§ 1005.437. Loan provisions.
555 words·~3 min read·
/us/cfr/t24/s§ 1005.437·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Loan form.
(1)The Loan shall be in a form meeting the requirements of HUD. HUD may prescribe loan closing documents. For each case in which HUD does not prescribe loan closing documents, HUD shall require specific language in the loan which shall be uniform for every loan. HUD may also prescribe the language or substance of additional provisions for all loans, as well as the language or substance of additional provisions for use only in particular jurisdictions.
(2)Each Loan shall also contain any provisions necessary to create a valid and enforceable security interest under Tribal law or the laws of the jurisdiction in which the property is located.
(b)Loan multiples. A Loan, in whole dollars, shall be in an amount not to exceed the maximum principal loan amount (as calculated under § 1005.443) for the area where the property is located.
(c)Payments. The Loan payments shall:
(1)Be due on the first of the month;
(2)Contain complete Amortization provisions in accordance with § 1005.453 and an Amortization period not in excess of the term of the loan; and
(3)Provide for payments to principal and interest to begin no later than the first day of the month, 60 days after the date the loan is executed. For closings taking place within the first seven days of the month, interest credit is acceptable.
(d)Maturity. The Loan shall have a repayment term of not more than the maximum period as approved by HUD and fully amortized.
(e)Property standards. The Loan must be a first lien upon the property that conforms with the requirements for standard housing under § 1005.419.
(f)Disbursement. The entire principal amount of the Loan must have been disbursed to the Borrower or to the Borrower's creditors for the Borrower's account and with the Borrower's consent.
(g)Disbursement for construction advances. HUD may guarantee loans from which advances will be made during construction when all applicable Section 184 Program requirements are met and all the following conditions are satisfied:
(1)The Direct Guarantee Lender and Borrower execute a building Loan agreement, in the form prescribed by Section 184 Program Guidance, setting forth the terms and conditions under which advances will be made.
(2)The advances may be made only as provided in the building loan agreement.
(3)The principal amount of the loan is held by the Direct Guarantee Lender in an interest-bearing account, trust, or escrow for the benefit of the Borrower, pending advancement to the Borrower or Borrower's creditors as provided in the building loan agreement;
(4)The loan shall bear interest on the amount advanced to the Borrower or the Borrower's creditors and on the amount held in an account or trust for the benefit of the Borrower.
(h)Changes to the Loan Agreement. Notwithstanding paragraph (g)(2) of this section, changes to the building loan Agreement must be approved and documented by the Direct Guarantee Lender prior to the construction advance.
(i)Documentation. Direct Guarantee Lender must submit a construction completion package to HUD, as prescribed in Section 184 Program guidance.
(j)Prepayment privilege. The Loan must contain a provision permitting the Borrower to prepay the Loan in whole or in part at any time. The Loan may not provide for the payment of any fee or penalty on account of such prepayment.