36260 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations

DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

24 CFR Parts 200, 201, 202, 203, 206,

221, 233, 234, 280 and 291

[Docket No. FR–3977–F–01]

RIN 2501–AG61

Office of the Assistant Secretary for

Housing-Federal Housing

Commissioner; Single Family

Miscellaneous Amendments,

Clarifications, and Corrections

AGENCY: Office of the Assistant

Secretary for Housing-Federal Housing

Commissioner, HUD.

ACTION: Final rule.

SUMMARY: This final rule makes a variety

of technical amendments, clarifications

and corrections to regulations for the

single family mortgage insurance

programs. None of the amendments or

clarifications add to the regulatory

burden for mortgagors or mortgagees.

EFFECTIVE DATE: August 8, 1996.

FOR FURTHER INFORMATION CONTACT: John

J. Coonts, Director, Office of Insured

Single Family Housing, Department of

Housing and Urban Development, Room

9266, 451 Seventh Street, SW,

Washington, DC 20410. Telephone:

(202) 708–3046; TTY: (202) 4594. (These

are not toll-free telephone numbers.)

SUPPLEMENTARY INFORMATION: This rule

is designed to make a large number of

technical improvements to the

regulations for single family programs.

The changes will not add to the

regulatory burden for mortgagors or

mortgagees. Some of the changes are

corrections of small errors in the current

regulations that will have no substantive

change on the way the rules have been

applied in practice. Other changes will

offer relief from unnecessary

requirements.

Following is an explanation of

changes made by the rule.

Part 200

A technical change is made to part

200 to remove a reference to part 267

which has been removed from the Code

of Federal Regulations.

Part 201

The rule makes a typographical

correction to the table of contents and

to § 201.18.

Part 202

Section 202.3 is amended to revise

paragraph (j) to provide that the

Secretary may identify classes or groups

of lenders that are exempt from one or

more of these fees. This provides more

flexibility to the program by allowing

additional groups to be exempted.

‘‘Origination approval agreement’’ is

included in the heading of § 202.11.

The rule deletes § 202.12(d). That

paragraph indicates that approval of a

supervised mortgagee that is a banking

institution or a trust company included

approval of the mortgagee when acting

in a fiduciary capacity. The Department

considers that the paragraph may be

misleading by implying that only

supervised mortgagees that are banking

institutions or trust companies may

hold mortgages in a trust or other

fiduciary capacity. Subject to any

limitations that may appear in

regulations for particular programs,

such as § 203.434, regarding a

declaration of trust for a pool of single

family mortgages, the Department does

not restrict mortgagees from holding

mortgages in a trust or other fiduciary

capacity. The Department eliminated

trusts as eligible mortgagees through a

1992 revision of part 202 but there was

no intent to prevent FHA-insured

mortgages from being held as trust

assets by an approved mortgagee. The

Department will deal only with the

mortgagee, rather than others who may

have interests in the mortgages, and will

hold the mortgagee solely responsible

for complying with obligations imposed

on mortgagees.

The provisions regarding approval

and recertification fees for Title I

lenders and Title II mortgagees are

amended by adding a new sentence

permitting the Secretary to identify

classes or groups of lenders or

mortgagees that are exempt from one or

more of the fees. The current exemption

for governmental lenders and

mortgagees is left intact.

Part 203

The rule eliminates the requirement

in § 203.17(b) (and corresponding

requirements in §§ 221.45 and

234.25(b)) that mortgages involve a

principal obligation in multiples of $50

if the mortgage does not include

financing of a one-time mortgage

insurance premium (MIP) payable

pursuant to § 203.280. One time MIP has

been replaced by the up-front segment

of risk-based mortgage insurance

premiums under §§ 203.284 and

203.285. Rather than substitute the upfront segment of risk-based MIP for the

one time MIP, however, the Department

has determined that there is no longer

any reason for the general requirement

that other mortgages without a financed

premium be in multiples of $50. All

mortgages may now be in multiples of

$1. Corresponding changes are made to

§§ 221.45 and 234.52.

Two changes are made to § 203.18

which explain how the maximum

mortgage amount is calculated. A

parenthetical phrase is removed from

§ 203.18(a)(1)(ii) to reflect the 1994

legislative change that set the maximum

dollar amount for an area at 75% of the

current Freddie Mac limit, instead of

75% of the 1992 Freddie Mac limit. A

new § 203.18(i) is added to recognize

that the maximum mortgage amount for

an energy efficient mortgage may exceed

the area dollar limit that would

otherwise apply, under conditions

prescribed by the Secretary in

accordance with section 106 of the

Energy Policy Act of 1992.

Section 203.19(c) which applied to

the now-repealed section 203(m)

program for mortgage insurance for

seasonal homes is deleted as obsolete.

Language is added in § 203.22(a) to

clarify that the mortgage provision

providing for payment of mortgage

insurance premium installments by the

mortgagor does not require payment for

any longer than the period during which

mortgage insurance premiums are

payable by the mortgagee to HUD.

Obsolete language regarding payment of

annual charges on ‘‘open-end’’ advances

is deleted.

Sections 203.24(a)(i) and 203.44, and

related provisions in other parts such as

234.70, are amended by deleting

references to open-end advances.

Section 203.30 is amended to add a

new paragraph (d) regarding

compliance, for buildings having four

(4) or more units which were built for

first occupancy after March 13, 1991,

with the Fair Housing Act new

contruction requirements at 24 CFR

100.205.

Sections 203.36 and 234.67 are

deleted as unnecessary. See sections

203.16 and 234.15 regarding the use of

a dwelling for transient or hotel

purposes.

The language in section 203.38 is

amended by changing the two

references to ‘‘unit’’ to ‘‘one or more

dwellings.’’

In §§ 203.40, 203.251(s), and 234.1(n),

‘‘Commonwealth of the Northern

Mariana Islands’’ is substituted for the

‘‘Trust Territory of the Pacific Islands’’

because the Commonwealth of the

Northern Mariana Islands is the only

portion of the former Trust Territory of

the Pacific Islands in which FHA single

family programs are currently

authorized.

