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Part 402 Loan Service Division. (Amended) 403 Property Management Division.

(Amended] 405 Reconditioning Section. (Revised] 406 Legal Department. (Amended]

Part 407 Treasury Division. (Amended) 408 Accounting Division. (Amended) 410 Purchase and Supply Section.


PART 402–LOAN SERVICE DIVISION Sec. 402.16 Reconditioning. (Revised ] 402.16-5 Incidental expenses. (Added] 402.16-6 Home office approval. (Revised) 402.16-7 Reports and legal advice. (Added) 402.16–13 Advances for reconditioning par

tially or fully completed. (Add

ed] 402.16–14 Catastrophe. (Added]

AUTHORITY: $ $ 402.16 to 402.16-14, appearing in this Supplement, issued under secs. 4 (a) and (k), 48 Stat. 129, 132, as amended; 12 U.S.C. 1463 (a), (k). E.O. 9070; 3 CFR Cum. Supp.

SOURCE: $ $ 402.16 to 402.16-14, appearing in this Supplement, contained in Bulletin 254, effective Feb. 18, 1944, 9 F.R. 1960.

$ 402.16 Reconditioning—(a) Advances for reconditioning. The General Manager may authorize advances for the account of borrowers, vendees, and transferees to accomplish reconditioning of any nature whatsoever, including advances for reconditioning which has been partially or fully performed by home owners not in conformance with established regulations, provided such reconditioning is determined to be in the best interest of the Corporation in order to protect its security, to facilitate the collection of the indebtedness owing to the Corporation, or to promote the orderly liquidation of the assets of the Corporation; and may incur and approve the amount and payment of fees and expenses in connection with such advances, except legal fees and expenses which shall be incurred, approved, and paid as provided in Part 406 of this chapter.

The authority herein granted may be exercised, also, by the regional manager, with the advice of the regional counsel, in those cases where he determines that an advance for reconditioning is in the best interest of the Corporation in order to protect its security or to facilitate the collection of the indebtedness owing

to the Corporation, Provided, The amount to be authorized (exclusive of legal and inspection fees) does not exceed $1,000. § 402.16–5 Incidental expenses.

All funds advanced by the Corporation to the home owner for expenses shall be included in the accepted and approved form of the debt or lien instrument. If the advance is disallowed, the funds advanced by the Corporation for expenses shall be charged to the home owner's account pursuant to the provisions of Form 529-A-R7AB.

Repayment of advances. An advance to a home owner for reconditioning shall be repaid “on demand" or "in monthly instalments," as may be determined by the regional manager, who shall notify the regional accountant of the time and manner of the repayment plan. When the advance is to be repayable "in monthly instalments," the total period of repayment shall not exceed the unexpired term of the Corporation's loan, or as extended, nor the statutory period of limitations, and shall be fixed with reference to the estimated life of the reconditioning and the home owner's ability to repay.

$ 402.16-6 Home office approval. If the amount of the advance to be authorized (exclusive of legal and inspection fees) exceeds $1,000, or, regardless of the amount, if the regional manager determines that any part of the advance for reconditioning is in the best interest of the Corporation in order to promote orderly liquidation of the assets of the Corporation, he shall forward the file, together with his recommendation, to the General Manager for determination.

In any cases wherein it appears that an advance may not be authorized due to any of the following circumstances, and the regional manager is of the opinion that it is to the best interest of the Corporation to grant an advance

notwithstanding, the case may be submitted to the home office for the review and approval of the General Manager. Each such case shall be submitted to the Deputy General Manager in Charge of Loan Service and the Director of Reconditioning for their review and recommendation and to the legal department for advice:

1. Where the home owner cannot effect subordination or release of liens, except taxes and assessments, which are prior to the lien obtained for the advance;

2. Where it is impracticable to require the home owner to effect subordination or release of intervening liens;

3. Where, because of emergency or for other reasons, it is impracticable to require title examination;

4. Where it is impracticable or impossible to obtain the execution of the required security instrument by any or all parties in interest or title and the advance would not be secured as a lien under the Corporation's loan instrument. (In each such case, the file shall contain the opinion of the regional counsel as to the legal rights and remedies of the Corporation to establish and enforce a lien for such reconditioning as against any or all parties in interest or title.);

5. Where an advance cannot be made in full compliance with procedure regulations, or where the regional manager seeks the advice or the decision of the General Manager as to the eligibility of the home owner for an advance under $ 402.16 (a).

