PART 291—DISPOSITION OF HUD-ACQUIRED AND -OWNED SINGLE FAMILY PROPERTY Authority: 12 U.S.C. 1701 et seq.; Source: 56 FR 46956, Sept. 16, 1991, unless otherwise noted. Subpart A—General Provisions Source: 64 FR 6479, Feb. 9, 1999, unless otherwise noted. § 291.1 Purpose and general requirements. (a) Purpose. (2) The purpose of the property disposition program is to dispose of properties in a manner that expands homeownership opportunities, strengthens neighborhoods and communities, and ensures a maximum return to the mortgage insurance funds. (b) Nondiscrimination policy. [64 FR 6479, Feb. 9, 1999, as amended at 81 FR 53002, Aug. 11, 2016] § 291.5 Definitions. Terms used in this part are defined as follows: Competitive sale of individual property Direct sale Eligible properties HUD Insured mortgage et seq. Investor purchaser Owner-occupant purchaser Private nonprofit organization (1) Have a voluntary board; (2)(i) Have a functioning accounting system that is operated in accordance with generally accepted accounting principles; or (ii) Designate an entity that will maintain a functioning accounting system for the organization in accordance with generally accepted accounting principles; (3) Practice nondiscrimination in the provision of assistance in accordance with the authorities described in § 291.435(a); and (4) Have nonprofit status as demonstrated by approval under section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)), or demonstrate that an application for such status is currently pending approval. Secretary State Tribe [64 FR 6479, Feb. 9, 1999, as amended at 81 FR 53002, Aug. 11, 2016] § 291.10 General policy regarding rental of acquired property. HUD will lease acquired property to comply with other designated HUD programs, or when the Secretary determines that it is in the interest of HUD. Leases may include an option to purchase in appropriate circumstances. Subpart B—Disposition by Sale Source: 64 FR 6480, Feb. 9, 1999, unless otherwise noted. § 291.90 Sales methods. In accordance with section 204(g) of the National Housing Act (12 U.S.C. 1710(g)), HUD will prescribe the terms and conditions for all methods of sale. HUD may dispose of assets using any method that the Secretary deems appropriate, including, but not limited to the following: (a) Future REO acquisition method. (b) Competitive sales of individual properties. (c) Direct sales methods. (1) Direct sales of properties without insured mortgages to governmental entities and private nonprofit organizations, the procedures for which are described in § 291.210(a); (2) Direct sales to displaced persons, sales of razed lots, or auctions, the procedures for which are described in § 291.210(b); (3) Direct sales to other individuals or entities that do not meet any of the categories specified in paragraphs (a) through (d) of this section, under the circumstances and procedures described in § 291.210(c); (d) Bulk sales, (e) Other sales methods. [64 FR 6480, Feb. 9, 1999, as amended at 81 FR 53002, Aug. 11, 2016] § 291.100 General policy on HUD acquisition, ownership, and disposition of real estate assets. For all sales, except as otherwise specifically indicated, those sales conducted in accordance with §§ 291.90(a) and 291.200 or with subpart D of this part, the following general policies apply: (a) Qualified purchaser. (i) No member of or delegate to Congress is eligible to buy or benefit from a purchase of a HUD-owned property; and (ii) No nonoccupant mortgagor (whether an original mortgagor, assumptor, or a person who purchased “subject to”) of an insured mortgage who has defaulted, thereby causing HUD to pay an insurance claim on the mortgage, is eligible to repurchase the same property. (2) Neither HUD nor any transferor pursuant to §§ 291.90(a) or 291.200 will offer former mortgagors in occupancy who have defaulted on the mortgage the right of first refusal to repurchase the same property. (3) HUD will offer tenants accepted under the occupied conveyance procedures outlined in 24 CFR 203.670 through 203.685 the right of first refusal to purchase the property only if: (i) The tenant has a recognized ability to acquire financing and a good rent-paying history, and has made a request to HUD to be offered the right of first refusal; or (ii) State or local law requires that tenants be offered the right of first refusal. (b) List price. (c) Insurance. (d) Financing. (i) Insured. (ii) Insured with repair escrow. (B) Changes in repair escrow. Federal Register (iii) Insured with rehabilitation loan (2) REO properties that have been identified as uninsurable in accordance with paragraph (c) of this section can be purchased and financed with a mortgage insured under section 203(k) of the National