The ‘‘rule of seven’’ in § 203.42

currently prohibits mortgage insurance

when a mortgagor is purchasing a

property to be rented that is ‘‘part of, or

adjacent or contiguous to, a project,

subdivision or group of similar rental
Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations 36261

properties’’ in which the mortgagor will

have a financial interest in more than

seven dwelling units. This rule removes

‘‘subdivision’’ from the quoted

language. Denial of mortgage insurance

simply because a mortgagor has a

financial interest in eight units in a very

large subdivision does not further the

purpose of the ‘‘rule of seven,’’ which is

to avoid insuring single family

mortgages on rental units that are in

such close geographical proximity with

other similar rental units that they could

logically be considered part of one

multifamily project rather than

unrelated single family units. In

practice, current departmental policy in

applying the ‘‘rule of seven’’ has been

directed to properties within a twoblock radius from one another.

Continued reference to a subdivision

would cause confusion regarding the

intent of § 203.42.

Section 203.43(c)(3) and the

corresponding § 234.52(c) are amended

to permit a $50 increase in the monthly

payment for refinancing to a shorter

term, to reflect the prevailing policy that

has been applied to date on a waiver

basis.

Section 203.43b regarding mortgage

insurance on seasonal occupancy homes

under now-repealed section 203(m) is

deleted as obsolete.

Section 203.43f(b) is amended by

deleting the last sentence which refers

to section 203.17(e). Section 203.17(e)

was completely revised and the current

cross-reference is not meaningful.

The introductory paragraph of

§ 203.43h is revised to clarify that a

mortgage covering a one- to four-family

residence located on Indian land is

eligible for insurance pursuant to

section 248 of the National Housing Act,

if the mortgage is made (1) by an Indian

Tribe or (2) on a leasehold estate, by an

Indian who will occupy it as a principal

residence. Tribes are already recognized

as eligible non-occupant mortgagors

under § 203.18(f)(3). This amendment to

§ 203.43h reconciles the two sections. In

addition, a statement has been added to

the definition of an ‘‘Indian tribe,’’ in

§ 203.43h(g), to note that, for purposes

of engaging in section 248 insured

mortgage transactions, an Indian tribe

may act through its duly authorized

representative.

The reference to § 203.50 contained in

§ 203.43i is deleted to allow

rehabilitation loan mortgages under

section 203(k) on section 247 Hawaiian

home lands. This would have been

permitted by a proposed rule published

on July 23, 1986, but the provision was

omitted from a final rule on the

Hawaiian home lands program

published on March 16, 1987, because

of the difficulty of operating the

Hawaiian home lands program for the

General Insurance Fund (as required for

section 203(k) loans) in addition to the

Mutual Mortgage Fund. This difficulty

no longer exists as a result of a

subsequent statutory change that

provides for all Hawaiian home land

mortgages to be in the General Insurance

Fund.

Section 225 of the National Housing

Act authorizes FHA insurance for openend mortgages under which the

mortgagee could advance additional

funds under the mortgage to finance

later improvements or repairs that

would substantially protect or improve

the basic livability or utility of the

property. Although mentioned in the

regulations, FHA does not have

administrative procedures for the

processing of open-end mortgages; they

are not provided for in HUD’s

instructions for mortgage forms, and

GNMA has no programs for the pooling

of open-end mortgages. Various

provisions in parts 203 and 234,

including §§ 203.44 and 234.70, are

amended to make clear that FHA is not

insuring open-end mortgages.

The introductory paragraph of

§ 203.49 is amended by including a

reference to section 203(h) in the second

sentence to permit adjustable rate

mortgages (ARMs) in disaster situations.

Section 203(h) mortgages generally meet

all requirements of section 203(b)

mortgages except that a higher loan-tovalue ratio is permitted. The

Department has determined that ARMs

should be available on the same terms

as for section 203(b) mortgages.

Some issuers of 10-year warranty

plans that have been approved by HUD

and used to support high-ratio

mortgages for new construction have

read HUD’s warranty plan requirements

as permitting plans that impose the

requirement that homeowners submit

warranty claims to arbitration. This has

never been HUD’s intention under the

warranty plan final rule. Although

arbitration must be available to a

dissatisfied homeowner, judicial

resolution of disputes must also be

available to homeowners. HUD has

modified the wording of § 203.204(g) to

make this clear.

Section 203.255(b)(2) is amended by

replacing ‘‘upon a form’’ with ‘‘in a

form’’ since application information

may now be collected electronically

through CHUMS.

Section 203.281(b)(1) is amended by

deleting the language following the first

comma to simplify the procedures for

calculating the MIP amount for the

small number of cases for which onetime MIP is still used.

Sections 203.356 and 203.402

regarding the notice of foreclosure are

amended to provide a more consistent

application of the rules for curtailment

of debenture interest included in

insurance benefits paid to mortgagees.

Section 203.356 is divided into

subsection (a) for the requirements to

provide the notice of foreclosure, and

subsection (b) for exercising reasonable

diligence in prosecuting the foreclosure.

Section 203.402(k)(1) is also subdivided.

New subsection 203.402(k)(1)(ii) limits

the amount of debenture interest that

the Secretary may curtail if the

mortgagee does not provide the

Secretary the notice of foreclosure. This

change will reduce the debenture

interest curtailment when the mortgagee

proceeded to foreclose with reasonable

diligence, despite its failure to forward

the initial notice of foreclosure. The

specific cap on debenture interest

curtailment will be set by administrative

issuances, but the curtailment will not

exceed what is currently being assessed.

Sections 203.378, 203.379, and

203.380 regarding property condition

and adjustments for damage are

amended to clarify that tornado damage

includes damage by hurricanes. Both

storm systems are defined as violent

whirlwinds and historically have been

treated the same by the Department in

this regard.

Section 203.502(b) regarding

notification of transfer of servicing is

amended to change the responsibility

for notifying the Secretary from the

transferor mortgagee to the transferee.

This change will enhance HUD’s ability

to coordinate the change in servicer

with the collection of mortgage

insurance premiums from the new

servicer.

Section 203.670 addresses

conveyance of occupied property.

Paragraph (a) states HUD’s property

disposition policy, which is also stated

in § 291.1 in part 291, Disposition of

HUD-Acquired Single Family Property.

However, § 291.1 was amended to

reflect a revised policy in a September

20, 1993 Interim Rule, made final on

September 22, 1994. Therefore,

§ 203.670(a) is being amended to reflect

the revised policy.

Section 203.685 is removed. It

authorized waivers of single family

servicing regulations, but such waivers

are now authorized by the Departmentwide waiver authority in 24 CFR 5.100.

