Partial release, addition or substitution of security.

(a) A mortgagee shall not release the security or any part thereof, while the mortgage is insured, without the prior consent of the Commissioner. (b) A mortgagee may, with the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot or replacing the dwelling with a similar or like kind on the existing lot under the following conditions: (1) The mortgagee obtains a good and valid first lien on the property to which the dwelling is removed or the existing lot upon which the dwelling is rebuilt; (2) All damages to the structure are repaired or all rebuilding of the structure is completed without cost to FHA; and (3) The property to which the dwelling is removed or rebuilt is in an area known to be reasonably free from natural hazards or, if in a flood zone, the borrower will insure or reinsure under the National Flood Insurance Program or obtain equivalent private flood insurance coverage, as defined in § 203.16a of this chapter. (c) A mortgagee may, without the prior consent of the Commissioner, accept an addition to, or substitution of, security for the purpose of removing the dwelling to a new lot under the following conditions: (1) The dwelling has survived an earthquake or other disaster with little damage, but continued location on the property might be hazardous; (2) The conditions stated in paragraph (b) of this section exist; and (3) Immediately following the emergency removal the mortgagee notifies the Commissioner of the reasons for removal. [82 FR 7117, Jan. 19, 2017, as amended at 87 FR 70744, Nov. 21, 2022]