PART 1007—SECTION 184A LOAN GUARANTEES FOR NATIVE HAWAIIAN HOUSING Authority: 12 U.S.C. 1715z-13b; 15 U.S.C. 1639c; 42 U.S.C. 3535(d). Source: 67 FR 40776, June 13, 2002, unless otherwise noted. § 1007.1 Purpose. This part provides the requirements and procedures that apply to loan guarantees for Native Hawaiian Housing under section 184A of the Housing and Community Development Act of 1992. Section 184A permits HUD to guarantee an amount not to exceed 100 percent of the unpaid principal and interest that is due on an eligible loan. The purpose of section 184A and this part is to provide access to sources of private financing to Native Hawaiian families who otherwise could not acquire housing financing because of the unique legal status of the Hawaiian Home Lands or as a result of a lack of access to private financial markets. § 1007.5 Definitions. The following definitions apply in this part: Department of Hawaiian Home Lands (DHHL) et seq. Eligible entity Family Guarantee Fund Hawaiian Home Lands (1) Have the status of Hawaiian Home Lands under section 204 of the Hawaiian Homes Commission Act (42 Stat. 110); or (2) Are acquired pursuant to that Act. HUD Native Hawaiian (1) A citizen of the United States; and (2) A descendant of the aboriginal people, who, prior to 1778, occupied and exercised sovereignty in the area that currently constitutes the State of Hawaii, as evidenced by: (i) Genealogical records; (ii) Verification by kupuna (elders) or kama'aina (long-term community residents); or (iii) Birth records of the State of Hawaii. Native Hawaiian family Office of Hawaiian Affairs § 1007.10 Eligible borrowers. A loan guaranteed under this part may only be made to the following borrowers: (a) A Native Hawaiian family; (b) The Department of Hawaiian Home Lands; (c) The Office of Hawaiian Affairs; or (d) A private, nonprofit organization experienced in the planning and development of affordable housing for Native Hawaiians. § 1007.15 Eligible uses. (a) In general. (b) Construction advances. (1) The mortgagor and the mortgagee execute a building loan agreement, approved by HUD, setting forth the terms and conditions under which advances will be made; (2) The advances are made only as provided in the building loan agreement; (3) The principal amount of the mortgage is held by the mortgagee in an interest bearing account, trust, or escrow for the benefit of the mortgagor, pending advancement to the mortgagor or to his or her creditors as provided in the loan agreement; and (4) The mortgage bears interest on the amount advanced to the mortgagor or to his or her creditors and on the amount held in an account or trust for the benefit of the mortgagor. § 1007.20 Eligible housing. (a) A loan guaranteed under this part may only be made for one to four-family dwellings that are standard housing, in accordance with paragraph (b), of this section. The housing must be located on Hawaiian Home Lands for which a housing plan that provides for the use of loan guarantees under this part has been submitted and approved under part 1006 of this chapter. (b) Standard housing must meet housing safety and quality standards that: (1) Provide sufficient flexibility to permit the use of various designs and materials; and (2) Require each dwelling unit to: (i) Be decent, safe, sanitary, and modest in size and design; (ii) Conform with applicable general construction standards for the region in which the housing is located; (iii) Contain a plumbing system that: (A) Uses a properly installed system of piping; (B) Includes a kitchen sink and a partitional bathroom with lavatory, toilet, and bath or shower; and (C) Uses water supply, plumbing, and sewage disposal systems that conform to any minimum standards established by the applicable county or State; (iv) Contain an electrical system using wiring and equipment properly installed to safely supply electrical energy for adequate lighting and for operation of appliances that conforms to any appropriate county, State, or national code; (v) Be not less than the size provided under the applicable locally adopted standards for size of dwelling units, except that HUD, upon request of the DHHL may waive the size requirements under this paragraph; and (vi) Conform with the energy performance requirements for new construction established by HUD under section 526(a) of the National Housing Act (12 U.S.C.A. 1735f-4), unless HUD determines that the requirements are not applicable. (c) The relevant requirements of 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, and R of this title and §§ 200.805 and 200.810 of this title apply to housing eligible for a loan guaranteed under this part. (d) Housing that meets the minimum property standards for Section 247 mortgage insurance (12 U.S.C. 1715z-12) is deemed to meet the required housing safety and quality standards. [67 FR 40776, June 13, 2002, as amended at 68 FR 66985, Nov. 28, 2003] § 1007.25 Eligible lenders. (a) In general. (b) Approval. (1) Any mortgagee approved by HUD for participation in the single family mortgage insurance program under title II of the National Housing Act (12 U.S.C.A. 1707 et seq. (2) Any lender that makes housing loans under chapter 37 of title 38, United States Code, that are automatically guaranteed under section 3702(d) of title 38, United States Code; (3) Any lender approved by the Secretary of Agriculture to make guaranteed loans for single family housing under the Housing Act of 1949 (42 U.S.C.A. 1441 et seq. (4) Any other lender that is supervised, approved, regulated, or