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3 526.5 Maximum rates of return pay

able on certificate accounts of less

than $100,000. (a) Maximum rates. Except as othervise provided in this section or in § 526.5-1;

(1) Maximum rate of 5.75 percent. A member institution may pay a return at a rate not in excess of 5.75 percent per annum on any certificate account having a fixed or minimum term or qualfying period of not less than 90 days.

(2) Maximum rate of 6.50 percent. A member institution may pay a return at a rate not in excess of 6.50 percent per annum on any certificate account of $1,000 or more having & fixed or minimum term or qualifying period of not less than 1 year.

(3) Maximum rate of 6.75 percent. A member institution may pay a return at a rate not in excess of 6.75 percent per annum on any certificate account of $1,000 or more having a fixed or minimum term or qualifying period of not less than 30 months.

(4) Maximum rate of 7.50 percent. A member institution may pay a return at a rate not in excess of 7.50 percent per annum on any certificate account of $1,000 or more having a fixed or minimum term or qualifying period of not less than 4 years.

(5) Maximum rate of 7.75 percent. A member institution may pay a return at a rate not in excess of 7.75 percent per annum on any certificate account of $1,000 or more having a fixed or minimum term or qualifying period of not less than 6 years. (b) Exceptions

to minimum amount. (1) If the home office of a member institution is located in a Standard Metropolitan Statistical Area, or county not in such Area, as to which the regional Federal Home Loan Bank has determined that a mutual savings bank having an ofice located therein is paying a return at a rate in excess of 5.25 percent per annum on any deposit having a minimum amount lower than the corresponding minimum amount prescribed in paragraph (a) of this section for certificate accounts of the same maturity, such member institution may issue certificate accounts of the same maturity in such lower minimum amount.

(2) If the home office of a member institution is located in a state as to which the regional Federal Home Loan Bank has determined (i) that the total amount of savings capital attributable to mutual savings banks exceeds 30 percent of the total amount of savings capital attributable to mutual savings banks, savings and loan associations, building and loan associations, homestead associations, and cooperative banks and (ii) that a mutual savings bank having an ofice located in such State is paying a return at a rate in excess of 5.25 percent per annum on any deposit having a minimum amount lower than the corresponding minimum amount prescribed in paragraph (a) of this section for certificate accounts of the same maturity, such member institution may issue certificate accounts of the same maturity in such lower minimum amount.

(3) With respect to certificate accounts issued under a monthly payment bonus plan providing for the payment of a bonus if regular monthly payments are made by the saver for a period of not less than 12 months, a member institution may pay a return as permitted by paragraph (a) of this section without regard to the minimum amount requirements contained in such paragraph.

(c) Exception as to fixed or minimum term or qualifying period. A member institution may pay a return at a rate not in excess of the highest rate permitted under paragraph (a) of this section on any certificate account which is a public unit account of $1,000 or more having a fixed or minimum term or qualifying period of not less than 30 days. (38 FR 18459, July 11, 1973, as amended at 38 FR 29568, Oct. 26, 1973; 39 FR 42694, Dec. 6, 1974; 39 FR 43195, Dec. 11, 1974) $ 526.5-1 Certificate accounts of $100,

000 or more. (a) Rate of return. Subject to the limitation contained in paragraph (b) of this section, no maximum rate of return is prescribed on any certificate account of $100,000 or more with a fixed or minimum term or qualifying period of not less than 30 days.

(b) Percentage limitations. No member institution may pay a return at a rate in excess of 6.75 percent per annum on any certificate account of $100,000 or more if, as a result of the issuance of

as

such certificate account, the total based on a period in excess of a year, o amount of all such certificate accounts an average annual percentage yield then outstanding, on which a return achieved by compounding during a is being paid at a rate in excess of 6.75 period in excess of a year. percent per annum, would exceed 15 per (d) Time or amount requirements. If cent of the institution's total savings an advertised rate is payable only on sav. accounts outstanding at the end of its ings accounts that meet time or amount most recent distribution period for requirements, such requirements shall be regular accounts; Provided, however, clearly and conspicuously stated. Where that the total amount of all such cer the time requirement for an advertised tificate accounts then outstanding hav rate is in excess of a year, the required ing an original fixed or minimum term number of years for the rate shall be or qualifying period of less than two stated with equal prominence, together years shall not exceed 10 percent of such with a nindication of any lower rate or total savings accounts.

