Sec. 05.06.01.24. General Provisions

A. Lender Assignments.

(1) Insured loans may not be assigned to another lender without prior written notice to and approval of the Fund. A request for assignment of an insured loan shall be accompanied by submission of an application fee and supporting documentation as may be required by the Fund.

(2) Servicing of insured loans may not be transferred by the insured lender to another servicer without prior written notice to and approval of the Fund.

B. Changes in Identity of Borrower, General Contractor, or Management Agent. The identity of the borrower or, if a partnership, the managing project's general partner, the identity of the general contractor, and the identity of the management agent may not be changed or substituted after the initial endorsement of an insured loan without prior written notice to and approval of the Fund.

C. Incontestability. Evidence of insurance issued by the Fund under the Act is conclusive evidence of the eligibility of the insured loan for insurance. This insurance is incontestable except as to defenses based on fraud or misrepresentation.

D. Books and Accounts.

(1) The lender shall require the borrower and its contractors, subcontractors, representatives, accountants, record keepers, and management agents to maintain such books, accounts, and records as the Fund may require. The borrower shall file with the lender such financial, operating, and other reports as the Fund may require.

(2) The books, accounts, and records required to be maintained are open to the inspection of representatives of the Fund or other agencies of the State during reasonable working hours.

(3) Books, accounts, and records of:

(a) The lender shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the lender and the Fund;

(b) The lender shall, with respect to each specific insured loan, be maintained and made available for inspection for 3 years past the date of termination of the contractual relationship between the borrower and the lender; and

(c) Contractors and subcontractors shall be maintained and made available for inspection for 3 years past the date of termination of the contractual relationships between the contractor or subcontractor and the borrower.

E. Specific information regarding the qualification of lenders, borrowers, and projects, the underwriting of insurance, and claims procedures is provided by the Fund.

F. Waiver. The Secretary may waive or vary particular provisions of these regulations to the extent that the waiver is not inconsistent with the Act or with agreements to which the Fund may be subject if:

(1) Conformance to the requirements of any federal agency for any project with respect to which federal assistance is sought necessitates a waiver or variance of a regulation; or

(2) In the written determination of the Secretary:

(a) The application of a regulation in a specific case or in an emergency situation would be inequitable or contrary to the purposes of the Act,

(b) A waiver would not be materially adverse to bondholders or others relying on the multifamily insurance reserve of the Fund, and

(c) The Office of the Attorney General has approved the form and legal sufficiency of the waiver.

G. False Statements. A borrower or lender who knowingly makes or causes to be made a false statement or report, whether in the nature of an understatement or overstatement of financial condition or any other fact material to the Department's action, is subject to cancellation of insurance, in addition to the criminal penalties authorized by the Act.

H. Delegation. The Secretary may delegate to the Director of the Fund or to any other official or employee of the Department or the Fund the authority to execute or approve any program documents or loan documents, including commitments and letters of intent.