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(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
$ 2700.101 Eligible properties.
In order to qualify for an emergency loan under Subpart D or Subpart E of this part, the mortgaged property must:
(a) Be the principal residence of the homeowner;
(b) Be subject to a delinquent mortgage, as defined in § 2700.5, but not subject to liens having a total outstanding principal balance at the time of filing of the application for an emergency loan under this chapter in excess of $55,000, or such other amount as approved by the Secretary; and
(c) Have flood insurance, pursuant to the National Flood Insurance Program, in an amount equal to at least the initial principal amount of the emergency loan, if the property is 10cated in an area that has been identified by the Secretary at least one year before the origination of the emergency loan as an area having special flood hazards.
implemented. If the determination of the Secretary is not to implement the Act, and if the composite rate of deliriquencies should continue at a level of 1.20 percent or above, the Secretary shall continue to consult with such agencies and shall issue such a finding and determination at the end of each 30 days period during which the rate is at or above the 1.20 percent level.
(c) If the Emergency Homeowners' Relief Program is activated pursuant to paragraph (b) of this section, the Secretary shall publish a notice thereof in the Federal Register, inviting lending institutions qualified under $ 2700.105 that are interested in participating in the program to submit a request for an insurance or direct loan authority allocation in the form specified in Appendix 1. Such request shall also serve as an application for a contract of insurance pursuant to Subpart D, or for a contract to act as the Secretary's servicer pursuant to Subpart E, depending on the type of allocation requested. The allocation request may be based upon anticipated applications with respect to mortgages held by other institutions. In such a case, the requesting institution should indicate the basis for its estimate of the number of such mortgages and the amount of assistance which will be sought pursuant thereto. An allocation of insurance authority shall constitute acceptance by the Secretary of the lending institution's application for a contract of insurance, the terms of which are embodied in this chapter. Similarly, an allocation of direct loan authority shall constitute acceptance by the Secretary of the institution's application for a contract to act as the Secretary's servicer, the terms of which are embodied in this chapter.
(d) If, after the program is activated, the Secretary determines that the emergency conditions which led to the activation of the program have abated, no new emergency loans may be made. Furthermore, if an allocation is not used as the applicant represented that it would be used, all or part of the unused allocation may be rescinded by the Secretary. Moreover, no emergency loans may be made after June 30, 1976.
§ 2700.105 Eligible lending institutions.
(a) In order to participate in the Emergency Homeowners' Relief Program as a lender or servicer, a lending institution must be approved as a mortgagee pursuant to 88 203.1 through 203.4 (except 8 203.4(e)) of this title.
(b) Approval of a lending institution pursuant to paragraph (a) of this section may be withdrawn at any time by notice from the Secretary by reason of:
(1) The transfer of an insured loan to a nonapproved entity;
(2) The failure of a lending institution to submit the required annual audit report of its financial condition within 75 days of the close of its fiscal year; or
(3) The failure of a lending institution to comply with the regulations of this chapter. Withdrawal of a lending institution's approval shall not affect the insurance on the loans accepted for insurance,
(c) All approved lending institutions are responsible for servicing of emergency loans in accordance with acceptable mortgage practices of prudent lending institutions.
8 2700.110 Eligible homeowners.
In order to qualify for an emergency loan under Subpart D or Subpart E the homeowner must:
(a) Be at least 3 months in arrears in his payments on the delinquent mortgage;
(b) Have incurred a substantial reduction in income as a result of involur.tary unemployment or underemployment due to adverse economic conditions;
(c) Be financially unable to make full mortgage payments on his principal residence;
(d) Have a reasonable prospect of being able to make the adjustments necessary for a full resumption of mortgage payments on the delinquent mortgage the month after the last advance under the emergency loan and for the repayment of the emergency loan pursuant to the terms of the note taken in connection with that loan (a favorable employment and credit history prior to the beginning of his current unemployment or underemployment will be considered one form of evidence of the homeowner having such a prospect);
(e) Have not received another emergency loan pursuant to this chapter;
(f) Have been notified that the investor intends to foreclose; and
(g) Sign the application to be sent to the Secretary, as specified in Appendices 2 and 5 of this part, which certifies that to the best of his knowledge the information in the application which the homeowner provided is accurate, that circumstances make it probable that there would be a foreclosure if emergency mortgage relief were not given, and that he is in need of such relief.
form, approved by the Regional Administrator of the HUD Regional Office, for the State in which the mortgaged property is located.