Housing Act (12 U.S.C. 1709(k)), subject to underwriting requirements supported by an FHA-specified appraisal and in accordance with 24 CFR 203.50. (3) HUD, in its sole discretion and subject to appropriations, may take back Purchase Money Mortgages (PMMs) on property purchased by governmental entities or private nonprofit organizations who buy property for ultimate resale to owner-occupant purchasers with incomes at or below 115 percent of the area median income. When offered by HUD, a PMM will be available in an amount determined by the Secretary to be appropriate, at market rate interest, for a period not to exceed 5 years. Mortgagors must meet FHA mortgage credit standards. (i) For purposes of this section, the term “purchase money mortgage,” or PMM means a note secured by a mortgage or trust deed given by a buyer, as mortgagor, to the seller, as mortgagee, as part of the purchase price of the real estate. (ii) Except as provided in paragraph (d)(3) of this section, the purchaser is entirely responsible for obtaining financing for purchasing a property. (e) Environmental requirements and standards. (f) [Reserved] (g) Lead-based paint poisoning prevention. (h) Any real estate broker who has agreed to comply with HUD requirements may be eligible to participate in the sales program. Purchasers participating in the competitive sales program, except government entities and nonprofit organizations, must submit bids through a participating broker. In accordance with section 204(g) of the National Housing Act (12 U.S.C. 1710(g)), HUD will prescribe the terms and conditions for all methods of listing properties. HUD may dispose of properties using any method that the Secretary deems appropriate, including, but not limited to the following: (1) Open listings. (2) Asset management and listing contracts. (ii) In areas where a broker has an exclusive right to list properties, a purchaser may use a broker of his or her choice. The purchaser's broker must submit the bid through HUD's designated electronic bid system. (i) Disciplinary actions against HUD-qualified real estate brokers In general. (2) Good cause. (i) Conviction under 18 U.S.C. 371 or 1010 of a broker or an agent supervised by that broker and acting within the scope of the agent's duties; (ii) Any of the following actions by a broker or an agent supervised by that broker and acting within the scope of the agent's duties: (A) Falsifying loan documents or aiding or abetting persons in the use of false or misleading information including, but not limited to, forged or fraudulent gift letters and owner occupant certifications; (B) Acting in concert with an appraiser to arrive at an artificial appraised value; (C) Engaging in fraudulent activities (with or without the assistance of an appraiser) that have led to default and payment of an insurance claim; (D) Failing to comply with earnest money collection, management, and disbursement procedures as set forth in this part; (E) Failing to maintain a current state license; (F) Violating the Real Estate Settlement Procedures Act (RESPA) (12 U.S.C. 2601 et seq. (G) Non-compliance with civil rights requirements regarding the sale of HUD-owned single family properties; (H) Involvement in, or knowledge of, any fraudulent activity by any person involved in the REO sales transaction; and (I) Any other actions or omissions that evidence a lack of business integrity or non-compliance with the laws, regulations, and rules applicable to housing, lending, or real estate sales. (3) Written notice. (i) State the reasons that HUD is taking the action; (ii) Identify the violations or deficiencies involved; (iii) Provide a citation to the relevant regulation, statute, or policy; and (iv) State the effective date and duration of the removal and deactivation. (4) Effective date and duration of removal. (ii) HUD's determination of the duration of removal and deactivation will be based upon HUD's consideration of the number and seriousness of the broker's violations and deficiencies. (5) Response and conference. (6) Disposition No response from real estate broker. (ii) Response from real estate broker. (7) Effect of removal proceeding on bids. [64 FR 6480, Feb. 9, 1999, as amended at 64 FR 50225, Sept. 15, 1999; 71 FR 65325, Nov. 7, 2006; 81 FR 53002, Aug. 11, 2016] Subpart C—Sales Procedures Source: 64 FR 6481, Feb. 9, 1999, unless otherwise noted. § 291.200 Future REO acquisition method. (a) Under this method of property disposition, HUD will enter into a property acquisition agreement (or agreements) with a transferor (or transferors), which shall provide for the right and obligation of the transferor(s) to acquire a future quantity of properties designated by HUD as they become available. The