www.hudclips.org U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 January 7, 1993 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER Mortgagee Letter 93-2 TO: ALL APPROVED MORTGAGEES SUBJECT: New Regulations for Mortgagee Approval and the Direct Endorsement Program - Single Family Loan Production The purpose of this Letter is to provide information to all mortgagees on the new regulations governing mortgagee approval and the Direct Endorsement Program. A copy of the regulations is enclosed. These regulations contain many important changes to the Department's previous requirements and become effective on January 8, 1993. Background The new regulations implement a comprehensive revision to the Department's requirements for the approval of mortgagees to participate in HUD mortgage insurance programs, and to maintain their approved status. These regulations also revise HUD's Direct Endorsement Program requirements. The new regulations provide for an increase in the net worth of approved mortgagees, improve the Department's ability to monitor mortgagee performance, and support the goal of maintaining actuarily sound mortgage insurance programs. This Mortgagee Letter contains the key provisions of the new regulations. Mortgagees are important partners in the Department's mortgage insurance programs. I ask that you carefully read these regulations for a detailed description of the new requirements. The following is a summary of the important changes. Net Worth Requirements Mortgagees approved on or after January 8, 1993 must meet the following net worth requirements, except that Supervised and Nonsupervised mortgagees approved after January 8, 1993 may have a net worth of $250,000 for the first year of approval. All mortgagees that were approved prior to January 8, 1993 must meet the new requirements by January 9, 1995. o Supervised and Nonsupervised mortgagees, including sponsors of HUD-approved Loan Correspondents (LC's) must maintain a net worth of not less than $250,000 plus one percent of the volume of insured mortgages the mortgagee originated, purchased and serviced in excess of $25 million, during its prior fiscal year, up to a maximum required net worth of $1 million. _____________________________________________________________________ 2 In determining mortgage volume, the Department will add the aggregate principal amount of the mortgages endorsed and insured mortgages purchased from its Loan Correspondent during the mortgagee's prior fiscal year, and the principal amount of insured mortgages serviced at its fiscal year end, excluding those insured mortgages that were originated by the mortgagee or purchased from its loan correspondents at the end of the mortgagee's prior fiscal year. The mortgage volume for a sponsor of Loan Correspondents must include the aggregate principal amount of mortgages purchased from its Loan Correspondents during the mortgagee's prior fiscal year. The following are examples of the calculations used to determine the basis for an approved mortgagee's adjusted net worth requirement: Example 1: A mortgagee has no loan servicing portfolio for its previous fiscal year. At the end of its previous fiscal year (FYE) the mortgagee had originated $25 million in loans and purchased $25 million in loans from its Loan Correspondents (LC). All of its loan production was sold to other investors. The required net worth is computed based on: Year 1 Year 2 1. Servicing Portfolio FYE $0 $0 2. Plus: Origination $ 25M $ 30M Purchased from LC $ 25M $ 37M _____ _____ $ 50M $ 67M 3. Less Servicing Retained $ 0 $0 Total $ 50M $ 67M Required Net Worth $500,000 $670,000 Example 2: A mortgagee chooses to retain 100% of its loan production at the end of its previous fiscal year: 1. Servicing Portfolio FYE $50M $100M 2. Plus: Origination $25M $25M Purchase from LC $25M $25M _____ _____ $100M $150M _____________________________________________________________________ 3 3. Less: Servicing Retained $25M $25M LC Purchase Retained $25M $25M ____ ____ $50M $50M Total $50M $100M Required Net Worth $500,000 $1 Million Example 3: A mortgagee with an existing loan servicing portfolio chooses to retain 50% of its loan production at the end of its previous fiscal year. 1. Servicing Portfolio FYE $45M $70M 2. Plus: Origination $25M $25M Purchase from LC $25M $25M ____ ____ $95M $120M 3. Less: Servicing Retained $25M $25M Total $70M $95M Required Net Worth $700,000 $950,000 (Maximum Required) Example 4: A mortgagee with an existing loan servicing portfolio purchases servicing from other than its approved Loan Correspondents during its previous fiscal year. It retains its own production but sells the production originated by its loan correspondents to third party investors. 