[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR573.5]

[Page 194-195]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER V--OFFICE OF ASSISTANT SECRETARY FOR COMMUNITY PLANNING AND 
        DEVELOPMENT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 573_LOAN GUARANTEE RECOVERY FUND--Table of Contents
 
Sec. 573.5  Underwriting standards and availability of loan guarantee assistance.

    (a) HUD may, in its discretion, accept the underwriting standards of 
the Financial Institution making a loan to a Borrower.
    (b) HUD will not make the loan guarantee unless it determines that 
the guaranteed loan is an acceptable financial risk under HUD's 
generally applicable loan underwriting standards based on the following:
    (1) The Borrower's ability to pay debt service; and
    (2) The value of the collateral assigned or pledged as security for 
the repayment of the loan.
    (c) The provision of a loan guarantee to a Financial Institution and 
the amount of the guarantee do not depend in any way on the purpose, 
function, or identity of the organization to which the Financial 
Institution has made, or intends to make, a Section 4 Guaranteed Loan.
    (d) HUD may disapprove a request for loan guarantee assistance based 
on the availability of funding.
    (e) HUD may decline any Financial Institution's participation if its 
underwriting criteria are insufficient to make the guarantee an 
acceptable financial risk, or if the proposed interest rates or fees are 
unacceptable. HUD expects the proposed interest rates to take into 
account the value of the Federal guarantee.
    (f) HUD may limit the availability of Guaranteed Loan Funds to 
geographic areas having the greatest need, as determined by a needs 
analysis of the

[[Page 195]]

most current available date conducted by HUD.
    (g) Other requirements associated with the underwriting standards 
and guidelines shall be contained in the Loan Guarantee Agreement.