8.15.5.1 Prepayment of Note

A. State and local bond financed projects are subject to prepayment restrictions and penalty charges as provided in Chapter 11, Section 11.8.3. However, in the case of so-called short-term cash-collateralized tax-exempt financing issued in conjunction with an allocation of 4 percent LIHTCs, the tax-exempt financing is non-recourse to the Borrower and the financing is fully secured by cash collateral or an interest in project loan documents, and will mature shortly after construction completion (for construction loans) or project repairs (for projects insured under Sections 207/223(f) and 223(a)(7)). In such cases, the tax-exempt financing documents, which may include promissory note, loan agreements, collateral agreements, etc. are generally not subject to HUD’s requirements for secondary financing unless the short term cash-collateralized tax-exempt bonds are secured against the insured project using a recorded Bond Mortgage.