Part 206

Section 206.13 is removed because it

addresses the terminated single family

co-insurance program. Section 206.17 is

amended to recognize that the basic

payment term and tenure payment
36262 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations

options for HECMs can be combined

with lines of credit.

Part 234

Sections 234.11 and 234.54 are added

to conform to corresponding provisions

in part 203.

Section 234.16 is amended to add a

new paragraph (d) regarding

compliance, for buildings having four

(4) or more units which were built for

first occupancy after March 13, 1991,

with the Fair Housing Act new

construction requirements at 24 CFR

100.205.

Part 280

Section 280.330(c)(2) is amended by

adding the following language: ‘‘. . .

remaining balance of the . . .’’. The way

this section is currently written, it

appears that the entire original mortgage

amount is cancelled. In addition, the

spelling of ‘‘cancelled’’ is corrected.

Part 291

Section 291.105(h)(2) is amended to

give the Secretary more flexibility in

determining what form of cash

equivalents will be acceptable for

earnest money deposits in the sale of

HUD-acquired single family properties,

given rapidly changing banking industry

practices. For example, the amendment

permits HUD to accept teller’s checks

that are currently excluded.

Section 291.115(b)(2) of the

regulations on HUD property

disposition is amended to clarify that

section 203(k) insured financing for

investors is available for eligible

properties without increased downpayment requirements. Section

291.110(e) already provides for section

203(k) financing in property disposition

sales. As a general rule, investors are

precluded from obtaining FHA-insured

mortgage financing. HUD-acquired

properties may be sold to investors with

FHA-insured financing but, in order to

protect the insurance funds, based upon

past experiences, the property

disposition regulations were drafted to

require higher down-payments for

investors. A 25 percent down-payment

is required for investors who purchase

a one-unit single family dwelling with

insured mortgage financing.

The section 203(k) program

specifically makes investors eligible to

obtain mortgage financing with a 15

percent down-payment based upon the

lesser of the estimated value of the

property plus the cost of rehabilitation,

or 110 percent of the estimate of value

after rehabilitation. The availability of

the section 203(k) program for property

disposition sales, as provided by

§ 291.110(e), incorporates the 15 percent

down-payment requirement for

investors through the regulations that

implement section 203(k). In order to

make it clear that the 25 percent downpayment provision of § 291.115(b)(2)

does not apply to section 203(k) investor

mortgages, a technical amendment is

being made to that section.

Typographical and Technical Errors,

and Cross Reference Corrections

This rule corrects several

typographical and technical errors and

also corrects and adds cross references

and removes cross references that are no

longer applicable. Also, § 203.390 is

amended to insert language

inadvertently omitted when that section

was last amended on July 1, 1993, at 58

FR 35369.

Other Matters

Justification for Final Rulemaking

In general, the Department publishes

a rule for public comment before issuing

a rule for effect, in accordance with its

own regulations on rulemaking, 24 CFR

part 10. However, part 10 does provide

for exceptions from that general rule

where the agency finds good cause to

omit advance notice and public

participation. The good cause

requirement is satisfied when prior

public procedure is ‘‘impracticable,

unnecessary, or contrary to the public

interest.’’ (24 CFR 10.1) The Department

finds that good cause exists to publish

this rule for effect without first

soliciting public comment, in that prior

public procedure is unnecessary and

contrary to public interest because the

amendments made by this rule give

greater clarity and accuracy to the

provisions. They do not substantively

affect the rights and duties of

participants in the programs.

Environmental Impact

A Finding of No Significant Impact

with respect to the environment has

been made in accordance with HUD

regulations at 24 CFR part 50, which

implements section 102(2)(C) of the

National Environmental Policy Act of

1969 (NEPA). This Finding of No

Significant Impact is available for public

inspection between 7:30 a.m. and 5:30

p.m. weekdays in the Office of the Rules

Docket Clerk, Office of the General

Counsel, Department of Housing and

Urban Development Room 10276, 451

Seventh Street, SW, Washington, DC

20410.

Regulatory Flexibility Act

The Secretary, in accordance with the

Regulatory Flexibility Act (5 U.S.C.

605(b)), has reviewed this rule before

publication and by approving it certifies

that this rule does not have a significant

economic impact on a substantial

number of small entities. This final rule

makes a variety of technical

amendments, clarifications and

corrections to regulations for the single

family mortgage insurance programs.

None of the amendments or

clarifications add to the regulatory

burden for mortgagors or mortgagees.

Executive Order 12612, Federalism

The General Counsel, as the

Designated Official under section 6(a) of

Executive Order 12612, Federalism, has

determined that the policies contained

in this rule will not have substantial

direct effects on states or their political

subdivisions, or the relationship

between the federal government and the

states, or on the distribution of power

and responsibilities among the various

levels of government. As a result, the

rule is not subject to review under the

order.

Executive Order 12606, The Family

The General Counsel, as the

Designated Official under Executive

Order 12606, The Family, has

determined that this rule does not have

potential for significant impact on

family formation, maintenance, and

general well-being, and, thus, is not

subject to review under the order. No

significant change in existing HUD

policies or programs will result from

promulgation of this rule, as those

policies and programs relate to family

concerns.

List of Subjects

24 CFR Part 200

Administrative practice and

procedure, Claims, Equal employment

opportunity, Fair housing, Home

improvement, Housing standards,

Incorporation by reference, Lead

poisoning, Loan programs—housing and

community development, Minimum

property standards, Mortgage insurance,

Organization and functions

(Government agencies), Penalties,

Reporting and recordkeeping

requirements, Social security,

Unemployment compensation, Wages.

24 CFR Part 201

Health facilities, Historic

preservation, Home improvement, Loan

programs—housing and community

development, Manufactured homes,

Mortgage insurance, Reporting and

recordkeeping requirements.

24 CFR Part 202

Administrative practice and

procedure, Home improvement,

Manufactured homes, Mortgage
Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations 36263

insurance, Reporting and recordkeeping

requirements.

24 CFR Part 203

Hawaiian Natives, Home

improvement, Indians—lands, Loan

programs—housing and community

development, Mortgage insurance,

Reporting and recordkeeping

requirements, Solar energy.

24 CFR Part 206

Aged, Condominiums, Loan

programs—housing and community

development, Mortgage insurance,

Reporting and recordkeeping

requirements.

