posed by such institution on a withdrawal from such certificate account before the end of the fixed or minimum term or qualifying period for such account. A member institution need not provide such a written statement in connection with the renewal of an existing certificate account. [38 FR 29568, Oct. 26, 1973] § 526.7 Penalty for early withdrawal. With respect to each certificate account issued on or after November 1, 1973, each member institution which is not an insured institution (as defined in § 561.1 of this chapter) shall impose the following conditions on withdrawal from such an account before the expiration of its fixed or minimum term or qualifying period: (a) the account holder shall receive interest or dividends from the date of issuance of such account on the amount withdrawn at a rate not in excess of the rate then being paid on regular accounts; and (b) the account holder shall also pay a penalty in an amount not less than the lesser of (1) the interest or dividends at such rate for 90 days (3 months) on the amount withdrawn or (2) all interest or dividends at such rate (since issuance or renewal of the certificate account) on the amount withdrawn. [38 FR 29568, Oct. 26, 1973] § 526.8 Transaction accounts. (a) General. Subject to the provisions of this section, a member institution having its home office in New Hampshire or Massachusetts may pay a return on transaction accounts. (b) Maximum rate of return. Such a member institution may pay a return at a rate not in excess of 5.00 percent per annum on any transaction account. (c) Service charge. Such a member institution may impose a service charge for the handling of instruments used in connection with a transaction account. (d) [Reserved] (e) Advertising. To the extent practicable, member institutions shall limit every advertisement, announcement, or solicitation relating to transaction accounts made in any newspaper, magazine, radio, television or any other form of communication to such media or other communications as are directed toward residents of New Hampshire or Massachusetts and which have a substantial circulation or audience within those States. The provisions of § 526.6 shall also Title I of the Emergency Home Flnance Act of 1970, Public Law 91-351, provides for the Board to make disbursement of appropriated funds to the Banks for the purpose of adjusting the effective interest rate charged by such Banks on advances. Said title authorizes the Board to prescribe terms and conditions to assure that the sums disbursed are used to assist in the provision of housing for low- and middle-income families and that such families share fully in the benefits resulting from such disbursements. This Subpart A applies to loans for the purchase of single-family dwellings by middle-income families. [37 F.R. 12559, June 27, 1972] § 527.2 Definitions. As used in this Subpart A: (a) Allowance. The term "allowance" means a Housing Opportunity Allowance 137 F.R. 12559, June 27, 1973. to be credited against interest due on loans and bank advances as provided in §§ 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 living together, or both such spouses; or (ii) 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. (i) Monthly installment loan. The term "monthly installment loan" means a loan repayable in equal, or substantially equal, monthly payments of principal and interest sufficient to amortize the principal amount of the loan in full within the term of the loan. (j) Qualified appraiser. The term "qualified appraiser" means (1) a 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 “qualifying 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 a guaranteed 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 (b) The purchase price of the security property. (ii) Not more than the lesser of(a) An amount equal to 100 percent of the value of the security property; (b) 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 period 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 repayable over a period of not less than 25 years nor more than 30 years; (7) Requires the borrower to pay, monthly, in advance, to the member institution, the equivalent of one-twelfth of the estimated annual taxes, assessments, and insurance premiums on the security property; and (8) Permits the borrower to prepay the loan in full or in part at any time with no prepayment privilege fee in excess of 6 months' advance interest on that part of the aggregate amount of all prepayments made on such loan in any 12-month period which exceeds 20 percent of the original principal amount of the loan. (1) Single-family dwelling. The term "single-family dwelling" means a structure designed for residential use by one family; or a unit designed for residential use by one family, the owner of which unit owns an undivided interest in the underlying real estate. The term also includes property, owned in common with others, which is necessary or contributes to the use and enjoyment of such a structure or unit. (m) Value. The term "value" mean's the value of a property as determined by a qualified appraiser using comparable properties (when available) for such determination. [36 F.R. 13769, July 24, 1971, as amended at 37 F.R. 12559, June 27, 1972] § 527.3 Housing Opportunity Allowance. (a) General. Subject to the provisions of this part, any eligible borrower who has obtained a qualifying loan from a member institution and a commitment for an allowance from such member