rates that will apply if the savings ac(c) Geographic exception. In the case count is withdrawn at an earlier of certificate accounts issued by a mem maturity. ber institution whose home office is lo (e) Penalty for early withdrawals. cated in the Commonwealth of Puerto Any advertisement, announcement, or Rico, the minimum amount requirement solicitation relating to interest or divi. specified in paragraph (a) of this section dends paid by a member institution on shall be $50,000 intead of $100,000, and certificate accounts shall include clear the percentage limitation contained in and conspicuous notice that Federal regparagraph (b) of this section shall apply ulations require member institutions to to certificate accounts of $50,000 or more impose a substantial interest penalty for with a return at a rate in excess of 6.75 a withdrawal from a certificate account percent per annum: Provided, That no before the end of the fixed or minimum such institution may advertise or pro term or qualifying period of such sc. mote any such account outside of the count. Such notice may state that, "A Commonwealth of Puerto Rico.

substantial interest penalty is required (38 FR 18460, July 11, 1973, as amended at for early withdrawal". 38 FR 23940, Sept. 5, 1973; 39 FR 36855, (f) Profit. The term "profit" shall not Oct. 15, 1974)

be used in referring to interest or divi8 526.6 Advertising of interest or divi.

dends paid on savings accounts. dends on savings accounts.

(g) Accuracy of advertising. No mem

ber institution shall make any adver Every advertisement, announcement,

tisement, announcement, or solicitation, or solicitation relating to the Interest or

relating to the interest or dividends dividends paid on savings accounts in

paid on savings accounts which is inacmember institutions shall be governed

curate or misleading or which misrepreby the following rules:

sents its savings account contracts. (a) Annual rate of simple interest.

(h) Solicitation of savings accounts Interest or dividend rates shall be stated

for member institution. Any person or in terms of annual rates of simple in

organization which solicits savings acterest or dividends. In no case shall a

counts for a member institution shall be rate be advertised that is in excess of

bound by the rules contained in this secthe applicable maximum rate for the

tion with respect to any advertisement, particular savings account.

announcement, or solicitation relating to (b) Percentage yields based on 1 year.

such savings accounts. No such person Where a percentage yield achieved by

or organization shall advertise a percentcompounding interest or dividends dur

age yield on any savings account it solicing 1 year is advertised, the annual rate of simple interest shall be stated with

its for a member institution which is equal prominence, together with a ref

not authorized to be paid and advertised

by such institution. erence to the basis of compounding. No member institution shall advertise a per

134 FR 9704, June 21, 1969, as amended st

38 FR 29568, Oct. 26, 1973) centage yield based on the effect of grace periods permitted such institutions. $ 526.6-1 Disclosure upon acceptance.

(c) Percentage yields based on periods At the time a member institution acin ercess of 1 year. No advertisement cepts a certificate account deposit, such shall include any indication of a total institution shall provide to the depositor percentage yield, compounded or simple, a written description of the penalty im

posed by such institution on a with apply to all advertisements, announcedrawal from such certificate account ments and solicitations related to transbefore the end of the fixed or minimum action accounts.

term or qualifying period for such ac (38 FR 34459, Dec. 14, 1973, as amended at e count. A member institution need not 39 FR 34646, Sept. 27, 1974)

provide such a written statement in conÈ nection with the renewal of an existing PART 527-HOUSING OPPORTUNITY e certificate account.

ALLOWANCE PROGRAM 138 FR 29568, Oct. 26, 1973] § 526.7 Penalty for early withdrawal.

Subpart A--Middle Income Families

Sec. With respect to each certificate ac 627.1 General. count issued on or after November 1, 527.2 Definitions. 1973, each member institution which is 527.3 Housing opportunity allowance. not an insured institution (as defined in 527.4 Credits to membor institutions, $ 561.1 of this chapter) shall impose the

527.5 Allocation and disbursement of funds following conditions on withdrawal from

to banks.

627.6 Closing documents. such an account before the expiration of its fixed or minimum term or qualifying

Subpart B-Low-Income Families E period: (a) the account holder shall re 527.11 Scope of subpart.

ceive interest or dividends from the date 527.12 Definitions. of issuance of such account on the 627.13 Housing opportunity allowance. amount withdrawn at a rate not in ex

527.14 Credits to member institutions. cess of the rate then being paid on reg

627.15 Allocation and disbursement of

funds to Banks. ular accounts; and (b) the account

527.10 Closing documonts. holder shall also pay a penalty in an

627.17 Rocertification of borrowor's income : amount not less than the lesser of (1)

category. the interest or dividends at such rate for

AUTHORITY: Tho provisions of this part 90 days (3 months) on the amount

527 issued under sec. 101, 84 Stat. 450; 12 withdrawn or (2) all interest or divi U.S.O. 1430nt.; Soc. 17, 47 Stat. 736, dends at such rate (since issuance or amended; 12 U.S.C. 1437, Roorg. Plan No. 8 renewal of the certificate account) on of 1947, 3 CFR, 1943-48 Comp. the amount withdrawn.