transferor(s) will be selected through a competitive process, conducted in accordance with applicable laws. HUD will negotiate the specific terms of the property acquisition agreement(s) with the selected transferor(s). The properties will be available on an “as-is” basis only, without repairs or warranties. (b) Eligible entities. [64 FR 6481, Feb. 9, 1999, as amended at 72 FR 73495, Dec. 27, 2007] § 291.205 Competitive sales of individual properties. When HUD conducts competitive sales of individual properties to individual buyers, it will generally sell the properties on an “as-is” basis, without repairs or warranties, and it will follow the sales procedures provided in this section. (a) General. (2) For properties being offered with insured mortgages, priority will be given to owner-occupant purchasers, as defined in § 291.5, for a period of up to 30 days, as determined by HUD. For properties offered without insured mortgages, priority will be given to governmental entities and nonprofit organizations prior to other owner-occupant purchasers. (b) Net offer. (2) If an owner-occupant purchaser of the property requests in the bid, HUD may pay all or a portion of the financing and loan closing costs, not to exceed the percentage of the purchase price determined appropriate by the Secretary for the area. In no event will the total amount for broker's sales commission exceed 6 percent of the purchase price, except for cash bonuses offered to brokers by HUD for the sale of hard-to-sell properties. No assistance for financing and loan closing costs or for the broker's sales commission will be provided to investor purchasers. (c) Acceptable bid. (d) Bid period. (2) HUD may treat all bids received during a specified period of time during the bid period to have been received simultaneously. HUD may also choose to review bids on a daily basis, with all bids submitted during each day considered to have been received simultaneously. HUD may use either (or both) of these methods during the bid period, as described in the bid materials accompanying a particular sale. (3) Offers received on a property before the bid period begins will be returned. Offers received after the bid period will not be considered at the bid opening, but will be considered during the extended listing period if no acceptable bid was received during the bid period (see paragraph (f) of this section). (e) Full price offers. (f) Extended listing period. (g) Bid requirements. (2) Noncomplying bids will be returned to the broker with an explanation for the noncompliance decision and information about whether the property is still available. (h) Earnest money deposits. (2) All bids must be accompanied by earnest money deposits in the form of a cash equivalent as prescribed by the Secretary, or a certification from the real estate broker that the earnest money has been deposited in the broker's escrow account. If a bid is accepted by HUD, the earnest money deposit will be credited to the purchaser at closing; if the bid is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total or partial forfeiture for failure to close a sale. (i) Multiple bids. (j) Identical bids. (k) Opening the bids. (1) The Secretary will make all winning bids available publicly. (2) Successful bidders will be notified through their real estate brokers by electronic mail, mail, telephone, or other means. Acceptance of a bid is final and effective only upon HUD's execution of the sales contract, signed by both the submitting real estate broker and the prospective purchaser, and sending a copy of the executed contract by electronic mail to the successful bidder or the bidder's agent. (l) Counteroffers. [64 FR 6481, Feb. 9, 1999, as amended at 81 FR 53003, Aug. 11, 2016] § 291.210 Direct sales procedures. When HUD conducts the sales listed in § 291.90(c), it will sell the properties on an “as-is” basis, without repairs or warranties, and it will follow the applicable sales procedures provided in this section. (a) Direct sales of properties without insured mortgages to governmental entities and private nonprofit organizations. (2)(i) Purchasers under paragraph (a)(1) of this section must designate geographical areas of interest by ZIP code. Upon request, before those properties without insured mortgages are publicly listed, HUD will assure that governmental entities and nonprofit organizations are notified in writing when eligible properties become available in the areas designated by them. HUD will coordinate the dissemination of the information to ensure that if more than one purchaser designates a specific area, those purchasers receive the list of properties at the same time, based on intervals agreed upon between HUD and the