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CHAPTER XV-MORTGAGE INSURANCE

AND

LOAN PROGRAMS UNDER THE

EMERGENCY HOMEOWNERS' RELIEF ACT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Part 2700

Emergency homeowners' relief program ....

Page 1058

PART 2700—EMERGENCY HOMEOWNERS' RELIEF PROGRAM

AUTHORITY: Sec. 108(a), 12 U.S.C. 2707, 89 Stat. 252, Pub. L. 94-50.

SOURCE: 40 FR 59867, Dec. 30, 1975, unless otherwise noted.

Subpart A-Goneral

Subpart A-General

Sec. 2700.1 Purpose. 2700.5 Definitions. 2700.10 Determination of emergency.

Subpart B-Eligibility 2700.101 Eligible properties. 2700.105 Eligible lending institutions. 2700.110 Eligible homeowners.

Subpart C-Terms of Emergency Loans

2700.201 Eligible notes and mortgages. 2700.205 Loan amount. 2700.210 Finance charges.

$ 2700.1 Purpose.

The purpose of this chapter is to describe and establish a standby program, authorized by the Emergency Homeowners' Relief Act, to prevent widespread mortgage foreclosures and distress sales of homes resulting from the temporary loss of employment and income. If it becomes necessary to implement the program, HUD would provide emergency relief under the standby program by coinsuring loans made by private lenders or by making direct loans to homeowners to assist them in making their mortgage payments. In the event that this emergency program is needed, coirsurance under Subpart D is intended to be the primary method of assistance.

Subpart D-Coinsurance

2700.301 Loan applications. 2700.305 Conditions of insurance. 2700.310 Fees. 2700.315 Insurance premiums. 2700.320 Servicing. 2700.325 Termination. 2700.330 Default. 2700.335 Claims. 2700.340 Payment of insurance benefits. 2700.345 Administrative reports and exami

nations. 2700.350 Sale, assignment, and pledge of

insured loan.

means

Subpart E-Direct Loans

2700.401 Participation by lending institu

tions. 2700.405 Application for loans. 2700.410 Transmittal of funds. 2700.415 Fees. 2700.420 Servicing. 2700.425 Default. 2700.430 Collection. 2700.435 Payment to Secretary. 2700.440 Administrative reports and exami

nation.

§ 2700.5 Definitions.

For purposes of this chapter: (a) “Act"

the Emergency Homeowners' Relief Act.

(b) “Delinquent mortgage" means a mortgage which is at least 3 months delinquent at the time of the application for assistance under this chapter and with respect to which such assistance is to be used or has been used to make payments.

(c) “Department” and “HUD" means the Department of Housing and Urban Development.

(d) "Direct loan" means an emergency loan made pursuant to Subpart E with funds of the United States of America, evidenced by a note payable to the United States of America.

(e) “Emergency loan" means an emergency mortgage relief loan made pursuant to this chapter.

(f) “Family” means one or more persons related by blood, marriage, or operation of law, who occupy the same dwelling unit.

(g) “Finance charge” means the cost of credit as determined in 12 CFR 226.4, a section in "Regulation Z" of the Federal Reserve System's regulations on Truth in Lending.

Subpart F-Appendices Appendix 1-Application for insurance or

direct loan authority allocation-appli

cation for contract. Appendix 2-Application for insured loan. Appendix 3-Premium form. Appendix 4-Insurance claim form. Appendix 5-Application for direct loan. Appendix 6–Monthly accounting of direct

loans. Appendix 7-Direct loan final accounting. Appendix 8-Income computation form.

in

(h) “Financially unable to make full includes a mortgage on a condominmortgage payments” means that a ium unit and a security interest in homeowner is unable to make his stock in a housing cooperative. monthly mortgage payment with 25 (0) "Monthly mortgage payment” percent of his gross monthly income means the monthly amount of princiand that his assets (excluding the pal, interest, taxes, ground rents, equity in his principal residence, hazard insurance and mortgage insurhousehold furniture, equipment used ance premiums due to be paid under a in his trade, clothing and automobiles) homeowner's mortgage(s). have a current value not in excess of (p) "Secretary" means the Secretary $5,000.

of Housing and Urban Development. (i) “Gross monthly income" means (q) “Servicer" means a lending insti. the total monthly income, before tution which services an emergency taxes and other deductions, received loan made by the Secretary pursuant by all members of the homeowner's to Subpart E. family. There shall be included in this

(r) "Servicing institution" means the total income all wages, social security lending instituticn that services the payments, retirement benefits, mili

delinquent mortgage. The servicing intary and veteran's disability payments, stitution may also be the lender or serunemployment benefits, welfare bene

vicer. fits, food stamp benefits, and interest

(s) "Substantial reduction and dividend payments.

income" means that the homeowner's (j) “Homeowner" means a mortgagor

average gross monthly income during or mortgagors who are in need of

the period the homecwner is in armortgage assistance pursuant to this

rears on the delinquent mortgage is chapter.

