PART 201

TITLE I PROPERTY IMPROVEMENT

AND MANUFACTURED HOME LOANS

1060.2 REV-6

SUBPART A - GENERAL

201.1 Purpose.

These regulations implement the provisions of section 2 of Title I

of the National Housing Act (12 [U.S.C.
1703](http://www.gpoaccess.gov/uscode/index.html) ). 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 § 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 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 on any individual loan.

§ 201.2 Definitions.

As used in the regulations in this part, the term:

Act means the National Housing Act, [12 U.S.C.
1703](http://www.gpoaccess.gov/uscode/index.html) .

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.

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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 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.

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However, these occupancy and completion requirements shall

not apply to:

\(1\) loans having a principal obligation of \$1,000 or less; or

\(2\) Residential structures which have been damaged by

conditions determined by the President to warrant relief

under the provisions of Title 42, Chapter 68, of the

United States Code.

Fire safety equipment loan means a loan made to finance the

purchase and installation of any device or construction

feature which is recognized in the latest edition of the

Department of Housing and Urban Development\'s Minimum Property

Standards for Care Type Housing (HUD Handbook 4920.1) or the

Fire Safety Code of the National Fire Protection Association,

and which is designed to reduce the risk of death, personal

injury, or property damage resulting from a fire in a health

care facility.

Furniture means movable articles of personal property relating

to a home or dwelling, such as beds, chairs, sofas, lamps,

tables, rugs, etc.; however, furniture does not include:

\(1\) Items built into the home or dwelling such as wall-to-

wall carpeting or heating or cooling equipment; or

\(2\) large appliances such as refrigerators, ovens, ranges,

dishwashers, clothes washers or clothes dryers.

Health care facility means a proprietary facility or facility

of a private nonprofit corporation or association, licensed or

regulated by the State or by the municipality or other

political subdivision in which the facility is located, and

operated as one or more of the following:

\(1\) A nursing home for the accommodation of convalescents or

other persons who are not acutely ill and not in need of

hospital care, but who require skilled nursing care and

related medical services performed under the genes

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;

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\(3\) 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

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from the factory to the dealer\'s lot or the homesite

(including any rental of wheels and axles) and for any sales

taxes to be paid by the dealer. The invoice may recite such

prices and charges on an itemized basis 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](http://www.gpoaccess.gov/cfr/index.html). 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.

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Manufactured home loan means a loan for the purchase or

refinancing of a manufactured home and/or the lot on which to

place such home. Unless otherwise indicated, the term includes

manufactured home purchase loans, manufactured home lot loans,

and combination loans.

Manufactured home lot loan means a loan for the purchase or

refinancing of a portion of land acceptable to the Secretary

as a manufactured home lot. A manufactured home lot may

consist of platted or unplatted land, a lot in a recorded or

unrecorded subdivision or in an improved area of such

subdivision, or a lot in a planned unit development. A

manufactured home lot may also consist of an interest in a

manufactured home condominium project (including any interest

in the common areas) or a share in a cooperative association

which owns and operates a manufactured home park.

Manufactured home purchase loan means a loan for the purchase

or refinancing of a manufactured home exclusive of any lot or

site, and may also include a garage, patio, carport, or other

comparable appurtenance.

Multifamily property improvement loan means a loan to finance

the alteration, repair, improvement, or conversion of an

existing structure used or to be used as an apartment house or

a dwelling for two or more families. The multifamily structure

may not be owned by a corporation, partnership, or trust,

unless the prior approval of the Secretary is obtained for an

exception to this requirement.

Nonresidential property improvement loan means a loan made to

finance the construction of a new exclusively nonresidential

structure or the alteration, repair or improvement of an

existing structure that is nonresidential. Such a structure

may be temporarily used for residential purposes while the

borrower constructs a new dwelling to replace a dwelling

previously occupied by the borrower that was destroyed or

damaged by conditions determined by the President to warrant

relief under the provisions of Title 42, Chapter 68, of the

United States Code, 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.

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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, including an existing

one-family manufactured home classified as real property by

the State or locality in which the property is located, for

use as a single family residence.

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

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which are limited to payments by the manufacturer directly to:

\(1\) A financial institution to \"buy down\" or reduce the

interest rate, discount points, or other fees or charges

related to a lending agreement for a dealer\'s

manufactured home inventory or \"floor plan\" financing

needs; or

\(2\) One or more advertising media for all or part of the

costs of advertising the manufacturer\'s homes, one or

more dealer\'s services, and related manufactured home

materials and products in such media.

State means any State of the United States, Puerto Rico, the

District of Columbia, Guam, American Samoa, the Commonwealth

of the Northern Mariana Islands, or the United States Virgin

Islands.

Volume incentives means specified dollar benefits to dealers

under a published marketing and promotional plan, payable by

a home manufacturer in cash or in kind in amounts or levels

relating to the volume of sales of manufactured homes to

dealers, other than 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;

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\(7\) 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.

§ 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.

\' 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.

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\' 201.5 Waivers.

The Secretary may waive a lender\'s noncompliance with any provision

of this part, subject to statutory limitations, when it is

determined that enforcement of the regulations would impose an

injustice upon a lender which has 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.

\' 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.

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