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3492

FEDERAL REGISTER, Tuesday, August 1, 1939

dent to the insurance of the mortgage, be placed in a special account with a depositary satisfactory to the Adminis trator and subject to withdrawal only upon written approval of th Adminis trator. Upon completion of construction to the satisfaction of the Administrator, any balance then remaining in such special account shall be paid over to the general account of the corporation for the purpose of establishing its reserves.
2 No funds representing the pro ceeds of an insured mortgage shall be advanced except upon proper requisi tion approved by the Administrator.
3 Assurance for the completion of a project i may be either the bond of a satisfactory surety company in the standard A. I. A. or equivalent form of construction bond in an amount at least equal to ten per centum 10% of the construction cost, or ii may be an escrow deposit in an approved deposi tary of cash or securities of, or fully guaranteed as to principal and interest by, the United States of America, in an amount at least equal to ten per centum 10% of the construction cost, condi tioned on completion of the project to the satisfaction of the Administrator, or iii may be in such other form as may be recommended by the mortgagee and approved in writing by the Admin istrator.! Sec. IV, pars. 1-51
Eligible Mortgagees 532.19 Classifications. The follow ing are eligible for approval as mort gagees:
a A chartered institution or other permanent organization having succes sion.
b The Federal or a State Govern ment, or an agency, instrumentality, or subdivision thereof.
c The holder or holders of a credit instrument or instruments given in con nection with a mortgage, acting by and through a trustee appointed pursuant to the terms of such mortgage.
In order to be eligible the mortgagee must demonstrate to the satisfaction of the Administrator its ability to make the mortgage loan and service the same.!
Sec. V, par. 11
532.20 Special provisions for ap proval. An eligible institution, organi zation, agency, or entity may become the mortgagee under an insured mortgage upon its approval by the Administrator for a particular transaction.
In the event that bonds are to be is sued as a part of the insured mortgage transaction, all arrangements with re spect to the issuance and sale of such bonds shall be subject to approval by the Administrator.! Sec. V, pars. 2-3
Eligible Properties 532.21 Eligibility of property. In order for property to be eligible as the subject of an insured mortgage, such property must be held in fee simple, or consist of the interest of lessor or lessee
under a lease for not less than ninetynine 99 years which is renewable, or under a lease having not less than fifty 50 years to run from the date the mortgage was executed. Such mortgage may also cover additional property ap proved by the Administrator.
The property constituting security for the mortgage must be held by an eligible mortgagor as herein defined and must at the time the mortgage is insured be free and clear of all liens other than that of such mortgage.! Sec. VI, pars.
1- 2

532.22 Development of property. At the time the mortgage is insured:
a There shall be located on the mortgaged property a building or build ings designed principally for residential use which shall conform to standards satisfactory to the Administrator and may consist of a group of detached, semidetached, or row houses, or multi family dwellings; or b The mortgagor shall be obligated to construct and complete such housing accommodations thereon and shall have furnished such assurance of the per formance of such obligation as the Ad ministrator may require.! Sec. VI, par. 3
Title 532.23 Eligibility of title. In order for the mortgaged property to be eli gible for insurance, the Administrator must determine that marketable title thereto is vested in the mortgagor as of the date the mortgage is filed for record.
The title will be examined by the Ad ministrator, and if found to be eligible such finding shall be recited in the con tract of insurance.! Sec. VII, par. 1
532.24 Title evidence. Upon insur ance of the mortgage, the mortgagee, without expense to the Administrator, shall furnish to the Administrator, a survey satisfactory to him and a policy of title insurance as provided in para graph a of this section, or, if the mortgagee is unable to furnish such policy for reasons satisfactory to the Administrator, the mortgagee, without expense to the Administrator, shall fur nish such evidence of title as provided in paragraphs b, c, or d of this sec tion, as the Administrator may require.
a A policy of title insurance with re spect to such mortgage, issued by a com pany satisfactory to the Administrator.
Such policy shall comply with the L. I. C. Standard Mortgagee Form or the A. T. A. Standard Mortgagee Form, or such other form as may be approved by the Administrator; shall be payable to the mortgagee and the Administrator as their respective interests may appear;
and shall become an owners policy, run ning to the mortgagee as owned upon the acquisition of the property by the mort gagee in extinguishment of the debt through foreclosure or by other means as provided in Section 533.5 b 1, and to the Administrator as owner upon the ac
quisition of the property by him pursuant to the mortgage insurance contract.
b An abstract of title satisfactory to the Administrator, prepared by an ab stract company or individual engaged in the business of preparing abstracts of title, accompanied by a legal opinion sat isfactory to the Administrator, as to the quality of such title, signed by an attor ney at law experienced in the examina tion of titles.
c A Torrens or similar title certifi cate.
d Evidence of title conforming to the standards of a supervising branch of the Government of the United States of America, or of any State or Territory thereof.! Sec. VII, par. 2
532.25 Effective date. These Admin istrative Rules shall be effective as to all mortgages with respect to which a com mitment to insure shall be issued on or after the date hereof, except that Section 532.14 shall be effective only as to mort gages upon which an application for mortgage insurance is filed after June 3, 1939.! Issued at Washington, D. C., June 30, 1939.
S tewart M cD onald,

Federal Housing Administrator.
PART
Sec.
533.0
533.1
533.2
533.3
533.4

533.5
a b 533.6
533.7
533.8
533.9
533.10
533.11
533.12
533.13
533.14
533.15
533.16
533.17

533--- REGULATIONS UNDER SECTION
207, NATIONAL HOUSING ACT!
Citations.
Definitions.
P remiums First and second interim premiums.
Prepayment premium charges.
Contract of insurance.
B ights and D uties of a M ortgagee U nder th e Con
tract of I nsurance Benefits of insurance.
By. assignment.
By conveyance of property.
Com putation of benefits received by assignment.
Computation of benefits received by conveyance.
Title in case of assignment.
Evidence of title.
Fire and hazard insurance.
Mortgage default.
Termination.
Assignments In general.
Term ination of mortgage insurance by assignment.
No vested right.
Am endments of regulations.
Effective date.

533.0 Citations. These Regulations may be cited and referred to as Regula tions of the Federal Housing Adminis trator under Section 207 of the National Housing Act, revised June 30, 1939.t Art. I
533.1 Definitions. As used in these Regulations Sections 533.0 to 533.17, inclusive, issued under authority contained in Section 211 cf the National Housing Act, as amended.
fT he source of Sections 533.0 to 533.17, in clusive, is M ultifam ily and Group Housing Insurance, Administrative Rules and Regu lations under Section 207 of Title II of the National Housing Act, revised June 30, 1939.