purchasers. A property in this section will be sold to the first eligible purchaser submitting an acceptable contract. All bids received on the same business day will be considered to have been received simultaneously. In the case of identical bids submitted on the same business day, award will be determined by drawing lots. (ii) Purchasers under paragraph (a)(1) of this section must notify HUD of preliminary interest in specific properties within 5 days of the notification of available properties (if notification is by mail, the 5 days will begin to run 5 days after mailing). HUD will provide a consideration and inspection period for these purchasers. The consideration and inspection period will usually be for ten days from the date of notification of interest, but may be lengthened or shortened by HUD, as appropriate. Those properties in which purchasers express an interest will be held off the market for the duration of the consideration and inspection period. Other properties on the list will continue to be processed for public sale. HUD may limit the number of properties held off the market for a purchaser at any one time, based upon the purchaser's financial capacity as determined by HUD and upon past performance in HUD programs. At the end of the consideration and inspection period, properties in which no governmental entity or nonprofit organization has expressed a specific intent to purchase will be offered for sale under the competitive bid process. Properties in which a governmental entity or nonprofit organization expressed an intent to purchase, during the consideration and inspection period, will continue to be held off the market pending receipt of the sales contract. If a sales contract is not received within a time period of up to 10 days, as determined by HUD, following expiration of the consideration and inspection period, and no other governmental entity or nonprofit organization has expressed an interest, then the property will be offered for sale under the competitive bid process. (3) In order to ensure that properties purchased at a discount are being utilized for expanding affordable housing opportunities, HUD may require, as appropriate, periodic, limited information regarding the purchase and resale of such properties, and certain restrictions on the resale of such properties. (b) Direct sales to displaced persons; razed lots; auctions. (c) Direct sales to individuals or entities. et seq. (d) Bulk sales. Subpart D [Reserved] Subpart E—Lease and Sale of HUD-Acquired Single Family Properties for the Homeless § 291.400 Purpose and scope. (a) Purpose. (b) Applicant preapproval. (c) Property available for lease with option to purchase. (d) Property available under a McKinney Act Supportive Housing program lease-option agreement. (e) Properties available for sale. (f) Concentration of properties. (g) Failure to comply with requirements. (Approved by the Office of Management and Budget under OMB control number 2502-0412) [61 FR 55714, Oct. 28, 1996] § 291.405 Definitions. For purposes of this subpart E: Applicant Homeless (1) Individuals or families who lack the resources to obtain housing, whose annual income is not in excess of 50 percent of the median income for the area, as determined by HUD, and who: (i) Have a primary nighttime residence that is a public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings; (ii) Have a primary nighttime residence that is a supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare hotels, congregate shelters, and transitional housing, but excluding prisons or other detention facilities); or (iii) Are at imminent risk of homelessness because they face immediate eviction and have been unable to identify a subsequent residence, which would result in emergency shelter placement (except that persons facing eviction on the basis of criminal conduct such as drug trafficking and violations of handgun prohibitions shall not be considered homeless for purposes of this definition); or (2) Persons with disabilities who are about to be released from an institution and are at risk of imminent homelessness because no subsequent residences have been identified and because they lack the resources and support networks necessary to obtain access to housing. Lessee [64 FR 6482, Feb. 9, 1999] § 291.415 Lease with option to purchase properties for use by the homeless. (a) Certification. (b) Term of lease. (2) Approvals for lease renewals will be denied if HUD determines that the lessee has not complied with the requirements of this part of the lease. (3) A property will not be leased to a lessee for a period longer than five years. At the end of the five-year period, if the lessee has not exercised the option to purchase, HUD