$ 402.16–7 Reports and legal advice. In special cases, if the regional manager determines that Form R-4-D and/or an appraisal report is necessary prior to consideration by him, the case may be referred to the Reconditioning Section and/or the Appraisal Section for the desired reports. Ordinarily, the legal requirements will be indicated by the regional counsel in Block VI after authorization of an advance by the regional manager. However, in any special case where the regional manager requires it, Block VI may be completed prior to consideration of the case by the regional manager.

Title examination. Title examination is not required when the estimated cost of reconditioning is $500 or less. Title examination is required when the estimated cost of reconditioning is greater than $500, unless regional counsel waives title examination and certifies as his opinion that the advance will be secured as a lien under the Corporation's loan instrument and such lien will be prior

to, encumbrances, except taxes and assessments, which intervened or may intervene between the date of the Corporation's loan and the date of the additional lien to be obtained.

Where title examination is required and intervening liens are disclosed, the home owner shall effect subordination or discharge of all such liens, except liens for taxes and assessments, without expense to the Corporation. If the home owner is unable to effect subordination or release of such liens, the regional manager shall be notified.

$ 402.16–13 Advances for reconditioning partially or fully completed. When application Form 529-A-R7AB requests an advance for reconditioning which has been partially or fully performed by a home owner not in conformance with the standard regulations, the case shall be reviewed by the control supervisor and the Analysis and Review Section, who shall make a recommendation to the regional manager. If the regional manager approves the further consideration of the advance, the case shall be referred to the regional reconditioning supervisor, who shall cause the necessary inspections to be made, and he shall indicate on the form whether the reconditioning has been performed in a satisfactory manner or whether it will be performed under the supervision of the Reconditioning Section. He also shall indicate the actual or estimated reasonable cost of the reconditioning. Acting upon the recommendations of the Loan Service Division and the information of the regional reconditioning supervisor, the regional manager may grant an advance for such repairs within the limitations of his authority.

§ 402.16–14 Catastrophe. The General Manager is authorized in an emergency to raise the limitations of authority of the regional manager for the purpose of reconditioning properties which have been damaged or destroyed by flood, earthquake, cyclone, or other catastrophe, and is authorized to waive full compliance with the regulations insofar as a need exists. In each such situation, the Director of Reconditioning and the Deputy General Manager in charge of Loan Service shall make recommendation to the General Manager.



CODIFICATION: $ 403.10 (c) was revoked by Bulletin 265, effective Mar. 14, 1944, 9 F.R. 2877.


Sec. 403.02 Property committee. (Amended]



SECTION [REVISED) Sec, 405.00 Organization. 405.00–2 Fee inspectors not employees. 405.003 Assignments. 405.004 Fees. 405.00–5 Fees limited. 406.00-6 Fee architects and engineers. 405.00–7 Fees for architectural engineering

services. 405.00-8 Fee work unsatisfactory.


403.10 Plans and terms of sale. (Amended]

$ 403.02 Property Committee.
(i) 'To review all cases:

(1) Where the regioral manager recommends the approval of the purchase by any oficer or employee of the Corporation from a home owner of property on which the Corporation holds a mortgage or other security instrument;

(2) Where the regional manager recommends the sale of a property owned by the Corporation, directly or indirectly, to:

(i) Any officer or employee of the Corporation or to any individual approved by the Corporation to perform services on a fee basis, or to the spouse or close relative of any such person,

(ii) Any contract salės broker, con-. tract management broker, or approved sales broker, or to the partner, officer or employee of any such broker,

(iii) The spouse or close relative of any such broker operating as an individual or of the partner of any such broker, and to submit all such cases with its recommendations to the General Manager or Deputy General Manager in Charge for final action. Where any purchaser from the Corporation referred to in this section is also a former borrower as defined in § 403.10 the sales price requirements of said $ 403.10 shall apply. [Paragraph (i) amended, effective Mar. 14, 1944, 9 F.R. 2877]

405.00–11 Standards. 405.00–12 Execution of forms. 405.00–13 Contractors. 405.00–15 Workmen's compensation. 405.00–16. Public liability insurance. 405.00–21 Job specifications. 405.00–22 Mechanical tests. 405.00–23 Special services. 405.00–24 Bids. 403.00–25 Award of contracts. 405.00–26 Reconditioning extras and credits. 405.00–27 Partial payments. 405.00–33 Chattels.


