(a) HFA responsibility for monitoring project owners. The HFA will have full responsibility for managing and servicing projects insured under this part (in accordance with procedures disclosed and submitted with its application and the requirements of this part). The HFA is responsible for monitoring and determining the compliance of the project owner in accordance with the provisions of this subpart. HUD will monitor the performance of the HFA, not the project owner, to determine its compliance with the provisions covered under this subpart.
(b) HUD review of procedures for HFAs with Level II approval. Asset management and servicing procedures of any HFA electing to take less than 50 percent of the risk on certain projects are subject to review, modification, and approval by HUD in accordance with § 266.100(b).
[85 FR 83444, Dec. 22, 2020]
(a) General. (1) The HFA must execute a Regulatory Agreement, in recordable form, between the mortgagor and the HFA to be in force for the duration of the insured mortgage and note or bond. The Regulatory Agreement must include a description of the property. The Regulatory Agreement must be incorporated by reference into the mortgage and recorded with the mortgage.
(2) The Regulatory Agreement executed between the HFA and the mortgagor must be binding upon the mortgagor and any of its successors and assigns and upon the HFA and any of its successors for so long as the mortgage is insured by HUD or HUD holds an HFA debenture issued in connection with a claim arising from the insured mortgage. The HFA may not assign the Regulatory Agreement.
(3) The HFA will enforce the Regulatory Agreement and take actions against any mortgagors who violate its provisions. Such actions may involve a declaration of default and application to any court for specific performance of the agreement.
(b) Requirements. The Regulatory Agreement must require the mortgagor to comply with the provisions of this part and obligate the mortgagor, among other things, to:
(1) Make all payments due under the mortgage and note/bond.
(2) Where necessary, establish a sinking fund for future capital needs.
(3) Maintain the project as affordable housing, as defined in § 266.5.
(4) Continue to use dwelling units for their original purposes.
(5) Comply with such other requirements as may be established by the HFA and set forth in the Regulatory Agreement.
(6) [Reserved]
(7) Maintain complete books and records established solely for the project.
(8) Comply with the Affirmative Fair Housing Marketing Plan, required by § 266.215(a), and all other fair housing and equal opportunity requirements.
(9) Operate as a single asset mortgagor.
(10) Make books and records available for HUD or U.S. Government Accountability Office (GAO) review with appropriate notification.
(11) Permit HUD officials or employees to inspect the project upon request by the Commissioner.
(c) Enforcement. The Regulatory Agreement shall be enforced by the HFA.
[59 FR 62524, Dec. 5, 1994, as amended at 63 FR 46578, 46593, Sept. 1, 1998; 65 FR 16296, Mar. 27, 2000; 85 FR 83444, Dec. 22, 2020]
The mortgagor must maintain the project in accordance with the physical condition standards in 24 CFR part 5, subpart G (Physical Condition Standards and Inspection Requirements).
[85 FR 83444, Dec. 22, 2020]
(a) Inspections. The HFA must perform inspections in accordance with the physical inspection procedures in 24 CFR part 5, subpart G (Physical Condition Standards and Inspection Requirements).
(b) Annual audits of projects. The HFA must analyze projects' annual audits and provide a copy to HUD along with a summary of unresolved findings and actions planned, with target dates, to correct unresolved findings.
(c) HFA's annual financial statement. The HFA must provide HUD with annual audited financial statement in accordance with the requirements of 2 CFR part 200, subpart F.
[59 FR 62524, Dec. 5, 1994, as amended at 63 FR 46578, Sept. 1, 1998; 65 FR 16296, Mar. 27, 2000; 80 FR 75936, Dec. 7, 2015; 85 FR 83444, Dec. 22, 2020]
(a) Loan origination and servicing. Records pertaining to the mortgage loan origination and servicing of the loan must be maintained for as long as the insurance remains in force.
(b) Defaults and claims. Records pertaining to a mortgage default and claim must be retained from the date of default through final settlement of the claim for a period of no less than three years after final settlement.
HUD will monitor the performance of the HFA in accordance with the provisions covered under this subpart.