1. Servicing Portfolio FYE $75.1 * $100M * 2. Plus: Origination $25M $25M Purchase from LC $25M $25M _____ _____ $125M $150M 3. Less: Servicing Retained $25M $25M Purchase from LC $0 $0 ____ ____ $25M $25M Total $100M $125M Required Net Worth $1M $1M (Maximum (Maximum Required) Required) * Includes servicing purchased from other than Loan Correspondent _____________________________________________________________________ 4 o Mortgagees that are approved for participation only in multifamily mortgage insurance programs must maintain a net worth of not less than $250,000. o Approved Loan Correspondents must maintain a net worth of not less an $50,000, plus $25,000 for each approved branch office up to a maximum required net worth of $250,000. o Approved mortgagees that are unable to meet the new net worth requirements by January 9, 1995 may apply to change their HUD-approved status to that of a loan correspondent. Application may be made by submitting a HUD Form 92001E and the appropriate application fee to the HUD Field Office where the mortgagee's main office is located. Direct Endorsement (Net worth) Requirements o The new regulations provide for a two-year phase in period for previously approved mortgagees to meet the new net worth requirements. However, mortgagees that presently are not approved for Direct Endorsement (DE) processing must either increase their net worth to not less than $250,000 and meet the other requirements for DE approval by April 5, 1993, or convert their status to that of a Loan Correspondent with a sponsor that is approved for DE. The Department will not accept applications for agency processing after this date except for the programs that are not eligible for DE processing. Liquid Assets Requirement All approved mortgagees must maintain liquid assets (cash, cash equivalents or readily convertible instruments) of 20 percent of their net worth up to a maximum amount of $100,000. The Department will not consider a line of credit to be a liquid asset, nor loans or mortgages held for resale by the mortgagee. Fidelity Bond and Errors and Omissions Coverage All mortgagees, except Loan Correspondents, are required to maintain base coverage of $300,000 in Fidelity bonds covering the mortgagee's employees and agents, and $300,000 errors and omissions coverage. The Department does not intend that it be the beneficiary of such coverage. This requirement is to assure that mortgagees have an adequate source of insurance in the event of employee fraud or negligence. A fidelity bond and errors and omissions insurance that is generally acceptable to the secondary market agencies such as GNMA, FNMA, and FHLMC will meet the intent of HUD's requirement. _____________________________________________________________________ 5 Warehouse Line of Credit Requirements All Nonsupervised mortgagees, except multifamily mortgagees, must maintain a warehouse line of credit or other mortgage funding program acceptable to the Department (such as table funding or concurrent funding arrangements) that is adequate to fund the mortgagee's average 60-day origination production pipeline, but not less than a $1 million warehouse line of credit or funding program. Loan Correspondents are not required to maintain a separate warehouse line of credit if they have an acceptable funding program with a single sponsor. Origination Approval Agreement The approval of a mortgagee by the Department for participation in the mortgage insurance programs constitutes an Origination Approval Agreement between HUD and the mortgagee under which a mortgagee's approval to originate insured mortgages may be terminated by the Department. The termination of a mortgagee's approval to originate insured mortgages under this Agreement is separate and apart from any action taken by HUD's Mortgagee Review Board as provided under the Department's regulations at 24 CFR Part 25. o Every three months, the Department will review the number of defaults and claims on mortgages originated by each mortgagee in the geographic area served by a HUD Field Office. At least 24 months of a mortgagee's production will be monitored under this provision before any action will be taken by the Department. o A mortgagee that has a percentage rate of claims and defaults on insured mortgages originated in a HUD Field Office jurisdiction during the Federal fiscal year that was in excess of 200 percent of the normal rate (field office's average), and the national rate for insured mortgages, will be notified that its Agreement will be terminated in 60 days. o Prior to sending a termination notice, the Department will review census tract, and zip code if appropriate, concentrations of the defaults and claims. If it is determined that the mortgagee's rate of claims and defaults is not excessive due to the lack of mortgage credit in an underserved area, the Department may determine not to send a termination notice. _____________________________________________________________________ 6 o Prior to any termination of the Agreement, a mortgagee may request an informal conference with the Deputy Assistant Secretary for Single Family Housing, or his or her designee to discuss the reasons for the excessive defaults and claims. Excessive claims and defaults caused by factors beyond the mortgagee's control may result in placing a mortgagee on credit watch status rather than termination of the Agreement. o Termination of the Agreement precludes a mortgagee from originating mortgages for HUD insurance. It does not preclude a mortgagee from purchasing or servicing insured mortgages. A mortgagee may reapply for a new origination Approval Agreement if the Department finds that the causes for termination have been remedied. Where a mortgagee's branch office exceeds the claim and default threshold, the branch approval alone may be terminated, or the branch office may be placed on a credit watch status. Credit Watch Status A mortgagee that has a percentage