[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR7501.104]

[Page 876-877]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
        CHAPTER LXV--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 7501_SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES OF THE 
 
Sec. 7501.104  Prohibited financial interests.

    (a) General requirement. This section applies to all HUD employees 
except special Government employees who are not ``covered employees'' as 
defined in Sec. 7501.106(b)(1) of this part. Except as provided in 
paragraph (b) of this section, an employee, or an employee's spouse or 
minor child, shall not directly or indirectly receive, acquire or own:
    (1) Securities issued by the Federal National Mortgage Association 
(FNMA) or securities collateralized by FNMA securities;
    (2) Securities issued by the Federal Home Loan Mortgage Corporation 
(FHLMC) or securities collateralized by FHLMC securities;
    (3) Federal Housing Administration debentures or certificates of 
claim;
    (4) Stock or another financial interest in a multifamily project or 
single family dwelling, cooperative unit, or condominium unit, which is 
owned or subsidized by the Department, or which is subject to a note or 
mortgage or other security interest insured by the Department, except to 
the extent that the stock or other interest represents the employee's 
principal residence. Employees who wish to purchase a Department-held 
property as a principal residence must adhere to the procedures 
established by the Assistant Secretary for Housing for the 
administration of the property disposition program set forth in HUD 
Handbook 4310.5;
    (5) Any Department subsidy provided pursuant to Section 8 of the 
United States Housing Act of 1937, as amended, (42 U.S.C. 1437f) to or 
on behalf of a tenant of property owned by the employee. However, an 
employee may receive such a subsidy when:
    (i) The employee acquires without specific intent, as through gift 
or inheritance, a property which at the time of acquisition has a tenant 
receiving such a subsidy, but only as long as that tenant continues to 
reside in the property;
    (ii) An incumbent tenant who has not previously received such a 
subsidy becomes the beneficiary thereof, but only if there is no 
increase in that tenant's rent upon the commencement of subsidy payments 
other than normal annual adjustments; or
    (iii) The tenant is the parent, child, grandchild, or sibling of the 
employee, but only if there is no increase in that tenant's rent upon 
the commencement of subsidy payments other than normal annual 
adjustments; or
    (6) Any direct creditor interest in a mortgage insured by the 
Department.
    (b) Exception to prohibition for certain interests. Nothing in this 
section prohibits an employee, or the spouse or minor child of an 
employee, from acquiring, owning, or controlling:
    (1) An interest in a publicly traded or publicly available 
investment fund which, in its prospectus, does not indicate the 
objective or practice of concentrating its investments in resi dential 
mortgages or securities backed by residential mortgages, except those of 
the Government National Mortgage Association (GNMA), and the employee 
neither exercises control nor has the ability to exercise control over 
the financial interests held in the fund;
    (2) A limited partnership interest in a partnership which has at 
least 5,000 partnership interests, and no more than 25% of the gross 
value of the partnership interest constitutes projects subject to HUD 
held or insured mortgages or projects currently receiving the benefit of 
HUD subsidies; or
    (3) Mortgage insurance provided pursuant to section 203 of the 
National Housing Act (12 U.S.C. 1709) on the employee's principal 
residence and any one other single family residence.
    (c) Reporting and divestiture. An employee must report, in writing, 
to the

[[Page 877]]

appropriate agency ethics official, any interest prohibited under 
paragraph (a) of this section acquired prior to the commencement of 
employment with the Department or without specific intent, as through 
gift, inheritance, or marriage, within 30 days from the start of 
employment or acquisition of such interest. Such interest must be 
divested within 90 days from the date reported unless waived by the 
Designated Agency Ethics Official in accordance with Sec. 7501.103.