(b) Borrower. The term "borrower" has the meaning given to it in paragraph (b) of § 527.2.

(c) Effective rate of interest. The term "effective rate of interest" has the meaning given to it in paragraph (c) of § 527.2.

(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;

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

(4) Does not include any person who is a "student" as defined in section 151 (e) (4) of the Internal Revenue Code.

(e) Adjusted annual income. The term "adjusted annual income" has the meaning given to it in paragraph (e) of § 527.2.

(f) Guaranteed loan. The term "guaranteed loan" has the meaning given to it in paragraph (f) of § 527.2.

(g) Insured loan. The term "insured loan" has the meaning given to it in paragraph (g) of § 527.2.

(h) Member institution. The term "member institution" has the meaning given to it in paragraph (h) of § 527.2.

(1) Monthly installment loan. The term "monthly installment loan" has the meaning given to it in paragraph (1) of § 527.2.

(j) Qualified appraiser. The term "qualified appraiser" has the meaning given to it in paragraph (j) of § 527.2.

(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, with a purchase price not in excess of $25,000, 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 not less than 70 percent of, nor more than 100

percent of, the lesser of the value or the purchase price of the security property.

(5) Bears an effective rate of interest which does not (and will not, during the period in which allowances are being credited) 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 20 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 month's advance interest on that part of the aggregate amount of all prepayments made on such loan in any 12month period which exceeds 20 percent of the original principal amount of the loan.

(1) Single-family dwelling. The term "single-family dwelling" has the meaning given to it in paragraph (1) of § 527.2.

(m) Value. The term "value" has the meaning given to it in paragraph (m) of § 527.2.

§ 527.13 Housing opportunity allow.

ance.

(a) General. Subject to the provisions of this part, any eligible borrower who has obtained a qualifying loan from a member institution and a Housing Opportunity Allowance Commitment from such member institution, as provided in paragraph (c) of this section, will receive from such member institution certain allowances to be credited against the interest to be charged on a certain number of monthly installments paid on such qualifying loan, as provided in such commitment. Subject to recertification of income category as provided in § 527.17, the amounts of such allowances and the number of monthly installment payments against which such allowances will be credited shall be based upon the current adjusted annual income of the eligi

1 The amount of the allowance may not exceed 75 percent of the principal and interest portion of a monthly installment payment.

(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 is to be submitted to the member institution's Bank as provided in paragraph (b) of § 527.16. 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, if so, which income category the borrower is in, 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;

(1) 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

COMMITMENT

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. Based upon your income category as indicated on the reverse side of this commitment, $---- will be credited to your loan account at the time each of the first 60 monthly installments required under the loan contract is accepted from you, and, subject to change upon recertification of your income category, $-will be credited at the time each of the next 60 monthly installments is accepted from you, except when any such credit is required to be withheld as provided in Item 2 below.

(NOTE: Each of your monthly installment payments should be in the amount required by your loan contract, less the applicable credit provided for above. 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;

(0) 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

(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.

[37 F.R. 12559, June 27, 1972; 37 F.R. 13529, July 11, 1972]

§ 527.14 Credits to member institutions.

(a) General. Each member institution will 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 § 527.13.

(b) Commitments for allowance funds. Commitments for allowance funds will be granted to member institutions 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 of allowances credited during the preceding month 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 shall be signed by an officer of the member institution.

§ 527.15 Allocation and disbursement of funds to Banks.

(a) Allocation of funds. Allocation of allowance funds to the Banks will be made by the Board on such bases and at such times as it may deem desirable. 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. However, 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 § 527.14, 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 pro

ceeds 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 (1) 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 § 527.12.

(3) By member institution. A certification by the member institution, that

(i) At the time the borrower's application was approved, such borrower, in the determination of the member institution based upon the information furnished by the borrower, was an eligible borrower, was in the income category indicated on the application, 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 § 527.13.

(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.

excess of 60.9 percent of the applicable maximum HOAP limits, there shall be a recertification of such borrower's income category, after such borrower has received allowance credits on the first 60 monthly installment payments accepted by the member institution. Such borrower shall provide current information necessary to enable the member institution to determine whether such borrower is still an eligible borrower, and, if so, which income category the borrower is currently in. If, at the time of such recertification, such borrower still has a current adjusted annual income not in excess of 60.9 percent of the applicable maximum HOAP limits, such borrower shall be entitled to receive allowance credits on each of the second 60 monthly installment payments accepted by the member institution. Such allowance credits shall be in the amount corresponding to the borrower's income category in the table set forth in paragraph (a) of § 527.13, as of either the time of approval of the application for the allowance or the time of such recertification, whichever is lower. A copy of such recertification, signed by an officer of the member institution, shall be promptly submitted to such member institution's Bank.