24 CFR Part 221

Low and moderate income housing,

Mortgage insurance, Reporting and

recordkeeping requirements.

24 CFR Part 233

Home improvement, Loan programs—

housing and community development,

Mortgage insurance, Reporting and

recordkeeping requirements.

24 CFR Part 234

Condominiums, Mortgage insurance,

Reporting and recordkeeping

requirements.

24 CFR Part 280

Community development, Grant

programs—housing and community

development, Loan programs—housing

and community development, Low and

moderate income housing, Nonprofit

organizations, Reporting and

recordkeeping requirements.

24 CFR Part 291

Community facilities, Conflict of

interests, Homeless, Lead poisoning,

Low and moderate income housing,

Mortgages, Reporting and recordkeeping

requirements, Surplus government

property.

Accordingly, in title 24 of the Code of

Federal Regulations, parts 200, 201, 202,

203, 206, 221, 233, 234, 280, and 291 are

amended as follows:

PART 200—INTRODUCTION

1. The authority citation for 24 CFR

part 200 continues to read as follows:

Authority: 12 U.S.C. 1701–1715z–18; 42

U.S.C. 3535(d).

§ 200.810 [Amended]

2. Section 200.810(b) is amended to

remove the phrase ‘‘, who shall be listed

on the HUD Appraiser Roster under

§ 267.8(d)(2) of the chapter,’’.

PART 201—TITLE I PROPERTY

IMPROVEMENT AND MANUFACTURED

HOME LOANS

3. The authority citation for 24 CFR

part 201 continues to read as follows:

Authority: 12 U.S.C. 1703; 42 U.S.C. 1436a

and 3535(d).

§ 201.18 [Amended]

4. Section 201.18 is amended by

revising the section heading to read,

‘‘Modification agreement or repayment

plan.’’

PART 202—APPROVAL OF LENDING

INSTITUTIONS AND MORTGAGEES

5. The authority citation for 24 CFR

part 202 continues to read as follows:

Authority: 12 U.S.C. 1703, 1709, and

1715b; 42 U.S.C. 3535(d).

6. Section 202.3(j) is amended to add

at the end the following sentence:

§ 202.3 General approval requirements.

* * * * *

(j) * * * The Secretary may identify

classes or groups of lenders that are

exempt from one or more of these fees.

* * * * *

7. Section 202.11 is amended by

revising the section heading to read as

follows:

§ 202.11 Approval, origination approval

agreement, recertification, withdrawal of

approval and termination of approval

agreement.

* * * * *

8. Section 202.12(k) is amended to

add at the end the following sentence:

§ 202.12 General approval requirements.

* * * * *

(k) * * * The Secretary may identify

classes or groups of mortgagees that are

exempt from one or more of these fees.

* * * * *

§ 202.13 [Amended]

9. Section 202.13 is amended by

removing paragraph (d) and

redesignating paragraph (e) as paragraph

(d).

PART 203—SINGLE FAMILY

MORTGAGE INSURANCE

10. The authority citation for 24 CFR

part 203 continues to read as follows:

Authority: 12 U.S.C. 1709, 1710, 1715b,

and 1715u; 42 U.S.C. 3535(d).

11. Section 203.5 is amended by

revising paragraph (e) to read as follows:

§ 203.5 Direct Endorsement process.

* * * * *

(e) Appraisal. (1) A mortgagee shall

have the property appraised in

accordance with such standards and

requirements as the Secretary may

prescribe.

(2) The mortgagee shall not

discriminate on the basis of race, color,

religion, national origin, sex, age, or

disability in the selection of an

appraiser.

12. Section 203.17 is amended by

revising paragraph (b) to read as follows:

§ 203.17 Mortgage provisions.

* * * * *

(b) Mortgage multiples. A mortgage

shall involve a principal obligation in a

multiple of $1.

* * * * *

13. Section 203.18 is amended to

remove the parenthetical phrase ‘‘(as in

effect on September 30, 1992)’’ in

paragraph (a)(1)(ii) and to add a new

paragraph (i) to read as follows:

§ 203.18 Maximum mortgage amounts.

* * * * *

(i) Energy efficient mortgages. The

principal amount of energy efficient

mortgages may exceed the maximum

amounts determined under paragraph

(a)(1) of this section under conditions

prescribed by the Secretary in

accordance with section 106 of the

Energy Policy Act of 1992.

§ 203.19 [Amended]

§ 203.19 [Amended]

14. Section 203.19 is amended by

removing paragraph (c).

15. Section 203.22 is amended by

revising paragraph (a) to read as follows:

§ 203.22 Payment of insurance premiums

or charges; prepayment privileges.

(a) Payment of periodic insurance

premiums or charges. Except with

respect to mortgages for which a onetime mortgage insurance premium is

paid pursuant to § 203.280, the mortgage

may provide for monthly payments by

the mortgagor to the mortgagee of an

amount equal to one-twelfth of the

annual mortgage insurance premium

payable by the mortgagee to the

Commissioner. Such payments continue

only so long as the contract of insurance

shall remain in effect or for such shorter

period as mortgage insurance premiums

are payable by the mortgagee to the

Commissioner.

* * * * *

16. Section 203.24 is amended by

revising paragraph (a)(1) to read as

follows:

§ 203.24 Application of payments.

(a) * * *

(1) Premium charges under the

contract of insurance (other than a onetime or up-front mortgage insurance
36264 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations

premium paid in accordance with

§§ 203.280, 203.284 and 203.285),

charges for ground rents, taxes, special

assessments, flood insurance premiums,

if required, and fire and other hazard

insurance premiums;

* * * * *

17. Section 203.30 is amended by

adding a new paragraph (d) to read as

follows:

§ 203.30 Certificate of nondiscrimination

by the mortgagor.

* * * * *

(d) That buildings having four (4) or

more units, which were built for first

occupancy after March 13, 1991, were

constructed in compliance with the Fair

Housing Act new construction

requirements in 24 CFR 100.205.

§ 203.36 [Removed and reserved]

18. Section 203.36 is removed and

reserved.

19. Section 203.38 is revised to read

as follows:

§ 203.38 Location of dwelling.

At the time a mortgage is insured

there must be located on the mortgaged

property one or more dwellings

designed principally for residential use

for not more than four families.

20. Section 203.40 is amended by

revising the first sentence to read as

follows:

§ 203.40 Location of property.