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405.01-4 Work order cases. 405.01-6 Receivership cases. 405.01-7 Manager's approval. 405.01-11 Reconditioning by purchaser.


405.01-15 Assistance by reconditioning sec

tion. 405.01-16 Obtaining of bids by brokers. 405.01-17 Review by reconditioning super

visor. 405.01-20 Work authorized on bids. 405.01-21 Work authorized on estimates. 405.01-22 Completion report.


405.02-1 Inspections. 405.02-3 Reconditioning authorized. 405.02-4 Completion. 405.02-6 Home owner providing labor. 405.02-7 Approval by home owner, 405.02-8 Emergency cases. 405.02-9 Abandoned properties. 405.02–10 Award in unusual cases.


$ 403.10 Plans and terms of sale.

[blocks in formation]

Sec. 405.03-6 Application of loss proceeds to

restoration. 405.03-7 Modification procedure. 405.03-8 Supplementing loss proceeds; es

crow account. 405.03-9 Restoration during foreclosure. 405.03-10 Insurance losses and restoration;

Corporation owned properties. CONSENT TO MAKE IMPROVEMENTS 405.04-1 Cases processed by the recondi

tioning section. 405.04-2 Inspections. 405.04-3 Consent granted. PARTIAL RELEASES, CONDEMNATION, AND

SUBSTITUTION OF SECURITY 405.04-5 Property visit.

AUTHORITY: $$ 405.00 to 405.04-5, inclusive, issued under secs. 4 (a), (k), 48 Stat. 129, 132, as amended by sec. 13, 48 Stat. 647; 12 U.S.C. 1463 (a), (k). E.O. 9070; 3 CFR Cum. Supp.

SOURCE: $$ 405.00 to 405.04–5, inclusive, contained in Bulletin 255, effective Feb. 18, 1944, 9 F.R. 1961. Exception is noted following section affected.

$ 405.00 Organization. The Recondi. tioning Section shall function under the administrative direction and supervision of the General Manager and be under the immediate charge of a Director of Reconditioning who shall have necessary authority to carry out the rules and regulations of the Corporation relating to matters within the jurisdiction of the Section, and who shall establish qualification standards for all salaried and fee personnel of the Reconditioning Section who perform reconditioning functions of a technical nature, and shall be responsible for the establishment and approval of fees, and cause to be provided such qualified and competent salaried, W. A. E., and fee personnel as may be necessary.

Field stai. The activities of the Reconditioning Section in the field shall be conducted by regional reconditioning supervisors functioning under the executive authority of managers of their respective offices and assisted by adequate staffs of assistants, inspectors and clerical personnel. Questions of a technical nature shall be submitted by reconditioning supervisors to reconditioning officials next superior for instructions. Copies of all correspondence shall be sent to the managers of the respective offices.

$ 405.00–2 Fee inspectors not employees. A fee inspector is not an agent or an employee of the Corporation. He

is & party who has contracted with the Corporation for the performance of certain enumerated services for an agreed fee. A fee inspector is not authorized to obligate the Corporation in any manner, except where specifically authorized by regulations or by an official duly authorized to grant such authority.

Qualifications and duties. Architects, engineers, builders, or other qualified persons, where practicable and to the best interests of the Corporation, shall be engaged on a fee basis for all types of cases, to make any necessary inspections of properties; to prepare sketches for minor reconditioning; to prepare specifications; to furnish cost estimates; to certify approval or disapproval of the reconditioning construction work; and to perform such other special assignments as hereinafter provided. Each applicant for such fee assignments must execute an approved application form.