insured by any agency of the Federal Government; and (5) Any other lender approved by HUD under this part. § 1007.30 Security for loan. (a) In general. (1) The property and/or improvements to be acquired, constructed, or rehabilitated, to the extent that an interest in such property is not subject to any restrictions against alienation applicable to Hawaiian Home Lands; (2) A security interest in non-Hawaiian Home Lands property; (3) Personal property; or (4) Cash, notes, an interest in securities, royalties, annuities, or any other property that is transferable and whose present value may be determined. (b) Hawaiian Home Lands property interest as collateral. (1) Approved Lease. (2) Assumption or sale of leasehold. (3) Liquidation. (4) Eviction procedures. (i) Enforcement. (ii) Review. [67 FR 40776, June 13, 2002, as amended at 68 FR 66985, Nov. 28, 2003] § 1007.35 Loan terms. To be eligible for guarantee under this part, the loan shall: (a) Be made for a term not exceeding 30 years; (b) Bear interest (exclusive of the guarantee fee under § 1007.55 and service charges, if any) at a rate agreed upon by the borrower and the lender and determined by HUD to be reasonable, but not to exceed the rate generally charged in the area (as determined by HUD) for home mortgage loans not guaranteed or insured by any agency or instrumentality of the Federal Government; (c) Involve a principal obligation not exceeding: (1) 97.75 percent of the appraised value of the property as of the date the loan is accepted for guarantee (or 98.75 percent if the value of the property is $50,000 or less); or (2) The amount approved by HUD under this section; and (d) Involve a payment on account of the property: (1) In cash or its equivalent; or (2) Through the value of any improvements, appraised in accordance with generally accepted practices and procedures. § 1007.40 Environmental requirements. Before HUD issues a commitment to guarantee any loan or (if no commitment is issued) before guarantee of any loan, there must be compliance with environmental review procedures to the extent applicable under part 50 of this title. If the loan involves proposed or new construction, HUD will require compliance with procedures similar to those required by § 203.12(b)(2) of this title for FHA mortgage insurance. § 1007.45 Nondiscrimination. (a) To the extent that the requirements of title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq. et seq. (b) The equal access to HUD-assisted or -insured housing requirements in 24 CFR 5.105(a)(2) apply to this part. [67 FR 40776, June 13, 2002, as amended at 81 FR 80993, Nov. 17, 2016] § 1007.50 Certificate of guarantee. (a) Approval process In general. (2) Approval. (b) Standard for approval. (c) Effect As evidence. (2) Full faith and credit. (d) Fraud and misrepresentation. (1) To preclude HUD from establishing defenses against the original lender based on fraud or material misrepresentation; or (2) To bar HUD from establishing regulations that are (on the date of issuance or disbursement, whichever is earlier) partial defenses to the amount payable on the guarantee. § 1007.55 Guarantee fee. The lender shall pay to HUD, at the time of issuance of the guarantee, a fee for the guarantee of loans under this part, in an amount equal to 1 percent of the principal obligation of the loan. This amount is payable by the borrower at closing. § 1007.60 Liability under guarantee. The liability under a guarantee provided under this section shall decrease or increase on a pro rata basis according to any decrease or increase in the amount of the unpaid obligation under the provisions of the loan agreement involved. § 1007.65 Transfer and assumption. Notwithstanding any other provision of law, any loan guaranteed under this section, including the security given for the loan, may be sold or assigned by the lender to any financial institution subject to examination and supervision by an agency of the Federal Government or of any State or the District of Columbia. § 1007.70 Disqualification of lenders and civil money penalties. (a) In general Grounds for action. (i) Has failed: (A) To maintain adequate accounting records; (B) To service adequately loans guaranteed under this section; or (C) To exercise proper credit or underwriting judgment; or (ii) Has engaged in practices otherwise detrimental to the interest of a borrower or the United States. (2) Actions. (i) Refuse, either temporarily or permanently, to guarantee any further loans made by such lender or holder; (ii) Bar such lender or holder from acquiring additional loans guaranteed under this part; and (iii) Require that such lender or holder assume not less than 10 percent of any loss on further loans made or held by the lender or holder that are guaranteed under this part. (b) Civil money penalties for intentional violations In general. (i) To maintain adequate accounting records; (ii) To adequately service loans guaranteed under this section; or (iii) To exercise proper credit or underwriting judgment. (2) Penalties. (c) Payment on loans made in good faith. § 1007.75 Payment under guarantee. (a) Lender options Notification. (2) Payment. (i) Foreclosure. (ii) No foreclosure. (b) Requirements. § 1007.80 Qualified mortgage. A mortgage guaranteed under section 184A of the Housing and Community Development Act of 1992 (1715z-13b), except for mortgage transactions exempted under § 203.19(c)(2), is a safe harbor qualified mortgage that meets the ability-to-repay requirements in 15 U.S.C. 1639c(a). [78 FR 75238, Dec. 11, 2013]