(a) Termination. The assistance payments contract shall be terminated when any of the following events occur:
(1) The contract of mortgage insurance is terminated, except when the mortgage has been assigned to the Secretary.
(2) The property is purchased by a homeowner not qualified to receive assistance payments.
(3) The cooperative member transfers his membership and occupancy rights to a new cooperative member not qualified to receive assistance payments.
(4) When the assistance payments contract has been suspended for a period of three years without reinstatement.
(b) Suspension. The assistance payments contract shall be suspended when any one of the following events occur:
(1) The homeowner or cooperative member ceases to occupy the property, except in the following instances:
(i) The property is purchased by a homeowner who immediately assumes the mortgage obligation with respect to which assistance payments have been made on behalf of the previous owner, and who meets the income and asset requirements prescribed by the Secretary.
(ii) The cooperative member transfers his membership and occupancy rights to a new member who assumes the mortgage obligation and who meets the income and asset requirements prescribed by the Secretary.
(2) The mortgagee determines that the mortgagor or cooperative member ceases to qualify for the benefits of assistance payments by reason of his income increasing to an amount enabling him to pay the full monthly mortgage payment by using 20 percent of the family income.
(3) Foreclosure is instituted.
(4) The mortgagee is unable to obtain from the homeowner (or from the cooperative association on behalf of the cooperative member) a required recertification of occupancy, employment, income, and family composition, and (if required) disclosure and verification of Social Security Numbers, as prescribed in Sec. 235.350, and (if required) signed consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as prescribed in Sec. 235.350.
(5) At such other times as the Secretary may require.
(6) Failure to provide evidence of citizenship or eligible immigration status in accordance with 24 CFR part 5:
(i) For a new member of the family, except with respect to a mortgagor described under Sec. 235.1.
(ii) At the first recertification of an assistance contract, except with respect to a mortgagor described under Sec. 235.1; or
(iii) Upon modification of an existing assistance contract.
(c) Effect of termination or suspension. Upon termination or suspension of the assistance payments contract, the payment due on the first day of the month in which the termination or suspension occurs shall be the last payment to which the mortgagee shall be entitled; except that, in the case of a suspended contract, payment may be resumed after the contract is reinstated pursuant to paragraph (e) of this section.
(d) Noneffect on mortgage insurance contract. The termination or suspension of the assistance payments contract, where the mortgage insurance contract is not simultaneously terminated, shall have no effect on the mortgage insurance contract.
(e) Reinstatement. Where the assistance payments contract is suspended, it may be reinstated by the Secretary at the Secretary's discretion and on such conditions as the Secretary may prescribe. To be eligible for reinstatement under this section, the mortgagor or cooperative member must meet the requirements for the disclosure and verification of Social Security Numbers, as provided by part 200, subpart T, of this chapter, and the requirements for the signing and submitting of consent forms for the obtaining of wage and claim information from State Wage Information Collection Agencies, as provided by part 200, subpart V of this chapter. (Approved by the Office of Management and Budget under control numbers 2502-0204, 2502-0267, 2502-0268, and 2577-0083) [41 FR 1178, Jan. 6, 1976, as amended at 43 FR 60157, Dec. 26, 1978; 46 FR 56422, Nov. 17, 1981; 51 FR 11219, Apr. 1, 1986; 53 FR 846, Jan. 13, 1988; 54 FR 39695, Sept. 27, 1989; 55 FR 11905, Mar. 30, 1990; 56 FR 7530, Feb. 22, 1991; 61 FR 13624, Mar. 27, 1996]