will notify the lessee to vacate the property and, if necessary, will take appropriate action under the eviction laws of the jurisdiction in which the property is located. All property returned to HUD must be vacant, and will be placed on the market for sale to the general public. (4) Within 30 days of leasing a property from HUD or within 30 days after a property is vacated, a lessee must sublease the property to the homeless, unless a longer period is approved by HUD. (c) Rent. (2) A lessee may charge rent, including utilities, to an occupant at a rate appropriate to the financial means of the occupant. Unless HUD approves after consideration of such factors as the cost of operating housing in the area and the amount of the lessee's contributions to the program, such rent may not exceed the highest of: (i) Thirty percent of the family's monthly adjusted income (adjustment factors include the number of people in the family, age of family members, medical expenses, and child care expenses); (ii) Ten percent of the family's monthly income; or (iii) If the family is receiving payments for welfare assistance from a public agency and a part of the payments, adjusted in accordance with the family's actual housing costs, is specifically designated by the agency to meet the family's housing costs, the portion of the payments that is designated. (3) In no event may the rent charged an occupant exceed the occupant's pro rata share of the lessee's costs of operating the property. (d) Damage to leased properties. (e) Purchase of leased properties. (2) Sales of leased properties will be on as-is, all-cash basis. HUD will not pay a fee for a selling broker. HUD will pay the closing agent's fee. The purchaser must pay all other closing costs. [61 FR 55715, Oct. 28, 1996] § 291.430 Elimination of lead-based paint hazards. The Lead-Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, F, and R of this title, apply to activities covered by this subpart. [64 FR 50225, Sept. 15, 1999, as amended at 69 FR 34275, June 21, 2004] § 291.435 Applicability of other Federal requirements. In addition to the requirements set forth in 24 CFR part 5, the following Federal requirements apply to lessees and purchasers under this subpart: (a) Nondiscrimination and equal opportunity. (i) As applicable, lessees and purchasers must also comply with the Americans With Disabilities Act (42 U.S.C. 12131) and implementing regulations in 28 CFR parts 35 and 36. (ii) The requirements of section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), and Executive Order 11246 (30 FR 12319, 12935, 3 CFR, 1946-1965 Comp., p. 339; Executive Order 11625 (36 FR 19967, 3 CFR, 1971-1975 Comp., p. 616); Executive Order 12432 (48 FR 32551, 3 CFR, 1983 Comp., p. 198; and Executive Order 12138 (44 FR 29637, 3 CFR, 1979 Comp., p. 393) do not apply to this subpart. (2) Lessees or purchasers that intend to serve designated populations of the homeless must comply, within the designated population, with the requirements for nondiscrimination on the basis of race, color, religion, sex, national origin, age, familial status, and disability. (3) If the procedures that the lessee or purchaser intends to use to make known the availability of housing are unlikely to reach persons of any particular race, color, religion, sex, age, national origin, familial status, or disability who may qualify for admission to the housing, the recipient must establish additional procedures that will ensure that interested persons can obtain information concerning the availability of the housing. (4) The lessee or purchaser must adopt procedures to make available information on the existence and locations of facilities and services that are accessible to persons with a handicap and maintain evidence of implementation of the procedures. (b) Conflicts of interest. [61 FR 55715, Oct. 28, 1996] § 291.440 Recordkeeping requirements. Each lessee must establish and maintain sufficient records to enable the Secretary to determine whether the requirements of this subpart have been met. This includes, where available, racial, ethnic, gender, and disability status data on the applicants for, and beneficiaries of, this homeless initiative. (Approved by the Office of Management and Budget under OMB control number 2502-0412) [61 FR 55716, Oct. 28, 1996] Subpart F—Good Neighbor Next Door Sales Program Source: 71 FR 64426, Nov. 1, 2006, unless otherwise noted. § 291.500 Purpose. This subpart describes the policies and procedures governing the Good Neighbor Next Door (GNND) Sales Program. The purpose of the GNND Sales Program is to improve the quality of life in distressed urban communities. This is to be accomplished by encouraging law enforcement