Subpart A-Middle Income Families 1 (38 FR 29568, Oct. 26, 1973]

SOURCE: The provisions of this Subpart A $ 526.8 Transaction accounts.

appoar at 36 F.R. 19769, July 24, 1971; 37 FR. (a) General. Subject to the provisions

12559, June 27, 1972) of this section, a member institution hav 527.1 General. ing its home office in New Hampshire or

Title I of the Emergency Home FIMassachusetts may pay a return on

nance Act of 1970, Public Law 91-351, transaction accounts.

provides for the Board to make disburse(b) Maximum rate of return. Such a

ment of appropriated funds to the Banks member institution may pay a return at a

for the purpose of adjusting the effecrate not in excess of 5.00 percent per an

tive interest rate charged by such Banks num on any transaction account.

on advances. Said title authorizes tho (c) Service charge. Such a member in

Board to prescribe terms and conditions stitution may impose a service charge for

to assure that the sums disbursed are the handling of instruments used in con

used to assist in the provision of housnection with a transaction account.

ing for low- and middle-income fam(d) [Reserved]

ilies and that such families share fully (e) Advertising. To the extent practi in the benefits resulting from such discable, member institutions shall limit bursements. This Subpart A applies to every advertisement, announcement, loans for the purchase of single-family or solicitation relating to transaction ac dwellings by middle-income families. counts made in any newspaper, maga

(37 F.R. 12559, Juno 27, 1972] +

zine, radio, television or any other form of communication to such media or other

8 527.2 Definitions. communications as are directed toward As used in this Subpart A:

residents of New Hampshire or MassaE

(a) Allowance. The term "allowance" chusetts and which have a substantial means a Housing Opportunity Allowance circulation or audience within those States. The provisions of $ 526.6 shall also 137 F.R. 12559, Juno 27, 1973.

to be credited against interest due on loans and bank advances as provided in 88 527.3 and 527.4.

(b) Borrower. The term "borrower" means the person or persons who are to be obligated to repay a qualifying loan.

(c) Effective rate of interest. The term "effective rate of interest" means the annual percentage rate of finance charge on a loan or advance determined in accordance with the provisions of $ 226.5 of this title relating to extensions of credit other than open end credit.

(d) Eligible borrower. The term "eligible borrower" means a borrower who, at the time of making application for an allowance

(1) Is one of the following:

(1) Either spouse of a married couple Uving together, or both such spouses; or

(1) A head of household with one or more dependent children;

(2) Has a current adjusted annual income (including income of both spouses) not in excess of the applicable maximum limits prescribed by the Board from time to time; and

(3) Has need of a Housing Opportunity Allowance to warrant the making of a qualifying loan by a member institution.

(e) Adjusted annual income. The term “adjusted annual income" means the total of

(1) Adjusted gross income as defined in $ 62 of the Internal Revenue Code; and

(2) "Tax-free" interest on State, municipal, and other governmental obligations.

(f) Guaranteed loan. The term "guaranteed loan" means a loan that is guaranteed, or as to which a commitment to guarantee has been made, under the provisions of the Servicemen's Readjustment Act of 1944, or chapter 37 of title 38, United States Code, as now or hereafter amended.

(g) Insured loan, The term "insured loan" means a loan that is insured, or as to which the mortgagee is insured, or as to which a commitment for any such Insurance has been made, under the provisions of either the National Housing Act or the Servicemen's Readjustment Act of 1944, or chapter 37 of title 38, United States Code, as now or hereafter amended.

(h) Member institution. The term "member institution" means (1) an institution which is a member of a Bank and whose accounts or deposits are in

sured by the Federal Savings and Loan Insurance Corporation or the Federal Deposit Insurance Corporation and (2) any other member which enters into an agreement with the Board to permit and pay the cost of such examination as the Board may from time to time deem necessary to insure compliance with the provisions of this part.

(1) Monthly installment loan. The term "monthly installment loan" means a loan repayable in equal, or substan. tially equal, monthly payments of prin. cipal and interest suficient to amortize the principal amount of the loan in full within the term of the loan.

(1) Qualified appraiser. The term "qualified appraiser" means (1) & professional real estate appraiser whose regular occupation includes the valuation of residential real estate, and (2) any appraiser who is employed by a lender on a regular basis.