PART 528-NONDISCRIMINATION REQUIREMENTS

Sec.

528.1 Definitions.

528.2 Nondiscrimination in lending and other services.

528.3 Nondiscrimination in applications.
528.4 Nondiscriminatory advertising.
528.5 Equal Housing Lender Poster.
528.6 Data on loan applicants.
528.7 Nondiscrimination in employment.
528.8 Complaints.

AUTHORITY: The provisions of this Part 528 issued under secs. 701-706, 801-819, 78 Stat. 253-266, 82 Stat. 81-89; 42 U.S.C. 200062000e-15, 3601-3619; 14 Stat. 27, 16 Stat. 144; 42 U.S.C. 1981, 1982; sec. 17, 47 Stat. 786, as amended; 12 U.S.C. 1437; secs. 5, 402, 403, 407, 48 Stat. 132, as amended, 1256, 1257, 1260; 12 U.S.C. 1464, 1725, 1726, 1730. Reorg. Plan No. 3 of 1947, 3 CFR, 1943-48 Comp. E.O. 11063.

SOURCE: The provisions of this Part 528 appear at 37 F.R. 8436, Apr. 27, 1972, unless otherwise noted.

§ 528.1 Definitions.

As used in this Part 528

(a) Member institution. The term "member institution” means any institu

tion which is a member of a Federal Home Loan Bank, other than:

(1) A savings bank whose deposits are insured by the Federal Deposit Insurance Corporation,

(2) An insurance company, or

(3) The Federal Home Loan Mortgage Corporation.

(b) Dwelling. The term "dwelling" means any building, structure, or portion thereof, including a mobile home, which is occupied as, or designed or intended for occupancy as a residence by one or more families, and any vacant land which is offered for sale or lease for the construction or location thereon of any such building, structure, of portion thereof. [37 FR 8436, Apr. 27, 1972, as amended at 39 FR 43619, Dec. 17, 1974]

§ 528.2 Nondiscrimination in lending and other services.

(a) No member institution shall deny a loan or other service rendered by the member institution for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling, or discriminate in the fixing of the amount, interest rate, duration, application procedures, collection or enforcement procedures, or other terms or conditions of such loan or other service because of the race, color, religion, sex, or national origin of.

(1) An applicant for any such loan or any other service rendered by the member institution;

(2) Any person associated with such applicant in connection with such loan or other service or the purposes of such loan or other service;

(3) The present or prospective owners, lessees, tenants, or occupant of the dwelling or dwellings in relation to which such loan or other service is to be made or given; or

(4) The present or prospective owners, lessees, tenants, or occupant of other dwellings in the vicinity of the dwelling or dwellings in relation to which such loan or other service is to be made or given.

(b) A member institution shall consider without prejudice the combined income of both husband and wife for the purpose of extending mortgage credit to a married couple or either member thereof.

[39 FR 43619, Dec. 17, 1974]

§ 528.3 Nondiscrimination in applica tions.

No member institution shall refuse or decline to allow, receive, or consider any application, request, or inquiry with respect to a loan or other service rendered by the member for the purpose of purchasing, constructing, improving, repairing, or maintaining a dwelling, or discriminate in the imposition of conditions upon, or in the processing of, any such application, request, or inquiry, or make statements which discourage any such application, request, or inquiry because of the race, color, religion, sex, or national origin of any prospective borrower or other person who

(a) Makes application for any such loan or other service;

(b) Requests forms or papers to be used to make application for any such loan or other service; or

(c) Inquires about the availability of such loan or other service. [39 FR 43619, Dec. 17, 1974]

§ 528.4 Nondiscriminatory advertising.

No member institution which directly or through third parties engages in any form of advertising shall use words, phrases, symbols, directions, forms, or models in such advertising which imply or suggest a policy of discrimination or exclusion in violation of the provisions of Title VIII of the Civil Rights Act of 1968. To the extent feasible, as prescribed by the Board, advertisements other than for savings shall include a facsimile of the following logotype and legend (except that the legend "Equal Opportunity Lender" may be substituted for the legend "Equal Housing Lender"):

EQUAL HOUSING
LENDER

[39 FR 24359, July 2, 1974]

§ 528.5 Equal Housing Lender Poster.

(a) Each member institution shall post and maintain one or more Equal Housing