officers, teachers, and firefighters/emergency medical technicians to purchase and live in homes that are located in the same communities where they perform their daily responsibilities and duties. [81 FR 53003, Aug. 11, 2016] § 291.505 Definitions. For purposes of this subpart: Locality Unit of general local government [81 FR 53003, Aug. 11, 2016] § 291.510 Overview of the GNND Sales Program. (a) General. (1) At a 50 percent discount from the list price; and (2) With a downpayment of $100, but only if the law enforcement officer, teacher, or firefighter/emergency medical technician finances the home through a Federal Housing Administration (FHA) insured mortgage. (b) Eligible properties. (c) Multiple bids. (d) Real estate brokers. (e) Cap on sales. Federal Register [71 FR 64426, Nov. 1, 2006, as amended at 73 FR 1974, Jan. 11, 2008] § 291.515 Purchaser qualifications. To qualify to purchase a home through the GNND Sales Program: (a) The person must be employed as a law enforcement officer (as described in § 291.520), teacher (as described in § 291.525), or firefighter/emergency medical technician (as described in § 291.530) at the time he/she submits a bid to purchase a home through the program and at the time of closing on the purchase of the home; (b) The person must certify to his/her good faith intention to continue employment as a law enforcement officer (as described in § 291.520), teacher (as described in § 291.525), or firefighter/emergency medical technician (as described in § 291.530) for at least one year following the date of closing; (c) The person must make an earnest money deposit at the time of signing the contract for purchase of the home, as described in § 291.535; (d) The person must agree to own, and live in as his/her sole residence, the home for the entire duration of the owner-occupancy term, as described in § 291.540, and to certify to that occupancy, as described in § 291.565; (e) The person must agree to execute a second mortgage and note on the home, as described in § 291.550, for the difference between the list price and the discounted selling price; (f) Neither the person (nor his/her spouse) may have owned any residential real property during the year prior to the date of submitting a bid on the home being acquired through the GNND Sales Program; (g) Neither the person (nor his/her spouse) must ever have purchased another home under the GNND Sales Program or under the predecessor Officer Next Door Sales and Teacher Next Door Sales Programs; and (h) Although both spouses, if otherwise eligible, may submit a bid on a single home made available for sale under the GNND Sales Program, HUD will approve a bid from only one spouse. § 291.520 Eligible law enforcement officers. A person qualifies as a law enforcement officer for the purposes of the GNND Sales Program if the person is: (a) Employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; (b) In carrying out such full-time employment, the person is sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws and (c) The full-time employment in paragraph (a) of this section must, in the normal course of business, directly serve the locality in which the home is located. [71 FR 64426, Nov. 1, 2006, as amended at 81 FR 53003, Aug. 11, 2016] § 291.525 Eligible teachers. A person qualifies as a teacher for the purposes of the GNND Sales Program if the person is: (a) Employed as a full-time teacher by a state-accredited public school or private school that provides direct services to students in grades pre-kindergarten through 12; and (b) The full-time employment in paragraph (a) of this section must, in the normal course of business, serve students from the locality where the home is located. [71 FR 64426, Nov. 1, 2006, as amended at 81 FR 53003, Aug. 11, 2016] § 291.530 Eligible firefighter/emergency medical technicians. A person qualifies as a firefighter/emergency medical technician for the purposes of the GNND Sales Program if the person is: (a) Employed full-time as a firefighter or emergency medical technician by a fire department or emergency medical services responder unit of the Federal Government, a State, unit of general local government, or an Indian tribal government; and (b) The full-time employment in paragraph (a) of this section must, in the normal course of business, directly serve the locality where the home is located. [81 FR 53003, Aug. 11, 2016] § 291.535 Earnest money deposit. (a) General. (b) Amount of earnest money deposit. (c) Acceptance or rejection of offer. § 291.540 Owner-occupancy term. (a) General. (b) Start of owner-occupancy term. (1) Thirty days following closing if HUD determines that the home requires no more than $10,000 in repairs prior to occupancy; (2) Ninety