institution, as provided in paragraph (c) of this section, will receive from such member institution an allowance of $20 to be credited against the interest to be charged on each of the first 60 monthly installments paid on such qualifying loan, as provided in such commitment. (b) Application (1) Form. The application for an allowance shall be on a form prescribed by the Board, copies of which form shall be furnished upon request by the banks. Such application shall be made in triplicate: one copy is to be furnished to the borrower, one copy is to be retained by the member institution, and one copy to be submitted to the member institution's bank as provided in paragraph (b) of § 527.6. Such application, together with the loan application, shall provide the information necessary to enable the member institution to determine whether the applicant is an eligible borrower and whether the loan applied for will be a qualifying loan. Each copy of such application shall be signed by each applicant who is to be a borrower. (2) Statement of intention. In making such application, each applicant shall sign a statement of intention that, if the qualifying loan is made, the borrower: (1) Will be the title owner of the real estate securing the loan; (ii) Will occupy the single-family dwelling comprising such real estate as a primary residence; and (iii) Will not give or execute any secondary lien or charge upon such real estate in connection with the purchase thereof. (c) Commitment to be furnished to borrower. At the time of closing of the qualifying loan, the member institution shall furnish to the borrower, and the borrower shall acknowledge receipt of, a commitment, signed by an officer of the member institution, stating the terms and conditions under which the borrower shall be entitled to receive an allowance from the member institution. Such commitment, which shall be printed on or attached to the reverse side of the application prescribed pursuant to paragraph (b) of this section shall be in the following form: HOUSING OPPORTUNITY ALLOWANCE To: (Name of each person who is obligated on the loan.) Pursuant to regulations of the Federal Home Loan Bank Board, the undersigned institution will make Housing Opportunity Allowance credits to you in connection with your loan for the purchase of the property described on the reverse side of this commitment, subject to the following terms and conditions: 1. Allowance of Credit. $20 will be credited at the time each of the first 60 monthly installments required under the loan contract is accepted from you, except when any such $20 credit is required to be withheld as stated in item 2 below. (NOTE: Each of your first 60 monthly installment payments should be in the amount required by your loan contract less the $20 credit herein provided for. However, the monthly installment payment should be in the full amount required by your loan contract if any of the exceptions in item 2 below are applicable.) 2. Exceptions to Allowance of Credit. No credit will be made (a) As to any monthly installment which is accepted more than 6 months before or more than 6 months after the date such installment is due; (b) After a sale or transfer of the property except a transfer by reason of death to a surviving tenant by the entirety or joint tenant or to your heirs or devisees; (c) As to any monthly installment which is accepted at a time when the property is rented; (d) If you have knowingly made a false statement in order to obtain your loan. (3) Charge for Disallowable Credit. Your loan account will be charged for any credit previously made but which should have been withheld under an exception set forth in item 2 above. (4) Dispute as to Allowable Credit. In the event of any dispute as to allowance of any credit under this commitment, the undersigned institution will rely on a determination by an Agent of the Federal Home Loan Bank Board as to whether the credit should be allowed or disallowed, and such determination will be final as to you and the undersigned institution. Date: (d) Crediting of allowance to borrower. The Board hereby prescribes the terms and conditions contained in the commitment set forth in paragraph (c) of this section as terms and conditions applicable to the crediting of allowances on qualifying loans. § 527.4 Credits to member institutions. (a) General. Each member institution having a commitment for allowance funds as provided in paragraph (b) of this section will, to the extent of such commitment, receive from the bank of which it is a member a credit against interest due on advances in an amount equal to the total amount of allowances which the member institution has properly credited on qualifying loans as provided in § 527.3. (b) Commitments for allowance funds. Any member institution may request a commitment for allowance funds from the bank of which it is a member. Written commitments for such funds will be granted by each bank, on such terms and conditions and for such time periods as the bank may deem advisable, subject to such guidelines as may from time to time be prescribed by the Board. (c) Procedure. Each member institution which has credited one or more allowances during a month shall, by the 20th day of the succeeding month, submit a report to the bank of which it is a member, pursuant to paragraph (d) of this section. Such member shall deduct, from any subsequent bill for interest due on outstanding advances from the bank, an amount equal