[Code of Federal Regulations]

[Title 24, Volume 4]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR880.602]



[Page 56-57]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

  CHAPTER VIII--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL 

 

PART 880_SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR NEW 

CONSTRUCTION--Table of Contents

 

                          Subpart F_Management

 

Sec.  880.602  Replacement reserve.



    (a) A replacement reserve must be established and maintained in an 

interest-bearing account to aid in funding extraordinary maintenance and 

repair and replacement of capital items.



[[Page 57]]



    (1) Part 880 and 24 CFR part 881 projects. (i) For this part 880 and 

24 CFR part 811 projects, an amount equivalent to .006 of the cost of 

total structures, including main buildings, accessory buildings, garages 

and other buildings, or any higher rate as required by HUD from time to 

time, will be deposited in the replacement reserve annually. This amount 

will be adjusted each year by the amount of the automatic annual 

adjustment factor.

    (ii) The reserve must be built up to and maintained at a level 

determined by HUD to be sufficient to meet projected requirements. 

Should the reserve achieve that level, the rate of deposit to the 

reserve may be reduced with the approval of HUD.

    (iii) All earnings including interest on the reserve must be added 

to the reserve.

    (iv) Funds will be held by the mortgagee or trustee for bondholders, 

and may be drawn from the reserve and used only in accordance with HUD 

guidelines and with the approval of, or as directed by, HUD.

    (v) Partially-assisted part 880 and 24 CFR part 881 projects are 

exempt from the provisions of this section.

    (2) Part 883 of this chapter projects. (i) For 24 CFR part 883 

projects, an amount equivalent to at least .006 of the cost of total 

structures, including main buildings, accessory buildings, garages and 

other buildings, or any higher rate as required from time to time by:

    (A) The Agency, in the case of projects approved under 24 CFR part 

883, subpart D; or

    (B) HUD, in the case of all other projects, will be deposited in the 

replacement reserve annually. For projects approved under 24 CFR part 

883, subpart D, this amount may be adjusted each year by up to the 

amount of the automatic annual adjustment factor. For all projects not 

approved under 24 CFR part 883, subpart D, this amount must be adjusted 

each year by the amount of the automatic annual adjustment factor.

    (ii) The reserve must be built up to and maintained at a level 

determined to be sufficient by the Agency to meet projected 

requirements. Should the reserve achieve that level, the rate of deposit 

to the reserve may be reduced with the approval of the Agency.

    (iii) All earnings, including interest on the reserve, must be added 

to the reserve.

    (iv) Funds will be held by the Agency, other mortgagee or trustee 

for bondholders, as determined by the Agency, and may be drawn from the 

reserve and used only in accordance with Agency guidelines and with the 

approval of, or as directed by, the Agency.

    (v) The Agency may exempt partially-assisted projects approved under 

24 CFR part 883, subpart D, from the provisions of this section. All 

partially-assisted projects not approved under the Fast Track Procedures 

formerly in 24 CFR part 883, subpart D, are exempt from the provisions 

of this section.

    (b) In the case of HUD-insured projects, the provisions of this 

section will apply instead of the otherwise applicable mortgage 

insurance provisions, except in the case of partially-assisted insured 

projects which are subject to the applicable mortgage insurance 

provisions.



[61 FR 13588, Mar. 27, 1996]