proceeds over the amounts specified in § 1000.132. Under this agreement, the mortgagor shall agree to:

(1) Disclose its relationship with the general contractor, including any collateral agreement, and with subcontractors and suppliers;

(2) Enter into a development contract the terms of which shall depend on whether or not there exists an identity of interest between the mortgagor and the contractor;

(3) Execute a certificate prior to each insured advance showing actual amounts disbursed prior to the initial endorsement of the mortgage for insurance or since the last insured advance; and

(4) Apply any excess of mortgage proceeds over the amounts specified in § 1000.132 to reduction of the outstanding balance of the principal of the mortgage, as and when directed by the Commissioner.

(b) The provisions of subparagraphs · (1) and (2) of paragraph (a) of this section shall not apply where the mortgagor is the general contractor.

§ 1000.112 Form of contract.

The form of contract between the mortgagor and the general contractor shall be in accordance with the following:

(a) Lump sum contract. If the Commissioner determines that neither the mortgagor nor any of the officers, directors, stockholders, partners or beneficiaries of the mortgagor have any interest in the general contractor, there may be used a lump sum form of contract providing for payment of a specified amount.

(b) Fixed fee contract. If the Commissioner determines that the mortgagor, its officers, directors, stockholders, partners or beneficiaries have any interest, financial or otherwise, in the general contractor, the form of contract shall provide for payment of the actual cost of land development not to exceed an upset price and may provide for payment of a fixed fee to the general contractor which shall not exceed a reasonable allowance as established by the Commissioner, in accordance with customary practices in the area.

§ 1000.115 Certificate as to subcontracts. If the Commissioner determines that the mortgagor, its officers, directors, stockholders, partners or beneficiaries have any interest, financial or otherwise, in any subcontractor or material sup

The

(a) Submission of certificates. mortgagor's certificate of actual cost, in a form prescribed by the Commissioner, shall be submitted prior to each insured advance.

(b) Items to be included. Each certificate shall show the actual cost to the mortgagor of items as follows:

(1) Development contract, where the mortgagor and the general contractor are separate entities.

(2) Construction of the improvements, where the mortgagor is the general contractor and there is no development contract.

(3) Architect's fee, engineer's fee, and land planning fees.

(4) Offsite public utilities and streets not included in computations under subparagraphs (1) and (2) of this paragraph.

(5) Organization and legal work. (6) Other items of expense approved by the Commissioner.

The

(c) Items not to be included. certificate shall not include as actual cost any kickbacks, rebates, trade discounts, or other similar payments to the mortgagor, or to any of its officers, directors, stockholders, partners, or beneficiaries. Any such payments shall be deducted from the costs determined under paragraph (b) of this section.

§ 1000.120 Certificate of actual costfixed fee or no contract.

In the case of a cost plus fixed fee contract or where the mortgagor is the general contractor and there is no development contract, the certificate of actual cost, in addition to the requirements of § 1000.117, shall show the following allowances:

(a) Such general overhead items as are acceptable to the Commissioner.

(b) A reasonable allowance for the general contractor's profit as established by the Commissioner.

[30 F.R. 15033, Dec. 4, 1965, as amended at 30 F.R. 16110, Dec. 28, 1965]

§ 1000.122 Certificate of actual costsubcontractor's cost.

(a) Submission of certificates. The Commissioner may require the mortgagor to submit a certificate of actual cost showing all amounts actually paid by a subcontractor, material supplier or equipment lessor, where it is determined by the Commissioner that an identity of interest exists between either of the following:

(1) The mortgagor or any of its officers, directors, stockholders, partners or beneficiaries and any subcontractor, material supplier, or equipment lessor. (2) The general contractor and any subcontractor, material supplier, equipment lessor.

or

(b) Items to be included. Each certificate shall show the amounts paid for labor, materials, subcontracts and overhead.

(c) Items not to be included. The certificate shall not include amounts paid for any kickbacks, rebates, trade discounts, or other similar payments to the general contractor, the mortgagor, or any of its officers, directors, stockholders, partners, or beneficiaries.

§ 1000.125 Contractor's certificationfixed fee contract.

A general contractor receiving a fixed fee shall certify, in form prescribed by the Commissioner, as to all actual costs paid for labor, materials, and subcontract work under the general contract. The fee of the general contractor, any kickbacks, rebates, trade discounts, or other similar payments to the general contractor or mortgagor corporation or any of its officers, directors, stockholders, partners or beneficiaries shall not be included in arriving at such actual costs. § 1000.127 Records.

The mortgagor shall keep and maintain adequate records of all costs of any development or other cost items not representing work under the general contract and shall require the general contractor to keep similar records. Upon request by the Commissioner, such records, together with any collateral agreements, shall be made available for examination.

§ 1000.130 Certificate of public account

ant.

The certificates of actual cost shall be supported by certificates, when required by the Commissioner, as to accuracy by

an independent Certified Public Accountant or independent public accountant, and shall include a statement that the accounts, records and supporting documents have been examined in accordance with generally accepted auditing standards to the extent deemed necessary to verify the actual costs.