to the allowances so reported, remitting only the net amount to the bank. (d) Form of report. The report required by paragraph (c) of this section shall be made on a form prescribed by the Board, copies of which form shall be furnished upon request by the banks. Such report, to be signed by an officer of the member institution, shall state: (1) The total number of allowances credited during the preceding month and the total dollar amount of allowances so credited; and (2) Such other information as the Board may from time to time require. § 527.5 Allocation and disbursement of funds to banks. (a) Allocation of funds—(1) Initial allocation. Subject to the limitation contained in subparagraph (4) of this paragraph, the Board will initially allocate allowance funds to each bank in an amount proportionate to the ratio of (1) the amount of outstanding mortgages on single-family dwellings held by all members in that bank's district on June 30, 1970, to (i) outstanding mortgages on single-family dwellings held by all members in all bank districts as of such date, as determined by the Board. (2) Subsequent allocations. Subsequent allocations of allowance funds to the banks will be made by the Board on such bases and at such times as it may deem desirable, subject to the limitation contained in subparagraph (4) of this paragraph. (3) Reallocation. Any allowance funds allocated to a bank but not committed by the bank to member institutions within a reasonable time may be subsequently reallocated by the Board on such bases and at such times as it may deem desirable, subject to the limitation contained in subparagraph (4) of this paragraph. (4) Limitation. No bank will receive an allocation of allowance funds in an amount exceeding 20 percent of the total amount of sums appropriated pursuant to subsection (a) of section 101 of the Emergency Home Finance Act of 1970. (b) Disbursement of funds. Each bank shall from time to time submit to the Board vouchers certifying the amount of credits made by the bank against interest due on advances, pursuant to § 527.4, during a certain time period. The Board shall process such vouchers and shall cause a disbursement to be made to each bank in an amount equal to the total amount of such credits properly made by the bank during the time period covered by the voucher. (a) Required certifications. At the time of closing of a qualifying loan with respect to which an allowance will be credited, the following written certifications, each of which shall contain a reference to the penal provisions of section 1014 of title 18 of the United States Code, shall be required as closing documents: (1) By seller and borrower. (i) A certification jointly executed by the borrower and seller or sellers of the security property stating the purchase price thereof and the items comprising such price; (ii) A certification executed by the seller or sellers of the security property stating that no lien or charge upon such property, other than the lien of the association or liens or charges which will be discharged from the proceeds of the loan, has been given or executed by the borrower to the seller or sellers or has been contracted or agreed to be so given or executed; and (iii) A certification executed by the borrower stating that no lien or charge upon such property, other than the lien of the association or liens or charges which will be discharged from the proceeds of the loan, has been given or executed by the borrower or has been contracted or agreed to be so given or executed. (2) By appraiser. A certification by a qualified appraiser that (i) in the case of an existing structure, he has personally inspected both the interior and exterior of such structure; or (ii) in the case of new construction, he has examined the plans and specifications for such structure; and that he has determined the value thereof in accordance with paragraph (m) of § 527.2. (3) By member institution. A certification by the member institution, that (1) At the time the borrower's application was approved, such borrower was, in the determination of the member institution based upon the information furnished by the borrower, an eligible borrower and did have need of a Housing Opportunity Allowance to warrant the making of a qualifying loan to such borrower; (ii) The loan is, in the determination of the member institution, a qualifying loan; and (iii) All certifications required by this paragraph have been obtained and are in the possession of the member institution. (b) Required submission to bank. Promptly after the closing of such qualifying loan, the member institution shall transmit to the bank of which it is a member the bank's copy of the borrower's application, containing the certification required to be made by the member institution pursuant to subparagraph (3) of paragraph (a) of this section, signed by an officer of the member institution, and containing the borrower's acknowledgement of receipt of the commitment respecting his allowance as required by paragraph (c) of § 527.3. (c) Retention of documents. The member institution shall retain its copy of the borrower's application and the original copies of all other closing documents required by paragraph (a) of this section and shall include such documents with its records as required by applicable law or regulation. Subpart B-Low-Income Families SOURCE: The provisions of this Subpart B appear at 37 F.R. 12559, June 27, 1972, unless otherwise noted. |