[Code of Federal Regulations]
[Title 24, Volume 3]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR573.7]

[Page 196]
 
                 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. 573.7  Loan guarantee agreement.

    (a) The rights and responsibilities with respect to the guaranteed 
loan shall be substantially described in an agreement entered into 
between the Financial Institution, as the lender, and the Secretary, as 
the guarantor, which agreement shall provide that:
    (1) The lender has submitted or will submit a request for loan 
guarantee assistance that is accompanied by the Borrower's request for a 
loan to carry out eligible activities described in Sec. 573.3;
    (2) The lender will require the Borrower to execute a promissory 
note promising to repay the guaranteed loan in accordance with the terms 
thereof;
    (3) The lender will require the Borrower to provide collateral 
security, to an extent and in a form, acceptable to HUD;
    (4) HUD reserves the right to limit loan guarantees to loans 
financing the replacement of damaged property with comparable new 
property;
    (5) The lender will follow certain claim procedures to be specified 
by HUD in connection with any defaults, including appropriate 
notification of default as required by HUD;
    (6) The lender will follow procedures for payment under the 
guarantee whereby the lender will be paid (up to the amount of 
guarantee) the amount owed to the lender less any amount recovered from 
the underlying collateral security for the loan; and
    (7) The lender will act as the fiscal agent for the loan, servicing 
the guaranteed loan, maintaining loan documents, and receiving the 
Borrower's payments of principal and interest. The Borrower and the 
lender may be required to execute a fiscal agency agreement.
    (b) In addition, the agreement shall contain other requirements, 
terms, and conditions required or approved by HUD.