by HUD to the mortgage, and may bring the effective interest rate paid by the mortgagor down to as low as one percent. Benefits received in this way are passed on to those families qualifying for assistance in the form of reduced rents. Assisted families are required to pay for rent at least 30 percent of their adjusted income (income after certain allowable deductions), but not in excess of the fair market rent. This program has maintenance of effort (MOE) requirements; see funding agency for further details. Length and Time Phasing of Assistance: The mortgage term normally extends for 40 years. Interest reduction payments may extend for the full term of the mortgage. For individual families, assistance ceases when their income rises to the point where they can afford the full market rent without the benefit of assistance. POST ASSISTANCE REQUIREMENTS: Reports: Any change of the mortgagor during the period of mortgage insurance must be approved by HUD. Defaults in meeting the mortgage terms must be reported. All mortgagors of insured projects are required to submit an annual financial statement to HUD. Approved mortgages, upon request by HUD, must furnish a copy of their latest financial statement. Audits: The Department of Housing and Urban Development reserves the right to audit the accounts of either the mortgage or mortgagor in order to determine their compliance and conformance 333 with FHA regulations and standards.
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