The mortgaged property shall be

located within the United States, Puerto

Rico, Guam, the Virgin Islands, the

Commonwealth of the Northern Mariana

Islands, and American Samoa. * * *

21. Section 203.42 is amended by

revising paragraph (a) to read as follows:

§ 203.42 Rental properties.

(a) A mortgage on property upon

which there is a dwelling to be rented

by the mortgagor shall not be eligible for

insurance if the property is a part of, or

adjacent or contiguous to, a project, or

group of similar rental properties, in

which the mortgagor has a financial

interest in eight or more dwelling units.

* * * * *

22. Section 203.43 is amended by

revising paragraph (c)(3) to read as

follows:

§ 203.43 Eligibility of miscellaneous type

mortgages.

* * * * *

(c) * * *

(3) The mortgage must result in a

reduction in regular monthly payments

by the mortgagor, except:

(i) When a fixed rate mortgage is given

to refinance an adjustable rate mortgage

held by a mortgagor who is to occupy

the dwelling as a principal residence or

secondary residence, as these terms are

defined in § 203.18(f); or

(ii) When refinancing a mortgage for

a shorter term will result in an increase

in the mortgagor’s regular monthly

payments of no more than $50. In the

case of a graduated payment mortgage,

the reduction in regular monthly

payments means a reduction from the

payment due under the existing

mortgage for the month in which the

refinancing mortgage is executed.

* * * * *

§ 203.43b [Removed and reserved]

23. Section 203.43b is removed and

reserved.

§ 203.43f [Amended]

24. Section 203.43f(b) is amended to

remove the last sentence.

25. Section 203.43h is amended by

revising the introductory text, revising

paragraph (b), and revising paragraph

(g)(3), to read as follows:

§ 203.43h Eligibility of mortgages on

Indian land insured pursuant to section 248

of the National Housing Act.

A mortgage covering a one- to fourfamily residence located on Indian land

shall be eligible for insurance pursuant

to section 248 of the National Housing

Act (12 U.S.C. 1715z–13),

notwithstanding otherwise applicable

requirements related to marketability of

title, if the mortgage meets the

requirements of this subpart as modified

by this section and is made by an Indian

Tribe or on a leasehold estate, by an

Indian who will occupy it as a principal

residence. Mortgage insurance on

cooperative shares is not authorized

under this section.

* * * * *

(b) Eviction procedures. Before HUD

will insure a mortgage on Indian land,

the tribe having jurisdiction over such

property must certify to the HUD Field

Office that it has adopted and will

enforce procedures for eviction of

defaulted mortgagors where the insured

mortgage has been foreclosed.

* * * * *

(g) * * *

(3) ‘‘Indian tribe’’ means any Indian or

Alaska native tribe, band, nation, or

other organized group or community of

Indians or Alaskan natives recognized

as eligible for the services provided to

Indians or Alaska natives by the

Secretary of the Interior because of its

status as such an entity, or that is an

eligible recipient under chapter 67 of

title 31, United States Code. For

purposes of engaging in section 248

insured mortgage transactions under

this section, an Indian tribe may act

through its duly authorized

representative.

* * * * *

26. Section 203.43i is amended by

revising paragraph (a) to read as follows:

§ 203.43i Eligibility of mortgages on

Hawaiian Home Lands insured pursuant to

section 247 of the National Housing Act.

(a) Eligibility. A mortgage on a

homestead lease granted by the

Department of Hawaiian Home Lands

covering a one- to four-family residence

located on Hawaiian home lands is

eligible for insurance pursuant to

section 247 of the National Housing Act

(12 U.S.C. 1715z–12) if the mortgagor is

a native Hawaiian who will occupy it as

a principal residence, and if the

mortgage meets the requirements of this

subpart as modified by this section.

Mortgage insurance on cooperative

shares under § 203.43c on homes in

federally impacted areas under

§ 203.43e is not authorized under this

section.

* * * * *

27. Section 203.44 is revised to read

as follows:

§ 203.44 Eligibility of advances.

Mortgagees may not make open-end

advances under section 225 of the

National Housing Act (12 U.S.C. 1715p)

in connection with the mortgages

insured under this chapter.

28. Section 203.49 is amended by

revising the second sentence of the

introductory text and by removing the

second sentence of paragraph (a)

beginning with ‘‘The weekly average

* * *’’, to read as follows:

§ 203.49 Eligibility of adjustable rate

mortgages.

* * * This section shall apply only to

mortgage loans described under sections

203(b), 203(h) and 203(k) of the National

Housing Act.

* * * * *

29. Section 203.204 is amended by

revising paragraph (a) and by revising

the third sentence of paragraph (g), to

read as follows:

§ 203.204 Requirements and limitations of

a plan.

(a) A Plan must assure timely

resolution of homeowners’ complaints

or claims covered under § 203.205.

Warranties set forth in a Plan must

comply with section 2301(a)(1)–(13) of

the Magnuson-Mass Warranty-Federal

Trade Commission Improvement Act

(15 U.S.C. 2301–2312) along with the

requirements and criteria set out in this

section.

* * * * *
Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations 36265

(g) * * * A Plan must contain prearbitration conciliation provisions at no

cost to the homeowner, and provision

for judicial resolution of disputes, but

arbitration, which must be available to

a homeowner during the entire term of

the coverage contract, must be an

assured recourse for a dissatisfied

homeowner.

* * * * *

30. Section 203.251 is amended by

revising paragraph (s) to read as follows:

§ 203.251 Definitions.

* * * * *

(s) State includes the several States,

Puerto Rico, the District of Columbia,

Guam, the Commonwealth of the

Northern Mariana Islands, American

Samoa, and the Virgin Islands.

* * * * *

31. Section 203.255 is amended by

revising paragraph (b)(2) to read as

follows:

§ 203.255 Insurance of mortgage.

(b) * * *

(2) An application for insurance of the

mortgage in a form prescribed by the

Secretary;

* * * * *

§ 203.265 [Amended]

32. Section 203.265(b) is amended in

the last sentence to remove the phrase

‘‘Treasury Fiscal Requirements Manual’’

and add in its place the phrase

‘‘Treasury Financial Manual.’’

33. Section 203.281 is amended by

revising paragraph (b)(1) to read as

follows:

§ 203.281 Calculation of one-time MIP.

