[Code of Federal Regulations]
[Title 45, Volume 4]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR1309.22]

[Page 193-194]
 
                        TITLE 45--PUBLIC WELFARE
 
CHAPTER XIII--OFFICE OF HUMAN DEVELOPMENT SERVICES, DEPARTMENT OF HEALTH 
                           AND HUMAN SERVICES
 
PART 1309_HEAD START FACILITIES PURCHASE, MAJOR RENOVATION AND 
CONSTRUCTION--Table of Contents
 
                Subpart C_Protection of Federal Interest
 
Sec. 1309.22  Rights and responsibilities in the event of grantee's 
default on mortgage, or withdrawal or termination.

    (a) The mortgage agreement, or security agreement in the case of a 
modular unit which is proposed to be purchased under a chattel mortgage, 
shall provide in the case of default by the grantee or the withdrawal or 
termination of the grantee from the Head Start program that ACF may 
intervene. In the case of a default, the mortgage agreement or security 
agreement must provide that ACF may intervene to ensure that the default 
is cured by the grantee or another agency designated by ACF and that the 
lender shall accept the payment of money or performance of any other 
obligation by ACF's designee, for the grantee, as if such payment of 
money of performance

[[Page 194]]

had been made by the grantee. The agreement shall also provide that ACF 
will have a period of 60 days after notification by the grantee of 
default in which to intervene to attempt to cure the default. The 
agreement shall further provide that in the event of a default, or the 
withdrawal or termination of the grantee the mortgage may be assumed by 
an organization designated by ACF. The mortgage or creditor will have 
the right to approve the organization designated to assume the mortgage, 
but such approval will not be withheld except for good reason. The 
required provisions must be included in the mortgages of facilities 
funded as continuing purchases pursuant to Sec. 1309.2 unless a 
convincing justification for not doing so is shown by the Head Start 
grantee.
    (b) The grantee must immediately provide the responsible HHS 
official with both telephonic and written notification of a default of 
any description on the part of the grantee under a real property or 
chattel mortgage.
    (c) In the event that a default is not cured and foreclosure takes 
place, the mortgagee or creditor shall pay ACF that percentage of the 
proceeds from the foreclosure sale of the property attributable to the 
Federal share as defined in 45 CFR 74.2, or, if part 92 is applicable, 
to ACF's share as defined in 45 CFR 92.3. If ACF and the mortgagee or 
creditor have agreed that ACF's Federal interest will be subordinated to 
the mortgagee's or creditor's interest in the property, that agreement 
must be set forth in a written subordination agreement that is signed by 
the responsible HHS official and that complies with Sec. 1309.21 and 
any other applicable Federal law.

[64 FR 5945, Feb. 8, 1999, as amended at 68 FR 23222, May 1, 2003]