rate of defaults and claims on insured mortgages originated in a HUD Field Office jurisdiction during a federal fiscal year that is greater than 150 percent but equal to or less than 200 percent of the Field Office's average, will be notified by the Department that it is being placed on credit watch status. o After notification to the mortgagee of its credit watch status, the Department will track insured mortgages originated by the mortgagee during a six-month period from the date of the credit watch notice for excessive claim and default rates. o A mortgagee will be removed from credit watch status if its claim and default rate decreases to 150 percent or less within one year following the tracking period. The Origination Approval Agreement of a mortgagee may be terminated if its claim and default rate during the tracking period remains above 150 percent of the Field Office's average rate one year after the tracking period. _____________________________________________________________________ 7 Approval of Supervised Mortgagees as Loan Correspondents o A mortgagee that meets the definition of a supervised mortgagee under the Department's regulations may apply for approval as a Loan Correspondent. This is to preclude any potential adverse effect under the new regulations on the ability of small supervised mortgagees to participate in the Direct Endorsement program. These mortgagees are not required to have mortgage lending as a principal activity. Sponsor Responsibility for Actions of its Loan Correspondents o Each sponsor of a Loan Correspondent is responsible to the Department for the actions of its Loan Correspondent in originating insured mortgages. The Department's intent is to affirm existing policy that a sponsor is required to supervise and perform quality control reviews of its Loan Correspondents. Elimination of Type 2 Supervised Mortgagees o The Department has eliminated "Type 2" Supervised mortgagees as a category of approved mortgagee. Under the prior regulations a "Type 2" Supervised mortgagee was typically a subsidiary or affiliate of a bank or savings and loan association, or an institution regulated solely by State officials. A mortgagee presently approved by the Department as a "Type 2" Supervised mortgagee will be automatically converted to a Nonsupervised mortgagee status on January 11, 1993 (unless the mortgagee requests HUD approval for Loan Correspondent status). Limitation of Authorized Agents o The Department has eliminated the use of Authorized Agents by mortgagees for the purpose of submitting applications for mortgage insurance except for affiliates or subsidiaries of Supervised mortgagees. In addition, Governmental Institutions, GNMA, FNMA, FHLMC, Public Housing Agencies and State Housing Agencies, and mortgagees whose lending activities involve properties located in an area determined by the Department to be under-served are permitted to use Authorized Agents. Mortgagees previously utilizing the program must be in compliance by April 5, 1993. _____________________________________________________________________ 8 Elimination of Trusts as Approved Mortgagees o The Department has removed Trusts from the types of businesses that may be approved as a mortgagee for participation in HUD's mortgage insurance programs. Approval of Partnerships o The new regulations prohibit an individual or a personal corporation from being a general partner in an approved mortgagee. In addition, the regulations, among other things, permit a general partner to manage more than one partnership provided that its principal activity is the management of the partnerships, and each partnership is involved in mortgage lending and not other unrelated business. Reporting Business Changes o All mortgagees are required to submit to the Department a financial statement within 30 days of the end of each fiscal quarter in which the mortgagee experiences an operating loss of 20 percent of its net worth. The financial statement will be either audited or unaudited, as specified by the Department, and must be submitted until the mortgagee shows an operating profit for two consecutive quarters, or until its next annual recertification by HUD, whichever is longer. o All mortgagees must submit a statement of net worth within 30 days of commencement of voluntary or involuntary bankruptcy, conservatorship, receivership or any transfer of control to a Federal or State supervisory agency. Approval Required for Servicing After January 10, 1994, all mortgagees that service insured mortgages must be HUD-approved mortgagees. This requirement also applies to subservicers. Application/Recertification Fees The application fee for approval as a mortgagee is established at $1,000, and $300 for each branch office. The annual recertification fee is established at $500 for a mortgagee, and $200 for each approved branch office. The application fee for an Authorized Agent is established at $300. The application fee for an additional Sponsor of a Loan Correspondent is established at $300. _____________________________________________________________________ 9 Recertification of Approval As part of its annual recertification procedure for all approved mortgagees, the Department will perform a review of each mortgagee to determine if continued approval by the Department is appropriate. The Department will