---
kind: "section"
citation: "24 C.F.R. § 242.49"
title: "24"
number: "242.49"
heading: "Funds and finances: deposits and letters of credit."
url: "https://uscodex.org/cfr/24/242.49"
---

# §242.49. Funds and finances: deposits and letters of credit.

- (a) **Deposits.** Where HUD requires the mortgagor to make a deposit of cash or securities, such deposit shall be with the mortgagee or a depository acceptable to the mortgagee and HUD. Any such deposit shall be held in a separate account for and on behalf of the mortgagor, and shall be the responsibility of that mortgagee or depository.
- (b) **Letter of credit.** Where the use of a letter of credit is acceptable to HUD in lieu of a deposit of cash or securities, the letter of credit shall be issued to the mortgagee by a banking institution acceptable to the lender. The mortgagee shall be responsible to HUD for collection under the letter of credit. In the event a demand for payment thereunder is not immediately met, the mortgagee shall forthwith provide a cash deposit equivalent to the undrawn balance of the letter of credit.
- (c) **Mortgagee not issuer.** The mortgagee of record may not be the issuer of the letter of credit without the prior written consent of HUD.

## Notes

### Amendments

[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8343, Feb. 5, 2013]

### Authority

Authority: 12 U.S.C. 1709, 1710, 1715b, 1715n(f), and 1715u; 42 U.S.C. 3535(d).

### Source

Source: 72 FR 67546, Nov. 28, 2007, unless otherwise noted.

### Amendments

[72 FR 67546, Nov. 28, 2007, as amended at 78 FR 8343, Feb. 5, 2013]