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Title 24—Chapter III

a proposal to build in accordance with plans and specifications prepared by his own architect and the usual commercial standards of quality and workmanship. If the proposal is acceptable, they will then enter into a contract under which the Local Authority agrees to purchase the completed property. This contract is backed by HUD's financial assistance commitment to the Local Authority, thereby enabling the developer to secure commercial construction financing in his usual manner. The “turnkey” technique may also be used in the rehabilitation of existing housing; instead of a Local Authority itself acquiring and rehabilitating existing dwellings, the Local Authority, under the “turnkey” approach, can contract with a private builder or rehabilitator to purchase from him certain dwellings which he has acquired and rehabilitated to HUD standards.

(c) Joint enterprise between Local Authorities and private organizations may consist, for example, of joint undivided ownership of housing by the Local Authority and a private organization, with moderate-income families housed in units used by the private organization and low-income tenants housed in other units with the aid of HUD annual contributions channeled through the Local Authority. Another form of joint enterprise would be for a private organization having full ownership of housing to use a portion of its units to house moderate-income families with the remaining units leased for occupancy by low-income families with the aid of HUD subsidy channeled through the Local Authority. § 1520.7 Applications; information.

(a) A Local Authority applying for financial assistance should submit its ap

plications and all related documents to the appropriate HUD Regional Office. Application forms and other forms, procedures, policy statements, and materials issued by HUD for the use or guidance of Local Authorities may be obtained through the appropriate HUD Regional Office; however, after approval of its application, a Local Authority will be sent copies of all relevant materials without specific request.

(b) Information with respect to methods of providing low-rent housing with private participation may be obtained from the Local Authority in the locality or from the appropriate HUD Regional Office. Information may also be obtained from the Department of Housing and Urban Development, Washington, D.C. 20410.

(c) A list of HUD Regional Offices ap-
pears as Appendix A to $ 1500.7 of this
chapter.
§ 1520.8 Federally owned low-rent hous-

ing.
Low-rent housing projects owned by
the Federal Government have been dis-
posed of except for project Cherokee
Terrace in Enid, Okla. Information on
final action on applications for tenancy
and information as to final action of the
Housing Manager in the procurement
of supplies and materials for which such
a Manager is authorized to contract shall
be kept at the project office and made
available to the public by the Housing
Manager. Inquiries concerning the proj-
ect and requests for statements of policy,
procedures, and forms should also
directed to the Housing Manager. The
address is: Cherokee Terrace, 619 East
Main Street, Enid, Okla. 73701.

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CHAPTER IV–FEDERAL NATIONAL MORTGAGE ASSOCIATION, DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT

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PART 1600-MORTGAGE AND LOAN PURCHASES, SERVICING AND SALES, AND SHORT-TERM LOANS ON THE SECURITY OF MORTGAGES AND LOANS

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Sec.
1600.0 Scope of part.

ORGANIZATION AND SCOPE OF OPERATIONS
1600.1

General,
1600.2 Area of operations.
1600.3

Public information.

SECONDARY MARKET OPERATIONS 1600.11 General. 1600.12 Purchases of mortgages and FHDA

loans. 1600.13 Purchase price. Ts d'1600.14 Loans on

security of mortgages and FHA loans. 1600.15

Financing of secondary market

operations.

SPECIAL ASSISTANCE FUNCTIONS
1600.21 General.
1600.22 Original mortgagee.
1600.23

Mortgage interest rate.
1600.24 Fees or charges.
1600.25

Below-market interest rate mort

gages. 1600.26

Financing of special assistance

functions.
MANAGEMENT AND LIQUIDATING FUNCTIONS
1600.31

General.
1600.32

Purchase of Government-owned

obligations.
1600.33

Financing of Management and
Liquidating Functions.

FIDUCIARY POWERS

General. 1600.42

Appropriations.

GENERAL ACCEPTABILITY REQUIREMENTS FOR

MORTGAGES AND FHDA LOANS Sec. 1600.51 General requirements. 1600.52 Ownership. 1600.53 Offering period. 1600.54 Maximum mortgage. 1600.55 VA mortgages, extent of guaranty

and other matters. 1600.56 Advances by seller. 1600.57 Credit. 1600.58 Property. 1600.59 Occupancy. 1600.60 Mortgage len. 1600.61 Title evidence. 1600.62 Hazard insurance. ELIGIBLE SELLERS OF MORTGAGES (NOT

APPLICABLE TO FHDA LOANS) 1600.71 General. 1600.72 VA-guaranteed mortgages. 1600.73 FHA-insured mortgages. SERVICING OF MORTGAGES (NOT APPLICABLE TO

FHDA LOANS) 1600.81 Servicing requirements. 1600.82 Servicer's compensation.