days following closing if HUD determines that the home requires more than $10,000, but not more than $20,000 in repairs prior to occupancy; or (3) One hundred and eighty days following closing if HUD determines that the home requires more than $20,000 in repairs prior to occupancy. (c) Interruptions to owner-occupancy term General. (i) The reason(s) why the interruption is necessary; (ii) The dates of the intended interruption; and (iii) A certification from the law enforcement officer, teacher, or firefighter/emergency medical technician that: (A) The law enforcement officer, teacher, or firefighter/emergency medical technician is not abandoning the home as his/her permanent residence; and (B) The law enforcement officer, teacher, or firefighter/emergency medical technician will resume occupancy of the home upon the conclusion of the interruption and complete the remainder of the 36-month owner-occupancy term. (2) Timing of written request to HUD. § 291.545 Financing purchase of the home. (a) Purchase using conventional financing. (b) Purchase with FHA-insured mortgage. (2) The amount of the FHA-insured mortgage may not exceed the discounted sales price of the home plus: (i) The closing costs; and (ii) The costs of rehabilitating and/or improving the home, where purchase of the home is being financed with an FHA-insured 203(k) rehabilitation loan (see 24 CFR part 203). (c) Closing costs and selling broker's commissions. § 291.550 Second mortgage. (a) General. (b) Second mortgage term. (c) Sale or vacancy of home. § 291.555 Refinancing. (a) General. (b) Subordination of second mortgage. (1) Will result in a lower annual percentage rate (APR) on the first mortgage; (2) Will be undertaken pursuant to HUD's Section 203(k) Rehabilitation Loan Insurance Program in order to rehabilitate or repair the home; or (3) Is necessary to prevent the law enforcement officer, teacher, or firefighter/emergency medical technician from defaulting on the first mortgage. § 291.560 Ineligibility of multiple-unit properties. Only single-unit properties are eligible for the GNND Sales Program. § 291.565 Continuing obligations after purchase. To remain in compliance with the GNND Sales Program, the law enforcement officer, teacher, or firefighter/emergency medical technician must, for the entire duration of the owner-occupancy term: (a) Continue to own, and live in as his/her sole residence, the home purchased through the GNND Sales Program; and (b) Certify initially and once annually thereafter during and at the conclusion of the owner-occupancy term that he/she was at all times fully in compliance with paragraph (a) of this section. Subpart G—Sale of HUD-Held Single Family Mortgage Loans Source: 89 FR 99716, Dec. 11, 2024, unless otherwise noted. § 291.601 Definitions. For purposes of this subpart, the following definitions apply: Aggregate Loan Database (ALD) Bidder Information Package (BIP) Bidder Qualification Statement Claim Date Competitive Sale of Single Family Loans Confidentiality Agreement Conveyance, Assignment and Assumption Agreement (CAA) Cut-off date claim submission cut-off date Desk Guide Direct Sale of Single Family Loans Home Equity Conversion Mortgage (HECM) Interim Servicing Agreement (ISA) Interim Servicing Period Low-value Nonprofit organization Participating Servicer (P-Servicer) Participating Servicer Agreement (PSA) Purchaser Qualified Participant Sale Notice Servicing Transfer Date Single Family Loan Single Family Sale Vacant § 291.603 Purpose, scope, and applicability. The sale of Single Family Loans is at the discretion of the Secretary. All Single Family Loans will be sold without recourse to HUD and without FHA insurance. HUD may sell individual Single Family Loans or groups of Single Family Loans to Qualified Participants as a Competitive Sale of Single Family Loans, § 291.609, or as a Direct Sale of Single Family Loans, § 291.619. Nothing in this section shall be construed to prevent HUD from grouping Single Family Loans with other types of HUD assets for sale, including grouping any associated HUD-held mortgages subordinate to the respective assets. The procedures set out in this subpart, including any cross-referenced regulations, documentation, and published notices detailed in this subpart, govern the Single Family Sales. § 291.605 Participating Servicers. (a) Participation. (1) Be an FHA-approved Mortgagee contributing eligible Single Family Loans and assigning loans to HUD; and (2) Execute a PSA and agree to execute an ISA, as needed. (b) Sale. (1) Identify mortgages that meet the eligibility criteria in accordance with terms of the PSA; (2) Conduct all sale activities in accordance with the PSA and ISA; (3) Comply with any Single Family Sale and