* * * * *

(b)(1) The Commissioner shall

determine the applicable premium

percentage in accordance with sound

financial and actuarial practice.

* * * * *

§ 203.284 [Amended]

34. Section 203.284 is amended by:

a. Removing the second sentence in

paragraph (a)(1);

b. Removing the phrase ‘‘pursuant to

paragraph (b)(1)(i) or (b)(2)(i) of this

section,’’ in paragraph (c); and

c. Removing the phrase ‘‘Treasury

Fiscal Requirements Manual’’ in the last

sentence of paragaph (e), and adding in

its place the phrase ‘‘Treasury Financial

Manual.’’

35. Section 203.285 is amended by

revising the second sentence of

paragraph (c) to read as follows:

§ 203.285 Fifteen-year mortgages:

Calculation of up-front and annual MIP on

or after December 26, 1992.

* * * * *

(c) Applicability of certain provisions.

* * * The provisions of paragraphs (c),

(d), (e), and (g) of § 203.284 also shall be

applicable to mortgages subject to

premiums under this section.

* * * * *

36. Section 203.346 is amended by

revising the first sentence to read as

follows:

§ 203.346 Postponement of foreclosure—

mortgagors in military service.

If at any time during default the

mortgagor is a ‘‘Person in military

service,’’ as such term is defined in the

Soldiers’ and Sailors’ Civil Relief Act of

1940, the period during which the

mortgagor is in such service shall be

excluded in computing the period

within which the mortgagee shall

commence foreclosure or acquire the

property by other means as provided in

§ 203.355 of this subpart. * * *

37. Section 203.356 is revised to read

as follows:

§ 203.356 Notice of foreclosure and preforeclosure sale; reasonable diligence

requirements.

(a) Notice of foreclosure and preforeclosure sale. The mortgagee must

give notice to the Secretary, in a format

prescribed by the Secretary, within 30

days after the institution of foreclosure

proceedings. The mortgagee must give

notice to the Secretary, in a format

prescribed by the Secretary, within the

time-frame prescribed by the Secretary,

of the acceptance of any mortgagor into

the pre-foreclosure sale procedure.

(b) Reasonable diligence. The

mortgagee must exercise reasonable

diligence in prosecuting the foreclosure

proceedings to completion and in

acquiring title to and possession of the

property. A time frame that is

determined by the Secretary to

constitute ‘‘reasonable diligence’’ for

each State is made available to

mortgagees.

38. Section 203.378 is amended by

revising paragraph (c)(1) to read as

follows:

§ 203.378 Property condition.

* * * * *

(c) * * *

(1) Damage by fire, flood, earthquake,

hurricane, or tornado;

* * * * *

39. Section 203.379 is amended by

revising paragraph (a), introductory text,

and paragraph (b), introductory text, to

read as follows:

§ 203.379 Adjustment for damage or

neglect.

(a) If the property has been damaged

by fire, flood, earthquake, hurricane, or

tornado, or, for mortgages insured on or

after January 1, 1977, the property has

suffered damage because of the

mortgagee’s failure to take action as

required by § 203.377, the damage must

be repaired before conveyance of the

property or assignment of the mortgage

to the Secretary, except under the

following conditions:

* * * * *

(b) For mortgages insured under firm

commitments issued on or after

November 19, 1992, or under direct

endorsement processing where the

credit worksheet was signed by the

mortgagee’s underwriter on or after

November 19, 1992, the provisions of

paragraph (a) of this section apply and,

in addition, if the property has been

damaged during the time of the

mortgagee’s possession by events other

than fire, flood, earthquake, hurricane,

or tornado, or if it was damaged

notwithstanding reasonable action by

the mortgagee as required by § 203.377

of this part, the mortgagee must provide

notice of such damage to the Secretary

and may not convey until directed to do

so by the Secretary. The Secretary will

either:

* * * * *

40. Section 203.380 is amended by

revising paragraph (a)(1)(i) to read as

follows:

§ 203.380 Certificate of property condition.

(a) * * *

(1) * * *

(i) Undamaged by fire, flood,

earthquake, hurricane or tornado; and

* * * * *

41. Section 203.390 is amended by

revising paragraph (b)(1) to read as

follows:

§ 203.390 Waiver of title—mortgages or

property formerly held by the Secretary.

* * * * *

(b) * * *

(1) If a property held by the Secretary

is sold by the Secretary who also insures

a mortgage financing the sale, and the

mortgage is later reassigned to the

Secretary or the property covered by the

mortgage is later conveyed to the

Secretary, the Secretary will not object

to title by reason of any lien or other

adverse interest that was senior to the

mortgage on the date the mortgage was

filed for record, except where the lien or

other adverse interest arose from a lien

or interest that had already been

recorded against the mortgagor.

* * * * *

42. Section 203.402 is amended by

revising paragraphs (b), (c) and (k)(1) to

read as follows:
36266 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations

§ 203.402 Items included in payment—

conveyed and non-conveyed properties.

* * * * *

(b) Special assessments, which are

noted on the application for insurance

or which become liens after the

insurance of the mortgage.

(c) Hazard insurance premiums on the

mortgaged property not in excess of a

reasonable rate as defined in

§ 203.379(a)(4).

* * * * *

(k)(1) For properties conveyed to the

Secretary, an amount equivalent to the

debenture interest which would have

been earned, as of the date such

payment is made, on the portion of the

insurance benefits paid in cash, if such

portion had been paid in debentures,

except that:

(i) When the mortgagee fails to meet

any one of the applicable requirements

of §§ 203.355, 203.356(b), 203.359,

203.360, 203.365, 203.606(b)(1), or

203.366 within the specified time and in

a manner satisfactory to the Secretary

(or within such further time as the

Secretary may approve in writing), the

interest allowance in such cash payment

shall be computed only to the date on

which the particular required action

should have been taken or to which it

was extended;

(ii) When the mortgagee fails to meet

the requirements of § 203.356(a) of this

part within the specified time and in a

manner satisfactory to the Secretary (or

within such further time as the

Secretary may approve in writing), the

interest allowance in such cash payment

shall be computed to a date set

administratively by the Secretary.

* * * * *

43. An undesignated center heading

‘‘GRADUATED PAYMENT

MORTGAGES’’ is added after § 203.435

and before § 203.436.

