D. Final Release of Escrow.

Subject to HUD approval, the Lender may release any unused balance in the working capital portion of the escrow to the Borrower if the project is not in default and when the operations of the project have demonstrated to the Regional Production Director’s satisfaction that the project has achieved 6 consecutive months of sustaining occupancy as defined in Chapter 3, Section 3.1.25.

If the mortgage is in default, the Lender must apply any balance of the escrow (either working capital or construction contingency portions) to cure a default, where a default occurs before its release.

At final endorsement, any remaining balance of the new construction contingency portion of the escrow may be used to fund any latent defects assurance or escrow for delayed construction items or if these needs are otherwise met, refunded to the Borrower.