U.S. Code » Title 12 » Chapter CHAPTER 42— LOW-INCOME HOUSING PRESERVATION AND RESIDENT HOMEOWNERSHIP › Subchapter SUBCHAPTER I— PREPAYMENT OF MORTGAGES INSURED UNDER NATIONAL HOUSING ACT

12 U.S.C. § 4114

Permissible prepayment or voluntary termination and modification of commitments

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(a) In generalNotwithstanding any limitations on prepayment or voluntary termination under this subchapter, an owner may terminate the low-income affordability restrictions through prepayment or voluntary termination, subject to compliance with the provisions of section 4113 of this title, under one of the following circumstances:(1)(A) The Secretary approves a plan of action under section 4109(a) of this title, but does not provide the assistance approved in such plan during the 15-month period beginning on the date of approval.(B) After the date that the housing would have been eligible for prepayment pursuant to the terms of the mortgage (notwithstanding this subchapter), the Secretary approves a plan of action under section 4110 or 4111 of this title, but does not provide the assistance approved in such plan before the earlier of (i) the expiration of the 2-month period beginning on the commencement of the 1st fiscal year beginning after such approval, or (ii) the expiration of the 6-month period beginning on the date of approval.(C) The Secretary approves a plan of action under section 4110 or 4111 of this title for any eligible low-income housing not covered by subparagraph (B), but does not provide the assistance approved in such plan before the earlier of (i) the expiration of the 2-month period beginning on the commencement of the 1st fiscal year beginning after such approval, or (ii) the expiration of the 9-month period beginning on the date of approval.(2) An owner who intended to transfer the housing to a qualified purchaser under section 4110 or 4111 of this title, and fully complied with the provisions of such section, did not receive any bona fide offers from any qualified purchasers within the applicable time periods.In the event that the purchaser under the plan of action is unable to consummate the purchase for reasons other than the failure of the Secretary to provide incentives, an owner may terminate the low-income affordability restrictions through prepayment or voluntary termination subject to the provisions of sections 4110 and 4111 of this title.(b) Section 1437f rental assistanceWhen providing rental assistance under section 1437f of title 42, the Secretary may enter into a contract with an owner, contingent upon the future availability of appropriations for the purpose of renewing expiring contracts for rental assistance as provided in appropriations Acts, to extend the term of such rental assistance for such additional period or periods necessary to carry out an approved plan of action. The contract and the approved plan of action shall provide that, if the Secretary is unable to extend the term of such rental assistance or is unable to develop a revised package of incentives providing benefits to the owner comparable to those received under the original approved plan of action, the Secretary, upon the request of the owner, shall take the following actions (subject to the limitations under the following paragraphs):(1) Modification of commitments

Modify the binding commitments made pursuant to section 4112(a)(2) of this title that are dependent on such rental assistance.

(2) Termination of plan of action

Permit the owner to prepay the mortgage and terminate the plan of action and any implementing use agreements or restrictions, but only if the owner agrees in writing to comply with provisions of section 4113 of this title.

At least 30 days before making a request under this subsection, an owner shall notify the Secretary of the owner’s intention to submit the request. The Secretary shall have a period of 90 days following receipt of such notice to take action to extend the rental assistance contract and to continue the binding commitments under section 4112(a)(2) of this title.(Pub. L. 100–242, title II, § 224, as added Pub. L. 101–625, title VI, § 601(a), Nov. 28, 1990, 104 Stat. 4265.)
Notes of Decisions
Cited in 7 cases, 1995–2013 · leading case: Fredericksburg Non-Profit Hous. Corp. v. United States, 113 Fed. Cl. 244 (Fed. Cl. 2013).
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Fredericksburg Non-Profit Hous. Corp. v. United States, 113 Fed. Cl. 244 (Fed. Cl. 2013). · cites it 3× “” 12 U.S.C. § 4114 (a)(1)(A). Similarly, 12 U.”
Cienega Gardens v. United States, 67 Fed. Cl. 434 (Fed. Cl. 2005). · cites it 4× “12 U.S.C. § 4114 (a)(1)(A). Similarly, a property owner could prepay if the Secretary approved a plan of action to sell, but there were no bids from qualified purchasers or HUD failed to provide the necessary assistance.”
Cca Assocs. v. United States, 667 F.3d 1239 (Fed. Cir. 2011). · cites it 4× “12 U.S.C. § 4114 (a)(1)-(2). Owners who exited the program were allowed to raise their rents to market rates unless their project was located in a "low vacancy area" (defined by HUD as a less than 3% vacancy rate), in which case owners could not raise rates on existing tenants…”
CCA Assocs. v. United States, 75 Fed. Cl. 170 (Fed. Cl. 2007). · cites it 2× “12 U.S.C. § 4114 (a)(3). Similarly, if HUD had approved the sale of the property, but the owner could not find a bona fide purchaser, the owner also could prepay.”
Cienega Gardens v. United States, 33 Fed. Cl. 196 (Fed. Cl. 1995). “seeking prepayment under 12 U.S.C. § 4114 and, consequently, plaintiffs’ case is fatally flawed because plaintiffs have never requested HUD approval for prepayment.”
City Line Jt. Venture v. United States, 71 Fed. Cl. 486 (Fed. Cl. 2006). · cites it 2× “12 U.S.C. § 4114 (a)(2). On March 28, 1996, Congress enacted the Housing Opportunity Program Extension Act of 1996, Pub.”
Celentano v. United States, 41 Fed. Cl. 596 (Fed. Cl. 1998). “LIHPRHA provided that “[a]n owner of eligible low-income housing may prepay, and a mortgagee may accept prepayment of, a mortgage on such housing only in accordance with a plan of action approved by the Secretary under [LIHPRHA] or in accordance with [ 12 U.S.C. § 4114 ].” 12…”
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