Mortgage Reserve Fund [HUD] Law and Legal Definition

Pursuant to 24 CFR 242.1 [Title 24 Housing and Urban Development; Subtitle B Regulations Relating to Housing and Urban Development; Chapter II Office of Assistant Secretary for Housing Federal Housing Commissioner, Department of Housing and Urban Development; Subchapter B Mortgage and Loan Insurance Programs under National Housing Act and Other Authorities; Part 242 Mortgage Insurance for Hospitals; Subpart A General Eligibility Requirements], the term Mortgage Reserve Fund means “a trust account, or an account held by the mortgagee, for and on behalf of the mortgagor, to which the mortgagor contributes and from which withdrawals must be approved by HUD. The purpose of the fund is to provide HUD a means to assist the hospital to avoid mortgage defaults and to preserve the value of the mortgaged property and the hospital's business.”