SALES OF MORTGAGES AND FHDA LOANS 1600.91 Eligible purchasers. 1600.92 Mortgages and FHDA 10ans for sale

and prices. 1600.93 Reservations. 1600.94 Consummating sales.

EXCEPTIONS

1600.101 Exceptions.

AUTHORITY: The provisions of this part 1600 issued under sec. 309, 68 Stat. 620; 12 U.S.C. 1723a.

SOURCE: The provisions of this Part 1600 appear at 30 F.R. 10159, Aug. 14, 1965, unless otherwise noted.

1600.41

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§ 1600.0 Scope of part.

include FHDA loans. Neither mortgages This part consists of general informa

nor FHDA loans may be purchased at a tion, and does not purport to set forth all

price rate in excess of par (100); FHDA of the procedures and requirements that

loans, but generally not mortgages (see apply to the purchase, servicing, or sale

§ 1600.25), may be purchased when they of mortgages and loans by FNMA, or to

are offered by, or cover property held by, short-term loans made by FNMA on the

a State, territorial, or municipal instrusecurity of mortgages and loans. All

mentality. FNMA itself is a national

ith such transactions are governed by the

corporation that had its inception in specific terms and provisions of contracts

1938. In 1954 it was rechartered by entered into by the parties. Complete

the Congress as a mixed-ownership corspecific information may be obtained

poration; all of its common stock is from the FNMA Agency Offices listed

freely transferable and is owned by pribelow.

vate shareholders; the preferred stock is

owned by the Federal Government (SecLocation of FNMA Agencies and area served. Atlanta, Ga., 30303, 34 Peachtree

retary of the Treasury). The corporate Street, NE.: Alabama, Florida, Georgia, Ken

charter expressly contemplates that in tucky, Mississippi, North Carolina, South

due course the preferred stock will be reCarolina, Tennessee.

tired and the Secondary Market Opera

THE Chicago, Ill., 60603, 1112 Commonwealth- tions (hereinafter described) will qualify Edison Building, 72 West Adams Street: Illi- to become privately owned and managed, nois, Indiana, Iowa, Michigan, Minnesota, The corporation is required to pay a full Nebraska, North Dakota, Ohio, South Dakota, Federal income tax equivalent on the Wisconsin. Dallas, Tex., 75201, 411 North Akard Street:

earnings of its Secondary Market OperaArkansas, Colorado, Kansas, Louisiana, Mis

tions. Under its charter, known as the souri, New Mexico, Oklahoma, Texas.

Federal National Mortgage Association
Los Angeles, Calif., 90005, 3540 Wilshire

Charter Act, 12 U.S.C. 1716 et seq., the
Boulevard: Alaska, Arizona, California, corporation has established and now
Guam, Hawaii, Idaho, Montana, Nevada,
Oregon, Utah, Washington, Wyoming.

maintains, dating from November 1, Philadelphia, Pa., 19107, 211 South Broad

1954, three separate portfolios of FNMA

THDA Street: Connecticut, Delaware, District of Co

owned mortgages, each with its own ac

are ne lumbia, Maine, Maryland, Massachusetts,

countability. These three portfolios re

pri New Hampshire, New Jersey, New York, Penn

sult from three separate operations pred

ferm sylvania, Puerto Rico, Rhode Island, Ver

icated on different purposes and obmont, Virgin Islands, Virginia, West Virginia. Sales Office. New York, N.Y., 10006, 149

jectives: (1) Secondary Market OperaBroadway, Room 2310.

tions, as

described in $$ 1600.11 to (30 F.R. 10159, Aug. 14, 1965, as amended at

1600.15; (2) Special Assistance Func32 F.R. 9662, July 4, 1967]

tions,

as described in $$ 1600.21 to ORGANIZATION AND SCOPE OF OPERATIONS

1600.26; and (3) Management and Liqui

dating Functions, 8 1600.1 General.

$ $ 1600.31 to 1600.33. The corporation The Federal National Mortgage Asso

also furnishes fiduciary services for ficiation (called “FNMA” or “the corpora

nancing purposes tion") purchases, services, and sells

1600

$ $ 1600.41 and 1600.42. mortgages insured or guaranteed by the

F Federal Housing Administration (FHA)

$ 1600.2 Area of operations. and the Veterans Administration (VA).