(k) Qualifying loan. The term “quel. ifying loan" means a loan which

(1) Is for the purpose of financing the purchase of a single-family dwelling to be owned and occupied by an eligible borrower as a primary residence;

(2) Is secured or is to be secured by a first lien on such single-family dwelling;

(3) Is not an insured loan or & guer. anteed loan;

(4) Is in a principal amount

(1) Not less than 70 percent of the lesser of

(a) An amount equal to the value of the security property; or

(6) The purchase price of the security property.

(i) Not more than the lesser of

(a) An amount equal to 100 percent of the value of the security property;

(6) The purchase price of the security property; or

(c) $25,000; or, in the case of a loan secured by property located in either Alaska or Hawaii, such higher amount as the Board may approve.

(5) Bears an effective rate of interest which does not (and will not, for a perlod of 5 years from the date the loan is made) exceed the effective rate of interest on long-term, fixed-rate advances offered by the member institution's Bank, at the time the qualifying loan is approved, by more than such percentile amount (not in excess of 150 basis points) as the Board has determined to be appropriate, at the time of such approval, for member institutions of such Bank;

(6) Is a monthly installment loan re application, together with the loan appllpayable over a period of not less than 25 cation, shall provide the information 2 years nor more than 30 years;

necessary to enable the member institu(7) Requires the borrower to pay, tion to determine whether the applicant monthly, in advance, to the member in is an eligible borrower and whether the stitution, the equivalent of one-twelfth loan applied for will be a qualifying loan. of the estimated annual taxes, assess Each copy of such application shall be ments, and insurance premiums on the signed by each applicant who is to be security property; and

& borrower. (8) Permits the borrower to prepay

(2) Statement of intention. In making the loan in full or in part at any time such application, each applicant shall with no prepayment privilege fee in ex sign a statement of intention that, if the cess of 6 months' advance interest on qualifying loan is made, the borrower: that part of the aggregate amount of (i) Will be the title owner of the real all prepayments made on such loan in estate securing the loan; any 12-month period which exceeds 20 (i) Will occupy the single-family percent of the original principal amount dwelling comprising such real estate as of the loan.

& primary residence; and (1) Single-family dwelling. The term (ii) Will not give or execute any sec"single-family dwelling” means a struc ondary lien or charge upon such real ture designed for residential use by one estate in connection with the purchase family; or a unit designed for residential thereof. use by one family, the owner of which (c) Commitment to be furnished to

unit owns an undivided interest in the borrower. At the time of closing of the e underlying real estate. The term also in qualifying loan, the member institution cludes property, owned in common with

shall furnish to the borrower, and the others, which is necessary or contributes borrower shall acknowledge receipt of, to the use and enjoyment of such a struc & commitment, signed by an officer of ture or unit.

the member institution, stating the terms (m) Value. The term "value" means and conditions under which the borthe value of a property as determined by rower shall be entitled to receive an & qualified appraiser using comparable allowance from the member institution. properties (when avallable) for such Such commitment, which shall be determination.

printed on or attached to the reverse 136 F.R. 19769, July 24, 1971, as amended at side of the application prescribed pur37 F.R. 12659, June 27, 1972)

suant to paragraph (b) of this section 3 527.3 Housing Opportunity Allowanco.

shall be in the following form: (a) General. Subject to the provisions

HOUSING OPPORTUNITY ALLOWANCE

COMMITMENT of this part, any eligiblo borrower who has obtained & qualifying loan from a To: (Name of each person who is obligated member institution and a commitment on the loan.) for an allowance from such member in Pursuant to regulations of the Federal

Home Loan Bank Board, the undersigned stitution, as provided in paragraph (c)

Institution will make Housing Opportunity of this section, will receive from such

Allowance credits to you in connection with member institution an allowance of $20

your loan for the purchase of the property to be credited against the interest to be

described on the reverse side of this comcharged on each of the first 60 monthly mitment, subject to the following terms and installments paid on such qualifying conditions: loan, as provided in such commitment. 1. Allowance of Credit. $20 will be credited

at the time each of the first 60 monthly in(b) Application-(1) Form. The ap

stallments required under the loan contract plication for an allowance shall be on a

18 accepted from you, except when any such form prescribed by the Board, copies of $20 credit is required to be withheld as which form shall be furnished upon re stated in item 2 below. quest by the banks. Such application (NOTE: Each of your first 60 monthly shall be made in triplicate: one copy is installment payments should be in tho to be furnished to the borrower, one amount required by your loan contract less copy is to be retained by the member

the $20 credit herein provided for. However, institution, and one copy to be submitted

the monthly installment payment should be

in the full amount required by your loan to the member institution's bank as pro

contract if any of the exceptions in Item 3 vided in paragraph (b) of $ 527.6. Such below are applicable.)

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