13.25 Deferment of Principal Payments

A. Borrowers are expected to manage the construction period and fulfill the payment terms of the mortgage note without modification. However, certain uncommon circumstances that result in delays in construction or achieving sustaining occupancy may justify a deferment of principal payments (e.g., delay in the commencement of amortization.)

B. Sufficient justification to support a deferment may exist after a casualty loss or catastrophic event (e.g., hurricane, flooding, etc.), or other significant non-Borrower related delays. However, general delays from normal inclement weather, labor/material shortages, or other typical construction-related exigencies would likely be insufficient justification for HUD to approve the deferment request.

• C. Should a MAP Lender request a deferral in principal payment, the following conditions must be met.

1. Securitized Loan Requirements: If the loan is collateral for a Ginnie Mae mortgage-backed security, then Ginnie Mae’s written acknowledgement that it is acceptable to delay principal payments via a loan modification is required. The MAP Lender must contact Ginnie Mae, Office of Issuer and Portfolio Management, Multifamily Division for review and approval.

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Chapter 13 Cost Certification 13.26 Document Distribution

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2. FHA Request Requirements:

   • Justification that conforming to the existing amortization schedule is an unreasonable hardship and would increase risks to HUD;

• Written assurance by the owner confirming that sufficient funds exist outside the mortgage proceeds to pay any interest overrun;

• The Borrower can evidence reasonable effort to complete construction and attain sustaining occupancy on a timely basis; and

  • The period of deferment is limited only to the additional time necessary for the Borrower to stabilize project operations.

3. Deferment Letter: Use Appendix 13, Section A.13.2, Specimen Letter – Agreement Authorizing Deferment of Principal Payments for Level Annuity Monthly Payment and distribute copies in accordance with Section 13.26 below.

4. Deferment Instruments: The Regional Center Director is authorized to approve modifications of the principal and interest payment as may be necessary to affect the deferment of principal payments.