FNMA is authorized to conduct its Rural housing loans insured by the

business in any State of the United Farmers Home Administration of the Department

States, including the District of Columof Agriculture (FHDA loans) are also bought and sold. The

bia, the Commonwealth of Puerto Rico, corporation also makes short-term loans

and the territories and possessions of on the security of such mortgages and

the United States. It carries on its oploans. As used in this part, unless the

erations through its principal office locontext indicates otherwise, the term

cated at 811 Vermont Avenue NW. "mortgages" is inclusive of mortgages

Washington, D.C., 20414, and through or other loans insured or guaranteed by

the offices of its Agencies listed herein. FHA under the National Housing Act or by VA under the Servicemen's Readjust

Inquiries concerning offerings to FNMA ment Act of 1944 or chapter 37 of title

of Mortgages and FHDA loans or con

cerning short-term loans may be di38, United States Code, but does not

rected to any FNMA Agency.

tire t excess that be wit The u Opera ENME

as

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$ 1600.3 Public information.

loans to FNMA for immediate purchase Pursuant to the requirements of Part

by executing an appropriate immediate 15 of this title, FNMA maintains an in

purchase contract and delivering thereformation center at its principal office

with required documents and forms. described in $ 1600.2 and at each of its

With each offer, the seller must agree Agency Offices described in § 1600.0.

to subscribe for FNMA common stock (as There is an Information Officer in each

stated in $ 1600.15(a)) and, if required, of the information centers. Any person

to pay a Purchase and Marketing Fee. may obtain any information available to

(b) Repurchase option. With respect the public concerning FNMA from any

to immediate purchase contract transInformation Officer in the manner de

actions, the seller may request an Option scribed in part 15 of this title, subject

Contract which will permit the seller to the requirements and limitations set

to repurchase, at seller's option, the forth in such Part 15.

mortgages or FHDA loans sold to FNMA, (32 F.R. 9662, July 4, 1967]

at a stated repurchase price rate or rates

which may be the same as paid by FNMA. SECONDARY MARKET OPERATIONS The Option Contract is issued to cover $ 1600.11 General.

a stated period after the date of pur

chase of the mortgages or loans by The Secondary Market Operations are basically a privately financed activity

FNMA, upon payment of the required fee.

(c) Commitment contract. A seller which provides supplementary assistance to the broad general secondary market

may offer mortgages for future purchase

by FNMA by executing a commitment for mortgages by providing a degree of liquidity for mortgage investments,

contract which, when accepted, obligates thereby improving the distribution of in

FNMA to purchase in accordance with vestment capital available for mortgage

its terms within the commitment period, financing. In accomplishing the pur

but does not obligate the seller to effect poses of the Secondary Market Opera

delivery. With each such offer the seller tions, FNMA purchases mortgages and

pays a Commitment Fee which is nonFHDA loans in areas where market funds

refundable if the contract is accepted by are needed, holds them available for sale

FNMA. The seller is required to subto private investors, and makes short- scribe for FNMA common stock, as stated term loans on the security of such mort- in § 1600.15(a). A part of the stock is gages and loans. Certain fees and paid for at the time of the offer; the recharges may be imposed with the objec- mainder is paid for if and when the purtive that they will reasonably prevent excessive use of FNMA's facilities and

chases are effected. No Purchase and that the conduct of the operations will

Marketing Fee is applicable. be within the income derived therefrom.

(d) Eligible mortgages. Each mortThe users of FNMA's Secondary Market

gage or FHDA loan purchased under the Operations are required to subscribe for

Secondary Market Operations must have FNMA common stock, as stated in

been insured or guaranteed on or after $ 1600.15(a).

August 2, 1954, pursant to a provision, § 1600.12 Purchases of mortgages and

as announced by FNMA, of the National FHDA loans.

Housing Act (12 U.S.C. 1701 et seq.); the Purchases of mortgages and FHDA

Servicemen's Readjustment Act of 1944 loans are confined, insofar as practicable,

or chapter 37 of title 38, United States to those which are of such quality, type,

Code; or title V of the Housing Act of and class as to meet, generally, the pur

1949 (42 U.S.C. 1471 et seq.). chase standards imposed by private in

(e) Special acceptability requirestitutional mortgage investors. Pur

ments. On the date of the offer of a chases are made under the terms of spe

mortgage or FHDA loan to FNMA, its cific contracts, and in accordance with unpaid principal balance, unexpired the conditions and requirements stated

term, and rate of interest must be curtherein. FNMA will also give considera- rently acceptable to FNMA. In addition, tion to the purchase, on a negotiated general acceptability requirements, inbasis, of participations (partial interests) cluding those set forth in $$ 1600.51 to in mortgages and FHDA loans.