review a mortgagee's Yearly Verification Report that is submitted to HUD, its claim and default rates and other pertinent documents to determine whether the mortgagee's Origination Approval Agreement should be continued or terminated. During this review procedure, the Department may request any additional information from the mortgagee to make its determination. o As part of the annual audit report submission by a mortgagee, a report on compliance tests is a requirement for all Nonsupervised mortgagees (including Loan Correspondents) regardless of the volume of origination. o With each annual recertification, a mortgagee must submit a certification to the Department that it has not been refused a license and has not been sanctioned by any State or States in which it will originate insured mortgages. If the mortgagee has been sanctioned, it must submit all pertinent information to the Department. Limited Denial of Participation (LDP) Authority The new regulations provide the Deputy Assistant Secretary for Single Family Housing with the authority, concurrent to that of HUD Field Offices, to impose LDP actions within a geographic area, or nationwide. Mandatory Direct Endorsement Processing The new regulations require mandatory Direct Endorsement (DE) processing for virtually all applications. Loan correspondents and other lenders that are not eligible to process applications under DE or have not been approved for DE will have to establish correspondent relationships with sponsors that are DE approved. HUD will not accept an application for agency processing unless it involves a specific type of loan that can be converted to HUD processing in accordance with paragraph 1-15 of the DE Handbook or it involves an application under one of the few remaining programs that are not eligible for DE processing. The programs not eligible for DE processing are Section 255 Home Equity Conversion Mortgages, Section 203(n) Cooperatives, Section 233 Experimental Housing, Section 237 Special Credit Risks and Sections 809 and 810 related to Armed Forces housing. _____________________________________________________________________ 10 The requirement for mandatory DE processing is effective for CASE NUMBERS ASSIGNED on or after April 5, 1993. Nationwide Approval of Direct Endorsement Underwriters The Department will continue the system of DE underwriter approval that was previously announced in Mortgagee Letter 92-15. As stated in that Mortgagee Letter, if a DE underwriter has already been approved by one HUD field office, the Department will grant automatic approval to the underwriter in any HUD field office where the lender is approved to do business or any HUD field office where the lender is applying for approval to do business. The underwriter is not required to provide documentation showing familiarity with market conditions in the local geographic area. To request approval from any additional HUD field offices where the lender is approved (or is requesting approval) to do business, the DE underwriter's approval request (HUD 54112) must include a copy of an approval letter issued by a HUD field office, the underwriter's CHUMS identification number, social security number and a statement that the underwriter has not had administrative sanctions taken against him or her by any HUD field office. Revised Direct Endorsement Underwriter Certifications The certifications that the DE underwriter and mortgagee make to HUD along with the Underwriter/Mortgagee Certification Form (HUD-54113) have been revised to make the certification process simpler and more streamlined. Underwriters no longer need to insert a specific "type" of mortgage on the HUD-54113. Underwriter certifications are listed in a change to the HUD Direct Endorsement Handbook 4000.4 and by signing the revised HUD-54113, the underwriter and lender are making all certifications required for the mortgage as set forth in the Handbook. A copy of the revised HUD-54113 is enclosed with this Mortgagee Letter and the revised form may be used immediately. Questions concerning the information in this Mortgagee Letter with respect to mortgagee requirements should be directed to the Office of Lender Activities and Land Sales Registration. Questions concerning the Direct Endorsement requirements should be directed to the Single Family Development Division. Sincerely Arthur J. Hill Assistant Secretary for Housing -Federal Housing Commissioner Enclosures _____________________________________________________________________ __________________________________________________________________________ Underwriter/Mortgagee Certification Direct Endorsement Program ******************************************************************** * * * * * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * * * * * ******************************************************************** __________________________________________________________________________ form HUD-54113 (9/92) ref. Handbook 4000.4 _____________________________________________________________________ APPENDIX 3 UNDERWRITER CERTIFICATION The underwriter executing form HUD-54113 has personally reviewed the appraisal report (if applicable) and credit application, including the analysis performed on the mortgage credit analysis worksheet, and certifies, for and on behalf of the mortgagee, that the mortgage