[Code of Federal Regulations]

[Title 45, Volume 4]

[Revised as of October 1, 2005]

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]