meet a net worth
requirement. A mortgagee shall maintain fidelity bond coverage and
errors and omissions insurance acceptable to the Secretary and in an
amount required by the Secretary, or alternative insurance coverage
approved by the Secretary, that assures the faithful performance of the
responsibilities of the mortgagee. There are no additional requirements
beyond the general approval requirements in Sec. 202.5 or as provided
under paragraph (b) of this section.
(b) Public housing agencies and State housing agencies. Under such
terms and conditions as the Secretary may prescribe and notwithstanding
the general requirements of Sec. 202.5 or the requirements of paragraph
(a) of this section, a public housing agency or its instrumentality or a
State housing agency may be approved as a mortgagee for the purpose of
originating and holding multifamily mortgages funded by issuance of tax
exempt obligations by the agency.
(c) Audit requirements. The insuring of loans and mortgages under
the Act constitutes ``financial assistance'' for purposes of audit
requirements set out in part 44 of this title. State and local
governments (as defined in 24 CFR 44.2) that receive insurance as
lenders and mortgagees shall conduct audits in accordance with HUD audit
requirements at part 44 of this title.
Subpart C--Title I and Title II Specific Requirements