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e-CFR data is current as of July 31, 2020

Title 24Subtitle BChapter IISubchapter BPart 241 → Subpart F


Title 24: Housing and Urban Development
PART 241—SUPPLEMENTARY FINANCING FOR INSURED PROJECT MORTGAGES


Subpart F—Insurance for Equity Loans and Acquisition Loans—Contract Rights and Obligations


Contents
§241.1200   Cross-references.
§241.1205   Payment of insurance benefits.
§241.1210   Condition for payment of insurance benefits.
§241.1215   Calculation of insurance benefits.
§241.1220   Termination of insurance benefits.
§241.1230   No vested right in fund.
§241.1235   Cross default.
§241.1245   Insurance endorsement.
§241.1250   Effect of endorsement.

Source: 57 FR 12040, Apr. 8, 1992, unless otherwise noted.

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§241.1200   Cross-references.

(a) Projects with a HUD-insured or HUD-held mortgage. (1) All the provisions of part 207, subpart B of this chapter, covering mortgages insured under section 207 of the Act, apply to equity loans or acquisition loans on a project insured under section 241(f) of the Act, except the following provisions:

Sec.

207.251   Definitions.

207.252   First, second and third premium.

207.252a   Premiums—operating loss loans.

207.252b   Premiums—mortgages insured pursuant to section 223(f) of the Act.

207.252c   Premiums—mortgages insured pursuant to section 238(c) of the Act.

207.254   Insurance endorsement.

(2) For the purposes of subpart F of this part, all references in part 207 of this chapter to section 207 of the Act and to the term “mortgage” shall be construed to refer to section 241(f) of the Act and “equity or acquisition loan,” respectively.

(b) Projects without a HUD-insured or HUD-held mortgage. The provisions of subpart D of this part shall be applicable to a project without a HUD-insured or HUD-held mortgage that is receiving an equity loan or acquisition loan under subpart E of this part in connection with a plan of action approved by the Commissioner under part 248 of this chapter.

(c) All of the definitions in §241.1005 apply to subpart F of this part. In addition, as used in subpart F of this part, the term “contract of insurance” means the agreement evidenced by the Commissioner's insurance endorsement and includes the provisions of subpart F of this part and of the Act.

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§241.1205   Payment of insurance benefits.

All the provisions of §207.259 of this chapter relating to insurance benefits shall apply to an equity or acquisition loan insured under subpart F of this part.

[80 FR 51469, Aug. 25, 2015]

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§241.1210   Condition for payment of insurance benefits.

(a) All of the provisions of §207.258 of this chapter apply to subpart F of this part, except that, if the holder of the senior insured mortgage institutes a foreclosure action, the lender shall notify the Commissioner in a timely manner of such action. The Commissioner, at its option, may then direct the lender to assign the equity or acquisition loan to the Commissioner, or bid an amount necessary to acquire the project and convey the project to the Commissioner.

(b) If the equity loan or acquisition loan is assigned in accordance with this section, the Commissioner at a foreclosure sale may bid, in addition to amounts otherwise authorized, any sum not in excess of the aggregate unpaid indebtedness secured by the senior insured mortgage and equity or acquisition loan, plus taxes, insurance, foreclosure costs, fees and other expenses.

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§241.1215   Calculation of insurance benefits.

All of the provisions of §207.259 of this chapter apply to subpart F of this part, except that if the lender, at the direction of the Commissioner, acquires title to the project at a foreclosure sale instituted by the holder of the senior insured mortgage, the amount of the claim determined under §207.259(c) of this chapter shall also include an amount bid by the lender to satisfy the senior insured mortgage at the foreclosure sale.

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§241.1220   Termination of insurance benefits.

All of the provisions of §207.253a of this chapter apply to subpart F of this part, except that the following shall also constitute grounds for terminating the contract of insurance:

(a) The failure of the lender to notify the Commissioner in a timely manner of a foreclosure action initiated by the holder of the senior insured mortgage; and

(b) The failure of the lender when directed by the Commissioner to assign the equity or acquisition loan or bid an amount necessary to acquire title to the project and convey the project to the Commissioner, in accordance with §241.1210.

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§241.1230   No vested right in fund.

Neither the lender nor the borrower shall have any vested or other right in the insurance fund under which the loan is insured.

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§241.1235   Cross default.

In the event the borrower commits a default under a prior recorded insured mortgage and the holder thereof initiates a foreclosure proceeding, said default under the prior recorded insured mortgage shall constitute a default under the equity or acquisition loan.

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§241.1245   Insurance endorsement.

(a) Endorsement. The Commissioner shall indicate his insurance of the equity loan or acquisition loan by endorsing the original credit instrument and identifying the section of the Act and the regulations under which the loan is insured and the date of insurance.

(b) Endorsement of phased loan. In the event the loan is phased, the Commissioner shall indicate his insurance of each amount by endorsing the original credit instrument and identifying the section of the Act and the regulations under which such amount is insured and the date of the insurance.

(c) Final advance of phased loan. When all advances of a phased loan have been made and the terms and conditions of the commitment have been complied with to the satisfaction of the Commissioner, the Commissioner shall indicate on the original credit instrument the total of all advances the Commissioner has approved for insurance and again endorse such instrument.

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§241.1250   Effect of endorsement.

From the date that the equity or acquisition loan is endorsed, the Commissioner and the lender shall be bound by the provisions of subpart F of this part to the same extent as if they had executed a contract including the provisions of subpart F of this part and the applicable sections of the Act.

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