(a) Mortgagor.

1. (1) Mortgagor must execute a sworn affidavit establishing the following:

   1. (A) The location of the residence to be financed with proceeds to the mortgage loan.

   2. (B) The residence is either:

      1. (i) a dwelling suitable for occupancy by only one family, or
      2. (ii) one unit in a condominium or P.U.D.
   3. (C) The mortgagor intends to occupy the residence as his principal residence within 60 days following the closing of the mortgage loan. The issuer cannot refinance any mortgage loan other than those qualified bridge, construction or interim financing loans.
   4. (D) An amount equal to $(dollar amount) of the purchase price is being paid for personal property, including appliances, a piece of furniture or a radio, which under applicable local law is not a fixture. Rules prohibit any financing for other than residence and actual fixtures.
   5. (E) If the residence is prefab housing, a mobile home or any other manufactured housing, it is or will be permanently fixed to land, e.g., the mobile home will be fixed in a concrete foundation or set on land owned by the mortgagor.
   6. (F) The land being financed with proceeds of the mortgage loan, on which the residence is or will be located is required to maintain the basic livability of the residence and does not provide a source of income to the mortgagor, other than incidentally. The mortgagor does not intend to farm any portion of the land being financed. The mortgagor does not intend to subdivide the land being financed or to apply for a zoning variance, minimum lot size or set back requirements for such purpose. Mortgagor must state the size of the lot.
2. (2) Mortgagor must submit copies of federal income tax returns for 3 years preceding closing of mortgage loan. Mortgagor must agree to provide tax returns for 3 years following the making of the mortgage loan.

(b) Lender.

1. (1) Lender must independently verify the accuracy of the facts contained in the mortgagor's affidavit, including performing or obtaining the following:

   1. (A) A surveyor location report: A report by a licensed surveyor showing the exact location of the property, as well as the minimum sized lot for residences under the local zoning law, the customary or usual size of lots in that area, any reasons why the lot is greater in size than the minimum for zoning purposes or tile usual plot in the area.
   2. (B) A copy of the purchase contract on the residence.
   3. (C) A site inspection to determine whether the structure constitutes a single-family residence, is expected to be used in a trade or business or as a recreational home, includes property which is not a fixture under local law, is factory-made housing permanently fixed to real property, the land appurtenant to the residence reasonably maintains the basic livability of the residence.

2. (2) Lender must complete a certification or an affidavit stating the following:

   1. (A) The lender has reviewed the mortgagor's affidavit, including attachments, for consistency and completeness;
   2. (B) A description of the verification made;
   3. (C) The lender has determined based on the above that the mortgage loan meets the requirements of the program guide as to principal residence.
3. (3) The Agency reserves the right to require the lender to perform a follow-up verification 4 - 12 months subsequent to the execution of the mortgage to determine that the residence is being used as the principal residence of the mortgagor.
4. (4) Mortgage loan must provide that the mortgagor agrees that the issuer or the lender may accelerate all payments due on the mortgage and note if the lender or the issuer finds the facts or statements contained in the mortgagor's affidavit to be untrue.

(c) Issuer.

1. (1) The program guide must contain a section stating the principal residence requirement, definitions of "principal residence", "single-family" and "owner-occupied" housing, and the term "residence", a description of the mortgagor's affidavit, the verification procedure to be undertaken by the lender and the issuer. It must also contain a statement that the lender will repurchase any mortgage found to be ineligible under the program because it fails to meet the principal residence requirement.

2. (2) The mortgage purchase agreement between the issuer and lender must contain:

   1. (A) A requirement that the mortgage loans purchased meet the principal residence requirement;
   2. (B) A requirement that the lender obtain a mortgagor's affidavit and independently investigate and verify the information contained in the affidavit;
   3. (C) A representation and warranty that the lender has diligently performed the investigation required by the issuer with respect to the principal residence requirements;

   4. (D) An issue of bonds is treated as meeting the mortgage eligibility requirements of the Tax Act only if:

      1. (i) the issuer in good faith attempted to meet all of the mortgage eligibility requirements before the mortgages were executed,
      2. (ii) any failure to comply with the mortgage eligibility requirements is corrected within a reasonable period after such failure is first discovered, and
      3. (iii) 95% or more of the lendable proceeds of the issue used to make loans were devoted to finance residences which met all such requirements at the time the loans were executed or assumed. On November 5, 1982, the Internal Revenue Service promulgated Temporary Regulations that interpreted the third requirement that 95% of the lendable proceeds must be used to acquire mortgage loans which, at the time such loans were made, meet all the mortgage eligibility requirements of the Tax Act in order for the issue to be treated as meeting the requirements of the Tax Act. To meet the requirements of the Temporary Regulations, the Agency, the Trustee and participants will review the borrower's and seller's affidavits, for among other things, the residence's purchase price to determine if it is within the limitations prescribed in the Tax Act and will review the borrower's and any other required mortgagor's income tax returns to confirm that the three-year requirement is met. In determining whether the third requirement is satisfied, i.e., that 95% of the lendable proceeds be so used, the Temporary Regulations permit the Agency to rely on the borrower's and seller's affidavits as well as income tax returns even if the relevant information in such affidavits and returns should ultimately prove to be untrue, unless the Agency or a participant knows or had reason to believe that such information is false.
3. (3) The rules and regulations must contain a statement of the principal residence requirement, definitions of "principal residence", "single-family" and "owner-occupied" residence and the term "residence", a summary of the mortgagor's affidavit and set forth the verification procedures to be undertaken prior and subsequent to the execution of the mortgage.