6-4. SECTION 202 REFINANCINGS

• A. If a project owner complies with the provisions of Section 811 of the American Home Ownership and Economic Opportunity Act of 2000 then it remains exempt from debtrestructuring, notwithstanding above market rents and an FHA-insured mortgage.

• B. If the project owner does not comply with the provisions of Section 811, then the project will remain exempt from debt-restructuring unless the Section 202 Direct Loan is refinanced with a FHA-insured mortgage when the HAP contract comes up for renewal.

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• C. Some properties that have prepaid the original Section 202 Direct Loan may now wish to “re-refinance” these former 202 projects. If the project owner re-refinances with conventional (non-FHA) financing, the project retains eligibility to renew under Option 4 of the Renewal Guide (“Renewal of Projects Exempt from or not Eligible for DebtRestructuring”) at the next expiration date of the HAP contract. However, if the owner re-refinances with an FHA insured loan, the project will no longer be exempt from Mark-to-Market restructuring and will lose the ability to renew under Option 4 upon the next expiration of the HAP contract. Following the re-refinance, the former 202 project must continue to operate under the terms and conditions of the recorded Section 202 Use Agreement.

• D. For detailed information on refinancing of 202 properties, please refer to Notice H 201317 or subsequent notices that may amend or supersede this notice.

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