1600.62 must be met. (a) Immediate purchase contract. A (30 F.R. 10159, Aug. 14, 1966, as amended at seller may offer mortgages or FHDA 31 F.R. 16515, Dec. 28, 1966].

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$ 1600.13 Purchase price.

from, FNMA in the Secondary Market The price or prices to be paid by FNMA

Operations; subsequent to issuance, the

9160. are established within the range of

common stock is freely transferable. The market prices for the particular classes

preferred stock, in its entirety, is held Tue of mortgages or loans involved, as deter

either by the Secretary of the Treasury mined by FNMA. The price paid by

or by the corporation as corporate treasFNMA for a mortgage may vary accord

ury stock. Users of the Secondary Maring to its interest rate, the location of

ket Operations are required to subscribe

FN the security property, the relative equity

for common stock in amounts determined in sp of the mortgagor, the term of the loan,

by FNMA, as prescribed by the corporate and other factors. Information con

charter. With respect to such subscrip- ingrese cerning FNMA's current mortgage pur

tions, the corporation issues to each sub-ar for chase prices may be obtained from the

scriber shares of common stock (only in reag FNMA Agency serving the area in which

par value denominations of $100, or gram the mortgaged property is located. The

multiples thereof). The amount of any prices paid for FHI)A loans will vary ac

subscription that cannot be evidenced by : pure cording to their yields, and information

a whole share of common stock may not thy as a concerning current prices may be ob

be withdrawn by the subscriber, but the cline tained from any FNMA Agency. All

subscriber will be permitted to supple- viding prices quoted by FNMA are subject to

ment any such amount by payment of an vzrially change without notice. A quotation of

additional sum sufficient to pay for a full stional prices does not constitute an offer by

share at the then applicable issue price. Spec FNMA but is solely an invitation to the

No restrictions are imposed by FNMA as

mafined, Seller to make an offer to FNMA. FNMA

to who may be the holder of such shares is under no obligation to purchase any

of common stock; however, the shares such qr mortgage or loan except pursuant to the

are transferable only on the books of terms of a written contract executed by

the corporation. Pursuant to law, 12 sposed FNMA and a seller.

U.S.C. 1718(f), any institution (includ- the inves 131 F.R. 16515, Dec. 28, 1966)

ing a national bank or State member

bank of the Federal Reserve System or $ 1600.14 Loans the security of

any member of the Federal Deposit Inmortgages and FHDA loans.

surance Corporation, trust company, or FNMA makes bank-type short-term other banking organization) organized loans that are secured by mortgages or

under any law of the United States, inFHDA loans. They may not have a term

cluding the laws relating to the District in excess of 12 months; however, con

of Columbia, is authorized to subscribe

Toas of sideration will be given to requests for

to FNMA's common stock under conextensions not in excess of 12 months.

ditions described in this paragraph and The volume of lending activities and the

to receive, hold, or dispose of such stock. establishment of loan ratios, interest

(b) Borrowings.

FNMA may issue, rates, maturities, and charges or fees are and have outstanding at any one time, determined by FNMA from time to time

obligations in an aggregate amount not with the objective of preventing excessive

exceeding 15 times the sum of its capital Cintracts, use of the facilities and of assuring that

and surplus, and not in excess of its the Secondary Market Operations will

ownership under the Secondary Market remain fully self-supporting.

Operations, free from any liens or en§ 1600.15 Financing of secondary mar

cumbrances, of cash, mortgages, shortket operations.

term notes, and other approved securiFunds for the conduct of FNMA's

ties. Such FNMA obligations are not Secondary Market Operations are ob

guaranteed by the United States and do tained principally from borrowings from

not constitute a debt or obligation of private investors, subscriptions for FNMA

the United States. The obligations are capital stock, liquidations of the port

available from time to time for sale to folio, and net earnings.

private investors. The Secretary of the (a) FNMA capital stock.

Treasury is authorized, within certain

The corporation issues nonvoting $100 par value

limitations, to purchase these FNMA common and preferred stock; the com

obligations until such time as all of the mon shares are initially issued to lenders

corporation's preferred stock has been and other institutions that sell mort

retired. gages or FHDA loans to, or borrow funds

[30 F.R. 10159, Aug. 14, 1965, as amended at

31 F.R. 12055, Sept. 15, 1966)

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