(b) The note evidencing the emergency loan shall bear the signature of the homeowner as maker, shall be valid and enforceable against him, and shall be complete and regular on its face.
(c) Loans shall be secured by an additional mortgage upon the property which shall be recorded at the time of the closing of the loan.
(d) The note, or a separate lending agreement which may be incorporated by reference in the note, shall provide for the disbursement of the loan proceeds within 12 months. However, the note or lending agreement shall provide that if at any time before the last disbursement under the emergency loan is made, the homeowner's average gross monthly income during the preceding 3 months has increased or decreased by 20 percent or more in relation to the gross monthly income of the homeowner at the time the loan amount was established, the homeowner must notify the lender or servicer within 30 days. In such a case, the emergency loan shall be recast with respect to the amount of principal and interest on the basis of the homeowner's new income in such a way as to satisfy the requirements of $ 2700.205(a).
(e) The maximum first disbursement of the loan proceeds may be in an amount equal to the loan amount as determined under 8 2700.205 divided by 12, times the number of months, not exceeding 12, that the delinquent mortgage is in arrears.
(f) The note shall provide for payments to principal in equal installments falling due monthly beginning no later than 12 months following the date of the last disbursement of loan proceeds.
(g) The note shall provide for payments of interest earned during the disbursement period and interest earned thereafter beginning no later than 6 months following the date of the last disbursement under the loan.
(h) The note shall contain a provision for acceleration of maturity, at
$ 2700.205 Loan amount.
(a) Subject to the limitation specified in paragraph (b) of this section, the principal amount of the loan, exclusive of finance charges, made under Subparts D and E of this part shall be equal to the lesser of:
(1) 12 times $250; or
(2) The sum of (i) 12 times the homeowner's monthly mortgage payment after 25 percent of his monthly income has been subtracted therefrom, and (ii) the fees allowed under 88 2700.310(a) and 2700.415(a).
(b) The lender or servicer shall not approve an emergency loan when the outstanding balance, including delinquent interest, of the delinquent mortgage when added to the other liens against the mortgaged property, plus the maximum loan which may be advanced to the homeowner pursuant to this chapter, exceeds the value of the mortgaged property. (In determining the value of the property, the lender or servicer may rely upon previously obtained appraisals or other determinations of value of the property and need not obtain a current appraisal.)
$ 2700.301 Loan applications.
(a) Lending institutions which have contracts of insurance pursuant to 8 2700.10(c) and this subpart are authorized to accept, process, and approve applications for emergency loans under this subpart. That authority includes making determinations relating to eligibility of the emergency loan, the homeowner, and the property under the provisions of this chapter.
(b) A lender may make an emergency loan on the terms specified in Subpart C if it is satysfied that the application meets all of the relevant requirements of this chapter. The lender shall prepare a note, loan agreement, if any, and mortgage as required by Subpart C of this part which it shall record upon the execution of those documents.
(c) On the last working day of the month during which a loan is closed, the lender shall submit to the Secretary an application for an insured loan in the form specified in Appendix 2 of this part, signed by the lender and homeowner, which certifies that: the lender, homeowner, and property meet the eligibility requirements of Subpart B of this part, that circumstances (such as the volume of delinquent loans in the investor's portfolio likely to remain uncured) make it probable that there would be a foreclosure if emergency mortgage relief were not given; that the homeowner is in need of such relief; that the investor has indicated to the homeowner its intention to foreclose; and that the first disbursement of the principal amount of the emergency loan has been paid or credited to the homeowner's account with the servicing institution.