§ 1000.132 Reduction in mortgage

amount.

The principal obligation of the mortgage shall be reduced at final endorsement for insurance or at such earlier times as may be required by the Commissioner, to an amount not exceeding (with respect to that portion of the land remaining under the mortgage) 50 percent of the Commissioner's estimated value of such portion of the land prior to development; plus 90 percent of the actual cost of the land development allocated by the Commissioner to such portion.

[30 F.R. 16110, Dec. 28, 1965]

§ 1000.135 Effect of agreement.

Any agreement, undertaking, statement, or certification required in connection with cost certification shall specifically state that it has been made, presented, and delivered for the purpose of influencing an official action of the Commissioner and may be relied upon as a true statement of the facts contained therein.

strument for insurance shall be evidence of its acceptability.

§ 1000.142 Title evidence.

Upon insurance of the mortgage, the mortgagee shall furnish to the Commissioner a survey, satisfactory to him, and a policy of title insurance, as provided in paragraph (a) of this section. If, for reasons the Commissioner deems satisfactory, title insurance cannot be furnished under paragraph (a) of this section, the mortgagee shall furnish evidence of title in accordance with paragraph (b) or (c) of this section, as the Commissioner may require. Each time there is an insured advance, the title evidence shall be continued down to date of mortgagee's request for the insured advance with the proper amount of title insurance including coverage against any outstanding liens of mechanics or materialmen. Any survey, policy of title insurance, or other evidence of title required under this section shall be furnished, upon insurance of the mortgage or the advance, without expense to the Commissioner. The types of title evidence are:

(a) A title insurance policy, issued by a company and in a form satisfactory to the Commissioner. The policy shall name as the insureds the mortgagee and the Commissioner as their respective interests may appear. The title policy shall provide that upon acquisition of title by the mortgagee or the Commissioner, it shall become an owner's policy running to the mortgagee or Commissioner, as the case may be.

(b) An abstract of title satisfactory to the Commissioner, prepared by an abstract company or individual engaged in the business of preparing abstracts of title, accompanied by a legal opinion satisfactory to the Commissioner as to the quality of such title, signed by an attorney at law experienced in the examination of titles.

(c) Torrens or similar title certificate.

[30 F.R. 15033, Dec. 4, 1965, as amended at 30 F.R. 16110, Dec. 28, 1965]

AMENDMENTS AND EFFECTIVE DATE

§ 1000.145 Amendment of regulations. The regulations in this subpart may be amended by the Commissioner at any time and from time to time, in whole or in part, but such amendment shall not adversely affect the interests of a mortgagee under the contract of insurance on

(a) If the mortgage is for a term not in excess of 7 years, the mortgage insurance premium shall be computed and paid as follows:

(1) The mortgagee, upon initial endorsement of the mortgage note for insurance, shall pay to the Commissioner a mortgage insurance premium equal to 2 percent of the original face amount of the insured mortgage if the mortgage is for a term of 3 years or less. If the mortgage is for a term in excess of 3 years, an additional mortgage insurance premium equal to one-twelfth of 1 percent of the original face amount of the mortgage shall be collected at the time of initial endorsement, for each month, or fraction thereof, in excess of the 3-year term.

(2) In the event the original term of the mortgage is extended with the ap

proval of the Commissioner, a mortgage insurance premium for the period of extension shall be due, and payable by the mortgagee, on the date the Commissioner approves such extension. This premium shall be equal to 1 percent of the unpaid principal balance of the mortgage outstanding on the date of the Commissioner's approval of such extension for each 12-month period or fraction thereof of the additional term of the mortgage granted by the extension.

(b) If the mortgage is for a term in excess of 7 years and is to cover water or sewerage systems, the mortgage insurance premium shall be computed and paid as follows:

(1) The mortgagee, upon initial endorsement of the mortgage note for insurance, shall pay to the Commissioner a mortgage insurance premium equal to one-twelfth of 1 percent of the original face amount of the insured mortgage for each month, or fraction thereof, prior to the date of commencement of amortization.

(2) Upon commencement of amortization and until the mortgage is paid in full, or until receipt by the Commissioner of an application for insurance benefits, or until the contract of insurance is otherwise terminated with the consent of the Commissioner, the mortgagee, on

the date amortization commences and on each anniversary of such date, shall pay an annual mortgage insurance premium equal to three-fourths of 1 percent of the average outstanding principal obligation of the mortgage for the year following the date on which such premium becomes payable.

(3) The premiums payable on and after the date of the commencement of amortization shall be calculated in accordance with the amortization provisions without taking into account delinquent payments or prepayments. All premiums are payable in advance.

§ 1000.255 Amendment of regulations.

The regulations in this subpart may be amended by the Commissioner at any time and from time to time, in whole or in part, but such amendment shall not adversely affect the interests of a mortgagee under the contract of insurance on any mortgage already insured or to be insured on which the Commissioner has made a commitment to insure.

§ 1000.260 Effective date.

Unless otherwise specified, the provisions of this subpart shall be effective as to all mortgages with respect to which a commitment to insure is issued on or after August 10, 1965.