24 CFR § 242.49 - Funds and finances: deposits and letters of credit.

---
identifier: "/us/cfr/t24/s242.49"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "24 CFR § 242.49 - Funds and finances: deposits and letters of credit."
title_number: 24
title_name: "Housing and Urban Development"
section_number: "242.49"
section_name: "Funds and finances: deposits and letters of credit."
chapter_name: "OFFICE OF ASSISTANT SECRETARY FOR HOUSING—FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT"
subchapter_number: "B"
subchapter_name: "MORTGAGE AND LOAN INSURANCE PROGRAMS UNDER NATIONAL HOUSING ACT AND OTHER AUTHORITIES"
part_number: "242"
part_name: "MORTGAGE INSURANCE FOR HOSPITALS"
positive_law: false
currency: "2026-03-24"
last_updated: "2026-03-24"
format_version: "1.1.0"
generator: "[email protected]"
authority: "12 U.S.C. 1709, 1710, 1715b, 1715n(f), and 1715u; 42 U.S.C. 3535(d)."
regulatory_source: "72 FR 67546, Nov. 28, 2007, unless otherwise noted."
cfr_part: "242"
---


# 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.

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