44. Section 203.502 is amended to

revise the first sentence of paragraph (a)

and all of paragraph (b) to read as

follows:

§ 203.502 Responsibility for servicing.

(a) After January 10, 1994, servicing of

insured mortgages must be performed

by a mortgagee that is approved by HUD

to service insured mortgages. * * *

* * * * *

(b) Whenever servicing of any

mortgage is transferred from one

mortgagee or servicer to another, notice

of the transfer of service shall be

delivered:

(1) By the transferor mortgagee or

servicer to the mortgagor. The

notification shall be delivered not less

than 15 days before the effective date of

the transfer and shall contain the

information required in § 3500.21(e)(2)

of this title; and

(2) By the transferee mortgagee or

servicer:

(i) To the mortgagor. The notification

shall be delivered not less than 15 days

before the effective date of the transfer

and shall contain the information

required in § 3500.21(e)(2) of this title;

and

(ii) To the Secretary. This notification

shall be delivered within 15 days of the

transfer, in a format prescribed by the

Secretary.

* * * * *

45. Section 203.604 is amended by

revising the second sentence of

paragraph (b) to read as follows:

§ 203.604 Contact with the mortgagor.

* * * * *

(b) * * * If default occurs in a

repayment plan arranged other than

during a personal interview, the

mortgagee must have a face-to-face

meeting with the mortgagor, or make a

reasonable attempt to arrange such a

meeting within 30 days after such

default and at least 30 days before

foreclosure is commenced, or at least 30

days before assignment is requested if

the mortgage is insured on Hawaiian

home land pursuant to section 247 or

Indian land pursuant to section 248 or

if assignment is requested under

§ 203.350(d) for mortgages authorized by

section 203(q) of the National Housing

Act.

* * * * *

46. Section 203.670 is amended by

revising paragraph (a) to read as follows:

§ 203.670 Conveyance of occupied

property.

(a) It is HUD’s policy to reduce the

inventory of acquired properties in a

manner that expands homeownership

opportunities, strengthens

neighborhoods and communities, and

ensures a maximum return to the

mortgage insurance fund.

* * * * *

47. Section 203.679 is amended by

revising paragraph (b)(4) to read as

follows:

§ 203.679 Continued occupancy after

conveyance.

* * * * *

(b) * * *

(4) Assignment of the property by the

Secretary to a different use or program.

§ 203.685 [Removed]

48. Section 203.685 is removed.

PART 206—HOME EQUITY

CONVERSION MORTGAGE

INSURANCE

49. The authority citation for 24 CFR

part 206 continues to read as follows:

Authority: 12 U.S.C. 1715b, 1715z–1720;

42 U.S.C. 3535(d).

§ 206.3 [Amended]

50. Section 206.3 is amended by

removing the last sentence of the

definition of ‘‘Maximum claim

amount’’.

51. Section 206.9 is amended by

revising the paragraph heading of

paragraph (b) to read as follows:

§ 206.9 Eligible mortgagees.

* * * * *

(b) HUD approved mortgagees.

§ 206.13 [Removed and reserved]

52. Section 206.13 is removed and

reserved.

53. Section 206.17 is amended by

revising paragraph (a) to read as follows:

§ 206.17 General.

(a) Payment options. A mortgage shall

initially provide for the tenure payment

option (§ 206.19(a)), the term payment

option (§ 206.19(b)), or the line of credit

payment option (§ 206.19(c)), or a

combination as provided in § 206.25(d),

subject to later change in accordance

with § 206.26.

* * * * *

§ 206.45 [Amended]

54. Section 206.45(b) is amended to

remove the second sentence.

§ 206.121 [Amended]

55. Section 206.121(c) is amended to

remove the citation ‘‘§ 206.27(e)’’ and to

add in its place the citation

‘‘§ 206.27(d).’’

PART 221—LOW COST AND

MODERATE INCOME MORTGAGE

INSURANCE

56. The authority citation for part 221

continues to read as follows:

Authority: 12 U.S.C. 1707(a), 1715b, and

1715l; 42 U.S.C. 3535(d).

57. Section 221.45 is revised to read

as follows:

§ 221.45 Mortgage obligation in multiples.

The mortgage shall involve a

principal obligation in multiples of $1.

PART 233—EXPERIMENTAL HOUSING

MORTGAGE INSURANCE

58. The authority citation for part 233

is revised to read as follows:

Authority: 12 U.S.C. 1715b, 1715x; 42

U.S.C. 3535(d).
Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations 36267

59. Section 233.5 is amended by

revising paragraph (a) introductory text

and paragraph (b) to read as follows:

§ 233.5 Cross-reference.

(a) To be eligible for insurance under

this subpart, a mortgage or home

improvement loan shall meet the

eligibility requirements for insurance

under § 203.1 et seq. (part 203, subpart

A); § 213.501 et seq. (part 213, subpart

C); § 220.1 et seq. (part 220, subpart A);

§ 221.1 et seq. (part 221, subpart A);

§ 226.1 et seq. (part 226, subpart A);

§ 234.1 et seq. (part 234, subpart A);

§ 235.1 et seq. (part 235, subpart A); or

§ 237.1 et seq. (part 237, subpart A) of

this chapter, except that:

* * * * *

(b) For the purposes of this subpart,

all references in parts 203, 213, 220,

221, 226, 234, 235, and 237 of this

chapter to sections 203, 213, 220, 221,

809, 234, 235, and 237 of the National

Housing Act shall be construed to refer

to section 233 of the Act.

PART 234—CONDOMINIUM

OWNERSHIP MORTGAGE INSURANCE

60. The authority for part 234

continues to read as follows:

Authority: 12 U.S.C. 1715qb and 1715y; 42

U.S.C. 3535(d). Section 234.520(a)(2)(ii) is

also issued under 12 U.S.C. 1707(a).

61. Section 234.1 is amended by

revising paragraph (n) to read as

follows:

§ 234.1 Definitions used in this subpart.

* * * * *

(n) State includes the several States,

Puerto Rico, the District of Columbia,

Guam, the Commonwealth of the

Northern Mariana Islands, American

Samoa, and the Virgin Islands.

* * * * *

62. Section 234.11 is added to read as

follows:

§ 234.11 Disclosure regarding interest due

upon mortgage prepayment.