complies with HUD underwriting requirements as contained in all outstanding HUD handbooks and Mortgagee Letters, and is in compliance with the applicable regulations described below. The mortgage loan is eligible for mortgage insurance under the Direct Endorsement program. This underwriter certification is in addition to any certifications required of the mortgagee, the mortgagor, or both on form HUD-92900-A. If a requirement from 24 CFR Part 203 is incorporated in a different regulation by cross-reference (e.g., # 203.40 in Certification 1 is cross-referenced in # 221.1), a reference to the Part 203 requirement in a certification shall also be deemed a reference to each instance where the requirement is incorporated by cross-reference. Each of the below-listed certifications apply to the loan submitted for endorsement, except to the extent the certification itself defines the situation to which it applies. (1) The mortgaged property is located in a community where the housing standards and location meet the requirements of 24 CFR 203.40 or # 234.63 (condominiums). (2) There is located on the mortgaged property a dwelling unit designed principally for residential use for not more than four families, as required by 24 CFR 203.38, or for eleven families if # 220.20 is applicable. (3) The mortgage is executed by a mortgagor who is to occupy the dwelling as a principal residence (as described in 24 CFR 203.18(f)(1) or 234.27(e)(1)) or, if the mortgagor is a non-occupant, the mortgagor is eligible under 24 CFR 203.18(f)(3), 234.27(e)(3), or is purchasing the dwelling from HUD. (4) The mortgagor's monthly mortgage payments will not be in excess of his or her reasonable ability to pay, as required either under 24 CFR 203.21, # 203.45(d) (GPMs), # 203.47(a) (GEMs), # 220.1, or # 234.36 (condominiums). (5) The mortgagor's income is and will be adequate to meet the periodic payments required to amortize the mortgage submitted for insurance, as required under 24 CFR 203.33, or # 234.56 (condominiums). (6) The mortgagor's general credit standing is satisfactory, as required under 24 CFR 203.34, or # 234.57. Page 1 _____________________________________________________________________ (7) The buildings on the property secured by the mortgage comply with # 203.17(e) and property standards issued by HUD as required by the applicable provisions of 24 CFR part 200, subpart S, for proposed construction, and ## 203.39, 203.50(d) (if a Section 203(k) mortgage), 220.15 (urban renewal), 234.25(d) (if a condominium unit) or the standards set forth in HUD handbook 4905.1 for existing construction as applicable. (8) In cases where the mortgaged property is subject to a junior mortgage or lien, the applicable requirements of 24 CFR 203.32(b), (c) or (d), or ## 234.55(b), (c) or (d) (condominiums), are met. (9) For a condominium unit, the mortgaged property is in a project that has been approved by HUD and all other requirements under 24 CFR # 234.26 are met. (10) In the case of proposed or new construction in a new subdivision, the property covered by the application for insurance meets the requirements of 24 CFR # 203.12. (11) The property covered by the mortgage is not located in an area that is precluded from receiving Federal financial assistance pursuant to the Coastal Barrier Resources Act (Pub. L. 97-349). (12) If the mortgage loan is for rehabilitation under Section 203(k), the mortgage also meets the requirements of # 203.50(c) (dwelling at least one year old), 203.50(d)(2) (meets energy conservation standards), and 203.50(e) (is an acceptable risk). (13) If the property is located in an older declining urban area and is to be insured under Section 223(e) of National Housing Act, it also meets the additional requirements of 24 CFR 203.43a. Page 2 _____________________________________________________________________ APPENDIX 4 MORTGAGEE'S CERTIFICATION The mortgagee executing form HUD-54113 has personally reviewed the mortgage documents and the application for insurance endorsement and certifies that the mortgage is eligible for mortgage insurance under HUD's Direct Endorsement program. The mortgagee has submitted all appropriate documents, properly executed, as required by all outstanding HUD handbooks and Mortgagee Letters. This mortgagee certification is in addition to any certifications required of the mortgagee, the mortgagor, or both on forms HUD-92800 or 92900-A. If a requirement from 24 CFR Part 203 is incorporated in a different regulation by cross-reference (e.g., # 203.17 in Certification 1 is cross-referenced in # 222.1), a reference to the Part 203 requirement in a certification shall also be deemed a reference to each instance where the requirement is incorporated by reference. Each of the below-listed certifications apply to the loan submitted for endorsement, except to the extent the certification itself defines the situation to which it applies. GENERAL CERTIFICATIONS. The following general certifications apply to all mortgage loans categories eligible for insurance under the Direct Endorsement program. Variations from the general certifications for mortgages with special features are listed here as alternative certifications. Additional requirements are listed below as specific certifications. (1) The mortgage is a first lien and contains the mortgage provisions required