less than 80 percent of his average (k) “Investor" means a lending insti- gross monthly income during the 24 tution which owns a delinquent mort- month period preceding the beginning gage. The investor may also be the of his involuntary unemployment or lender or servicer.

underemployment. (1) "Involuntary unemployment or underemployment due to adverse eco- 8 2700.10 Determination of emergency. nomic conditions" means the status of

(a) The Department has constructed a homeowner who is able to work full

a nationwide composite index of delintime in work which is suitable for the

quencies of 60 days or more (including homeowner on the basis of experience

loans in the process of foreclosure) for and training, who is available for and mortgage loans on one-to four-family actively secking such suitable work,

dwellings. It is a quarterly index and who is either totally unemployed which is based on a weighted average or working part-time in any job, suit- of delinquency rates published by: the able or unsuitable, or working full- Veterans Administration, the National time in work which is unsuitable, but Association of Mutual Savings Banks, who has suffered a substantial reduc

the Mortgage Bankers Association of tion in income. (Registration with the America, the American Life Insurance local office of the state employment Association, and the U.S. League of service will be considered one form of Savings Associations. The rates are evidence of active search for work.) weighted according to the percentage

(m) "Lender" means a lending insti. of the long-term mortgage loans, held tution which makes an emergency by the respective lender group repreloan pursuant to Subpart D, or its as- sented by the data in each individual signee or successor in interest.

series at the end of each quarter. (n) "Mortgage" means any mort- (b) If the composite rate of delingage, deed of trust, executory land quencies should reach 1.20 percent the sales contract, conditional sales con- Secretary will, after consultation with tract, or other form of security and the Federal agencies that regulate inthe obligation secured thereby on a stitutions which make home mortgage one- to four-family dwelling which is loans, make a finding and determinaeither real estate or a mobile home. It tion as to whether the Act should be

implemented. If the determination of the Secretary is not to implement the

Subpart B--Eligibility Act, and if the composite rate of deliriquencies should continue at a level of

$ 2700.101 Eligible properties. 1.20 percent or above, the Secretary

In order to qualify for an emergency shall continue to consult with such

loan under Subpart D or Subpart E of agencies and shall issue such a finding

this part, the mortgaged property and determination at the end of each

must: 30 days period during which the rate is (a) Be the principal residence of the at or above the 1.20 percent level.

homeowner; (c) If the Emergency Homeowners'

(b) Be subject to a delinquent mortRelief Program is activated pursuant gage, as defined in § 2700.5, but not to paragraph (b) of this section, the

subject to liens having a total outSecretary shall publish a notice there

standing principal balance at the time of in the Federal Register, inviting

of filing of the application for an lending institutions qualified under

emergency loan under this chapter in $ 2700.105 that are interested in par

excess of $55,000, or such other ticipating in the program to submit a

amount as approved by the Secretary; request for an insurance or direct loan

and authority allocation in the form speci

(c) Have flood insurance, pursuant fied in Appendix 1. Such request shall

to the National Flood Insurance Proalso serve as an application for a con

gram, in an amount equal to at least tract of insurance pursuant to Subpart

the initial principal amount of the D, or for a contract to act as the Secre

emergency loan, if the property is 10tary's servicer pursuant to Subpart E,

cated in an area that has been identidepending on the type of allocation re

fied by the Secretary at least one year quested. The allocation request may

before the origination of the emergenbe based upon anticipated applications

cy loan as an area having special flood

hazards. with respect to mortgages held by other institutions. In such a case, the

§ 2700.105 Eligible lending institutions. requesting institution should indicate the basis for its estimate of the

(a) In order to participate in the number of such mortgages and the

Emergency Homeowners' Relief Proamount of assistance which will be

gram as a lender or servicer, a lending sought pursuant thereto. An alloca

institution must be approved as a tion of insurance authority shall con

mortgagee pursuant to 88 203.1 stitute acceptance by the Secretary of

through 203.4 (except 8 203.4(e)) of

this title. the lending institution's application for a contract of insurance, the terms

(b) Approval of a lending institution of which are embodied in this chapter.

pursuant to paragraph (a) of this secSimilarly, an allocation of direct loan

tion may be withdrawn at any time by authority shall constitute acceptance

notice from the Secretary by reason

of: by the Secretary of the institution's

(1) The transfer of an insured loan application for a contract to act as the Secretary's servicer, the terms of

to a nonapproved entity; which are embodied in this chapter.

(2) The failure of a lending institu(d) If, after the program is activated,

tion to submit the required annual

audit report of its financial condition the Secretary determines that the

within 75 days of the close of its fiscal emergency conditions which led to the

year; or activation of the program have abated,

(3) The failure of a lending instituno new emergency loans may be made.

tion to comply with the regulations of Furthermore, if an allocation is not

this chapter. used as the applicant represented that it would be used, all or part of the Withdrawal of a lending institution's unused allocation may be rescinded by approval shall not affect the insurance the Secretary. Moreover, no emergen on the loans accepted for insurance, cy loans may be made after June 30, (c) All approved lending institutions 1976.

are responsible for servicing of emer

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