Each mortgagee with respect to a

mortgage under this part shall, at or

before closing with respect to any such

mortgage, provide the mortgagor with

written notice in a form prescribed by

the Commissioner describing any

requirements the mortgagor must fulfill

upon prepayment of the principal

amount of the mortgage to prevent the

accrual of any interest on the principal

amount after the date of such

prepayment.

63. Section 234.16 is amended by

adding a new paragraph (d) to read as

follows:

§ 234.16 Certificate of nondiscrimination

by mortgagor.

* * * * *

(d) That buildings having four (4) or

more units, which were built for first

occupancy after March 13, 1991, were

constructed in compliance with the Fair

Housing Act new construction

requirements in 24 CFR 100.205.

64. Section 234.25 is amended by

revising paragraph (b) to read as follows:

§ 234.25 Mortgage provisions.

* * * * *

(b) Mortgage multiples. The mortgage

shall involve a principal obligation in a

multiple of $1.

* * * * *

65. Section 234.52 is amended by

revising paragraph (c) to read as follows:

§ 234.52 Refinancing of existing

mortgages.

* * * * *

(c) The mortgage must result in a

reduction in regular monthly payments

by the mortgagor, except:

(1) When a fixed rate mortgage is

given to refinance an adjustable rate

mortgage held by a mortgagor who is to

occupy the dwelling as a principal

residence or secondary residence, as

these terms are defined in § 237.27(e); or

(2) When refinancing a mortgage for a

shorter term will result in an increase in

the mortgagor’s regular monthly

payments of no more than $50. In the

case of a graduated payment mortgage,

the reduction in regular monthly

payments means a reduction from the

payment due under the existing

mortgage for the month in which the

refinancing mortgage is executed;

* * * * *

66. Section 234.54 is added, under the

undesignated center heading ‘‘ELIGIBLE

MORTGAGES,’’ to read as follows:

§ 234.54 Eligibility of assigned mortgages

and mortgages covering acquired property.

The Commissioner may insure under

this part, without regard to any

limitation upon eligibility contained in

this subpart, 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 in the settlement of

an insurance claim under any section or

title of the National Housing Act.

§ 234.67 [Removed and reserved]

67. Section 234.67 is removed and

reserved.

68. The undesignated center heading

‘‘OPEN-END ADVANCES’’ immediately

preceding § 234.70 is removed.

69. Section 234.70 is revised to read

as follows:

§ 234.70 Eligibility of open-end advances.

Mortgagees may not make open-end

advances under section 255 of the

National Housing Act in connection

with mortgages insured under this

chapter.

PART 280—NEHEMIAH HOUSING

OPPORTUNITY GRANTS PROGRAM

70. The authority citation for 24 CFR

part 280 continues to read as follows:

Authority: 12 U.S.C. 1715l note; 42 U.S.C.

3535(d).

71. Section 280.330 is amended by

revising the section heading and

paragraph (c)(2) to read as follows:

§ 280.330 Loan and Profit.

* * * * *

(c) * * *

(2) Loan and Profit—Any amounts

remaining after distribution of the down

payment shall be shared equally

between the Secretary and the family,

but only to the extent that the Secretary

recovers an amount equal to the amount

of the loan originally made to the family

under this section. If such remaining

amounts are insufficient for the

Secretary to recover the full amount of

the loan made under this section, the

remaining balance of the second

mortgage shall be cancelled and shall

not be transferred to a subsequent

purchaser.

* * * * *

PART 291—DISPOSITION OF HUDACQUIRED SINGLE FAMILY

PROPERTY

72. The authority for 24 CFR part 291

continues to read as follows:

Authority: 12 U.S.C. 1790 and 1715(b); 42

U.S.C. 1441, 1441a, 1551a, and 3535(d).

73. Section 291.100 is amended by

revising the first sentence of paragraph

(a)(3) and the introductory text in

paragraph (a)(4) to read as follows:

§ 291.100 General policy.

(a) * * *

(3) Except as provided in paragraph

(a)(4) of this section, tenants in

occupancy will not be offered the right

of first refusal to purchase the property.

* * *

(4) HUD tenants in occupancy will be

offered the right of first refusal to

purchase property where:

* * * * *

74. Section 291.105 is amended by

revising the first sentence of paragraph

(e) and the first sentence of paragraph

(h)(2), to read as follows:

§ 291.105 Competitive sales procedure.

* * * * *
36268 Federal Register / Vol. 61, No. 132 / Tuesday, July 9, 1996 / Rules and Regulations

(e) Full price offers. HUD field offices

that operate under a ‘‘full price offer’’

program open offers at specified times

during the 10-day bidding period. * * *

* * * * *

(h) * * *

(2) All bids must be accompanied by

earnest money deposits in the form of a

cash equivalent as prescribed by the

Secretary, or a certification from the real

estate broker that the earnest money has

been deposited in the broker’s escrow

account. * * *

* * * * *

75. Section 291.110 is amended by

revising the first sentence of paragraph

(b)(1) to read as follows:

§ 291.110 Other sales procedures.

* * * * *

(b) Direct sales to displaced persons.

(1) At the discretion of the Field Office,

properties eligible for insured financing

are offered for direct sale, at a discount

of 10 percent off the list price, to

displaced persons who will occupy the

properties. * * *

* * * * *

76. Section 291.115 is amended by

revising paragraph (b)(2) to read as

follows:

§ 291.115 Insured sales.

* * * * *

(b) * * *

(2) For an owner-occupant purchaser,

the mortgage amount is based on the bid

price plus any allowable pre-paids (e.g.,

taxes) and financing or closing costs, up

to local maximum mortgage amounts.

For investor purchasers without

rehabilitation loans insured under

§ 203.50 of this chapter, the mortgage

amount is limited to 75 percent of the

bid price for one-unit properties, and 85

percent for two- to four-unit properties,

up to local maximum mortgage

amounts. Pre-paids, financing or closing

costs may not be included in the

mortgage amount for such investor

purchasers. For investor purchasers

with rehabilitation loans insured under

§ 203.50 of this chapter, the mortgage

amount is calculated as provided in

§ 203.50(f) of this chapter and the bid

price is used as the Commissioner’s

estimate of the value of the property

before rehabilitation.

Dated: June 13, 1996.

Nicolas P. Retsinas,

Assistant Secretary for Housing-Federal

Housing Commissioner.

[FR Doc. 96–17305 Filed 7–8–96; 8:45 am]

BILLING CODE 4210–27–P