---
kind: "section"
citation: "24 C.F.R. § 232.11"
title: "24"
number: "232.11"
heading: "Establishment and maintenance of long-term debt service reserve account."
url: "https://uscodex.org/cfr/24/232.11"
---

# §232.11. Establishment and maintenance of long-term debt service reserve account.

- (a) To be eligible for insurance under this part, and except with respect to Supplemental Loans to Finance Purchase and Installation of Fire Safety Equipment ([subpart C](/cfr/24/subpartC.md) of this part), if HUD determines the mortgage presents an atypical long-term risk, HUD may require that the borrower establish, at final closing and maintain throughout the term of the mortgage, a long-term debt service reserve account.
- (b) The long-term debt service reserve account, if required, may be financed as part of the initial mortgage amount, provided that the maximum mortgage amount as otherwise calculated is not thereby exceeded.
- (c) The amount required to be initially placed in the long-term debt service reserve account and the minimum long-term balance to be maintained in that account will be determined during underwriting and separately identified in the firm commitment. Although HUD may, when appropriate to avert a mortgage insurance claim, permit the balance to fall below the required minimum long-term balance, the borrower may not take any distribution of mortgaged property except when both the long-term debt service reserve account is funded at the minimal long-term level and such distribution is otherwise permissible.

## Notes

### Amendments

[77 FR 55136, Sept. 7, 2012]

### Source

Source: 61 FR 14406, Apr. 1, 1996, unless otherwise noted.

### Authority

Authority: 12 U.S.C. 1715b, 1715w, 1735d, and 1735f-19; 42 U.S.C. 3535(d).

### Source

Source: 36 FR 24618, Dec. 22, 1971, unless otherwise noted.

### Amendments

[77 FR 55136, Sept. 7, 2012]