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12 U.S.C. 1703, 1709 and 1715b; 42 U.S.C. 3535(d).
62 FR 20082, Apr. 24, 1997, unless otherwise noted.
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(a) Definition. An investing lender or investing mortgagee is an organization that is not approved as a supervised lender or mortgagee under § 202.6, a nonsupervised lender or mortgagee under § 202.7, or a governmental or similar institution under § 202.10. An investing lender or investing 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 investing mortgagee may not service Title I loans or Title II mortgages without prior approval of the Secretary.
(b) Additional requirements. In addition to the general approval requirements in § 202.5, an investing lender or investing mortgagee shall meet the following requirements:
(1) Funding arrangements. An investing lender or investing 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 § 202.5(b), an investing lender or investing 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 lender or 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.
(4) Audit report. An investing lender or mortgagee must comply with the financial reporting requirements in24 CFR part 5, subpart H. 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. Audit reports shall include:
(i) A financial statement in a form acceptable to the Secretary, including a balance sheet and a statement of operations and retained earnings, a statement of cash flows, an analysis of the investing lender's or mortgagee's 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.
[62 FR 20082, Apr. 24, 1997, as amended at 63 FR 9742, Feb. 26, 1998; 75 FR 20734, Apr. 20, 2010; 89 FR 30277, Apr. 23, 2024]