§ 405.00–3 Assignments. Assignments may be made to any approved fee inspector, irrespective of (1) previous salary employments by the Corporation, (2) present W. A. E. employment by the Corporation, or (3) previous salaried or W. A. E. service on cases reassigned: Provided, That fee service shall not be performed on the same day as W. A. E. employment by the Corporation. The services rendered by the fee inspector shall be conducted under the immediate supervision of the regional reconditioning supervisor or a salaried employee designated by him to exercise such supervision. Reconditioning inspections may be made either on a fee or salaried basis by a qualified inspector at the discretion of the regional reconditioning supervisor.

$ 405.00–4 Fees. The regional manager and regional reconditioning supervisor shall recommend the fees to be established for fee inspection service to the Director of Reconditioning, for submission to and final approval by the General Manager. The fees shall include all incidental costs, such as mileage, photographs, plans, and all expenses incidental to the service to be rendered on each type of case. The approved schedule of fees established in accordance with the procedure shall be used by the regional reconditioning supervisor in determining the fees to be paid to the inspector, except when such supervisor determines a lower fee adequate for the service to be performed.

$ 405.00–5 Fees limited. An individual fee employee shall not receive assignments for inspection services as heretofore described in this part, the compensation for which would exceed $500 in any given month. Under exceptional circumstances where the best interests of the Corporation require it, the Director of Reconditioning may remove temporarily the limit of $500, upon the recommendation of the regional manager and regional reconditioning supervisor. Individual contracts for architectural or engineering services for plans or supervision, or both, will not be included in the computation of the $500 limit of fees for inspection services.

$ 405.00–6 Fee architects and engineers. When the scope of the reconditioning work requires the preparation of sketches or working drawings, together with special specifications, if any, in order to visualize properly the work before the case can be advanced for further consideration, approved architects or engineers may be employed on a fee basis pursuant to the following regulations.

Mortgagor cases. The home owner may cause to be prepared at his own expense such drawings and special specifications for approval of the regional reconditioning supervisor; or, if the home owner so elects, the supervisor may assign a fee architect or engineer for said service, provided the contemplated reconditioning first receives a tentative approval by the regional manager. The fee, with the consent and approval of the owner, shall be established as hereinafter provided.

Acquired property cases. In all cases where architectural or engineering services are engaged by the Corporation on acquired properties or properties in the process of being acquired, architectural and engineering services shall not be contracted for until the case has received preliminary approval by the regional manager and approval by him for the fee recommended to be paid.

§ 405.00–7 Fees for architectural engineering services. Fees for architectural and engineering services, including the preparation of sketches, working drawings, specifications, and supervision, shall be established by the regional reconditioning supervisor with the approval of the regional manager, and in no instances shall be in excess of the prevailing fee or fees fixed and

established by local professional societies. In cases involving advances to home owners, such fees shall be included in the advance and charged to the home owner's account. In the event the reconditioning work is not executed after preliminary approval by the regional manager, and an advance for reconditioning is not made to the home owner, the Corporation may advance the fee, subject to the approval of the Director of Reconditioning, not to exceed 242% of the estimated cost of the work, Provided, The amount so advanced shall not exceed the sum of $75, and, further, that the sketches or working drawings and specifications submitted shall have been approved by the regional reconditioning supervisor. In all cases of acquired properties or properties in the process of being acquired, payments of fees shall be in accordance with the amount and terms of the fee contract approved by the regional manager, both for partial and fully completed cases.

§ 405.00–8 Fee work unsatisfactory. If the work of any fee inspector, fee architect, or fee engineer is unsatisfactory, the regional reconditioning supervisor shall withhold payment of any fees for such work, direct that no more work be assigned to such individual, and report the same to the Director of Reconditioning.

PROCEDURE AND FUNCTIONS $ 405.00-11 Standards. The Reconditioning Section shall formulate and establish, under approved procedure, standards of specifications for materials, equipment, and workmanship, and maintain a technical reconditioning service available to mortgagors and to the several divisions of the Corporation.

Master specifications. Unless otherwise specifically provided for in the regulations of reconditioning operations of the Corporation, where the cost of reconditioning exceeds $25, the master specifications, with any addenda approved by the Director of Reconditioning, are required in the preparation of specifications, reports, and agreements.

In such preparations, the scope of the reconditioning shall be listed under the appropriate trade classifications, and reference made to the applicable section and paragraph of the master specifications governing the nature of the reconditioning.

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