Loan Sale Notification requirements as prescribed by the Secretary through notice; and (4) Comply with the terms of the Sale Notice. (5) Ensure the Loan Sale Notification is provided to each borrower and any other parties as required by the Secretary and the Loan Sale Notification complies with all applicable law. Loan Sale notification requirements will be announced to the Participating Servicer through notice. (c) Claim payment requirements. (d) Interim servicing. (e) Transfer documents and servicing. § 291.607 Qualified participants. (a) Confidentiality Agreement and Bidder Qualification Statement. (b) Process for determining Qualified Participant. § 291.609 Bidding process. (a) Sale notice. (b) Submission of bids. (c) Bids by brokers or agents. (d) Earnest money deposits. (e) Timing for withdrawal of bids. (f) Termination of Single Family Sale. (g) Withdrawal of Single Family Loans. (h) Rejection of bids. (1) The bid does not conform with the instructions in the BIP; (2) HUD determines that an award based on the bid would not be in the best interests of the Secretary because the award would not further HUD's fiduciary responsibility to the mutual mortgage insurance fund (MMIF) or any stated mission objectives in the Sale Notice; or (3) HUD can also issue a conditional rejection that would provide the opportunity for the bid to be amended and resubmitted for acceptance upon fulfillment of HUD's requests. § 291.611 Post-bid process and HUD's execution of the CAA. After HUD evaluates conforming bids, HUD may request an adjustment to a bid in accordance with the BIP. After any bid adjustments, HUD will select bids for award and provide notice of award in a manner set forth in the BIP. After selection of a Purchaser, HUD will execute the CAA. § 291.613 Settlement requirements. (a) Settlement payment. (b) Settlement statement. (c) Endorsement and assignment. (d) Purchaser's special purpose entity. § 291.615 Purchaser servicing requirements. (a) Purchaser post-sale servicing. (b) Purchaser reporting requirements. (c) Remedy for performance failures. § 291.617 General policy—Direct Sale of Single Family Loans. The Secretary may pursue a Direct Sale of Single Family Loans to individuals or entity type the Secretary determines may be eligible to qualify as set forth in the Sale Notice. The Direct Sale of Single Family Loans will be subject to the requirements of this subpart, excluding §§ 291.609 and 291.611. The Secretary will publish in the Sale Notice, sale specific Single Family Loan eligibility criteria. § 291.619 Direct Sale of Single Family Loans process. (a) Sale Notice. (b) Sale feasibility. (c) Direct Sale of Single Family Loans process. (1) Meet the Secretary's prescribed requirements for the Direct Sale of Single Family Loans in the Sale Notice; (2) Submit a letter of interest to the Secretary that includes, at a minimum: (i) The description of the individual or entity and a statement about how it would be able to satisfy the participant eligibility requirements and mission objectives, if any; (ii) The geographic area of interest where the party wishes to purchase the loans; (iii) The individual or entity's goals and how this purchase would assist in achieving these goals through post-sale outcomes; (iv) The approximate timeframe for the purchase; (v) The approximate number of loans or, alternatively, the approximate gross sale amount desired; and (vi) The organizational documents for an entity including, but not limited to organizational documents, any required authorizing resolutions, and disclosure of all nonprofit organization or private entity partnership interests in the Direct Sale of Single Family Loans transaction. (d) HUD determination. (e) Secretary's determination to proceed. (2) Upon receipt and review of business plan proposal, HUD will: (i) Reject the business plan proposal; (ii) Issue a conditional rejection that would provide the opportunity for a business plan proposal to be amended and resubmitted for approval upon fulfillment of HUD's request; or (iii) Approve the business plan proposal. (3) Upon approval of such business plan proposal, HUD and the individual or entity will begin the Direct Sale of Single Family Loans process that includes: (i) An executed Confidentiality Agreement; (ii) An executed Bidder Qualification Statement; (iii) A P-Servicer executed PSA; and (iv) Review of Single Family Loans from P-Servicer(s) or HUD. (4) HUD and the individual or entity reviews the ALD and will agree on the Single Family Loan Sale List for the Direct Sale of Single Family Loans. (f) Direct Sale of Single Family Loans. (g) Settlement. § 291.621 Disqualifications. (a) Fraudulent information. (b) Participant ineligibility. (c) Future participation.