$ 2700.210 Finance charges.
The maximum permissible finance charge, exclusive of fees and charges
provided in 88 2700.310, and 2700.415, which may directly or indi. rectly be paid to or collected by the lender or the servicer, in connection with an emergency loan transaction shall not exceed simple interest on the outstanding principal balance at the annual interest rate for FHA-insured home mortgages specified in 8 203.20 of this title at the time of the closing of the loan. No points or discounts of any kind may be assessed or collected in connection with an emergency loan transaction.
$ 2700.305 Conditions of insurance.
When the requirements of this subpart have been complied with, the lender's insurance coverage under its insurance contract will apply to a particular loan as of the date of closing, if the lender has not exceeded the insurance authority allocation which the Secretary has given the lender pursu. ant to $ 2700.10(c). When the investor
is the lender, the insurance of the
$ 2700.315 Insurance premium.
(a) On March 1 of each year the intor's agreement, for a period up to the
sured shall pay to the Secretary an inmonth after the last advance under
surance premium equal to one-half of the emergency loan, to refrain from
1 percent of the average outstanding instituting foreclosure proceedings
balance, during the previous calendar against the homeowner as long as the
year, of all the emergency loans which
the lender held during that period amount delinquent at the time of the origination of the emergency loan, ex
pursuant to this part.
(b) With respect to the payment procluding interest thereon, does not in
vided for in paragraph (a) of this seccrease, unless the prior approval of
tion, the lender shall submit a breakthe Secretary is obtained. From the ef
down of the premium in the form prefestive date of the loan until the ter
scribed in Appendix 3 to this part. mination of the insurance with respect
(c) Any adjustments of the insurto that loan, the Secretary and the
ance premium already paid in conneclender shall be bound by the provi
tion with an emergency loan the mortsions of this chapter as they relate to
gage on which is transferred between the loan.
insureds, shall be made by the in$ 2700.310 Fees.
sureds, except that any unpaid install
ments of the insurance premium shall (a) The lender may collect from the be paid by the purchasing insured. homeowner during the year following (d) There shall be no refund or the origination of the emergency loan abatement of any portion of the insurthe following fees or charges in con- ance premium except when the premijunction with providing the emergency um relates to a loan found to be ineliloan:
gible. However, no refund shall be (1) A charge to compensate the made unless a claim is denied by th lender for expenses incurred in origi- Secretary or the ineligibility is reportnating and closing the emergency ed by the insured promptly upon disloan, including preparation of a note, covery and an application for refund is loan agreement, if any, and a mort- made. In no event shall charges be regage in a form satisfactory for recor
funded when the application for dation, the total charge not to exceed refund is not made until after the loan $25;
is paid in full.
$ 2700.320 Servicing.
be performed by the lender or the ser(3) An amount equal to the annual vicing institution acting for the lender. premium for flood insurance required The lender is responsible to the Secreby $ 2700.101(c) (the lender shall pay tary for proper servicing, even though the homeowner's flood insurance pre- the actual servicing is not performed mium for that year to the extent it by the lender. collects such an amount); and (4) An amount equal to the annual
$ 2700.325 Termination. mortgage insurance premium required The insurance coverage and the inunder $ 2700.315.
sured lender's obligation to remit in(b) Subsequent to the year following surance premiums with respect to an the origination of the emergency loan emergency loan shall be terminated and up to the termination of insurance upon whichever of the following first under $ 2700.325, the lender may col- occurs: lect from the homeowner the follow- (a) The loan is paid in full; ing fees and charges in connection (b) The lender acquires the property with the emergency loan: an amount securing the loan and notifies the Secequal to the mortgage insurance pre- retary that no claim for insurance mium required under $ 2700.315.
benefits has been or will be made;
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