by 24 CFR # 203.17 (except as provided in # 203.50(i) for rehabilitation loans under Section 203(k) of National Housing Act); or ## 221.25, 221.30, 221.32, 221.35 or 221.40, and 221.45 for low- and moderate income mortgagors under Section 221(d)(2) of National Housing Act; or # 234.25 for condominiums. (2) The mortgage is on real estate held in fee simple or on a leasehold under a lease for not less than 99 years which is renewable, or under a lease which otherwise meets the requirements of 24 CFR 203.37 or # 234.65 for condominiums. (3) The stated mortgage amount satisfies the requirements of: ## 203.18, 203.18a, 203.18b, or 203.29; or # 203.50(f) or (g) for rehabilitation loans; or ## 220.25 and 220.30 (urban renewal); or Page 1 _____________________________________________________________________ ## 221.10, 221.11, 221.20, 221.50, for low- and moderate-income mortgages; or # 234.27 or # 234.49 for condominiums; or # 240.5 for fee title purchasers; or For a mortgage given to refinance an existing HUD-insured mortgage pursuant to Section 223(a)(7) of the National Housing Act, the stated amount satisfies the limitations set forth in # 203.43(c) and 234.52; or If the mortgage involves refinancing to be insured under 24 CFR 221.21, the mortgage, in addition to the limitations contained in ## 221.10, 221.11, and 221.20, does not exceed the estimated cost of repair and rehabilitation and the amount required to refinance the existing indebtedness secured by the property; or If the mortgage is on property sold by HUD, the mortgage amount is that determined by the Secretary under 24 CFR 203.43(k) and Part 291. (4) The mortgagor has made the minimum investment required by 24 CFR 203.19; or # 220.35 (urban renewal); or # 221.50 (low- and moderate income); or # 234.28 (condominiums); or # 203.43(k) for properties sold by HUD where the Secretary has determined the minimum cash investment; and no prepaid expenses, other than those listed in 24 CFR 221.54 were included in determining the mortgagor's minimum investment. (5) If the mortgaged property is in a flood plain, the mortgage meets the flood insurance requirements set forth in # 203.16a or # 234.17. SPECIFIC CERTIFICATIONS. The following specific certifications reflect additional special features of the mortgage loan categories eligible for insurance under the Direct Endorsement program. (6) If the property is located in an older declining urban area and the mortgage is to be insured under Section 223(e) of National Housing Act, it also meets the requirements of 24 CFR 203.43a or 234.68. (7) If the mortgage is an adjustable rate mortgage it also meets the requirements established under 24 CFR 203.49 or 234.79. Page 2 _____________________________________________________________________ (8) If the mortgage is a graduated payment mortgage it also meets the requirements established under 24 CFR 203.45 or 234.75; if a growing equity mortgage it also meets the requirements established under 24 CFR 203.47 or 234.77; (9) If the property is located in an outlying area and is insured under Section 203(i) of the National Housing Act, the mortgage also meets the requirements of 24 CFR 203.18(d). (10) If the property to be insured is for a borrower who is a disaster victim under Section 203(h) of the National Housing Act, it also meets the requirements of 24 CFR 203.18(e). (11) If the mortgage loan is for rehabilitation under Section 203(k) of the National Housing Act, the mortgage also meets the requirements of 24 CFR # 203.50. (12) If the mortgage to be insured is on a property in an area determined to be a federally impacted area under Section 238(c) of National Housing Act, it also meets the requirements of # 203.43e. (13) If the mortgage to be insured is on Indian lands and is insured pursuant to Section 248 of the National Housing Act, it also meets the requirements set forth in 24 CFR 203.43h. (14) If the mortgage to be insured is on Hawaiian Home Lands property and is insured pursuant to Section 247 of the National Housing Act, the mortgage also meets the requirements of # 203.43i including the eligibility requirements set forth in # 203.43(i). (15) If the mortgage to be insured is eligible as an open-end advance, it also meets the requirements of # 203.44 or # 234.70 (condominiums). (16) If the mortgage is a serviceperson's mortgage to be insured under Section 222 of the National Housing Act, it also meets the requirements of 24 CFR Part 222. (17) If the mortgage is a refinance of a under Section 235(r) of the National Housing Act, it also meets the requirements of that Section and applicable requirements of 24 CFR Part 235. (18) If the mortgage to be insured is for fee title purchases under Section 240 of the National Housing Act, it also meets the requirements of 24 CFR Part 240. (19) If the mortgage to be insured is for loans for urban renewal under Section 220(d) of the National Housing Act, or if for a home improvement loan under Section 220(h) of the National Housing Act, it also meets the requirements of 24 CFR Part 220, Subpart A. Page 3 _____________________________________________________________________ ATTACHMENT - PART III DHUD OFFICE OF THE SECRETARY 24 CFR PART 24, ET AL, MORTGAGEE APPROVAL REFORM AND DIRECT ENDORSEMENT EXPANSION; FINAL RULE, DATED WEDNESDAY, DECEMBER 9, 1992, CAN BE FOUND IN THE FR DATABASE OF DAS.