3550.162—Recapture.
(a) Recapture policy.
Borrowers with loans approved or assumed on or after October 1, 1979, will be required to repay subsidy amounts received through payment subsidy or deferred mortgage assistance. Amounts to be recaptured are due and payable when the borrower transfers title or ceases to occupy the property.
(b) Amount to be recaptured.
(1)
The maximum amount to be recaptured is the amount of principal reduction attributed to subsidy and the lesser of:
(2)
The value appreciation of property with a cross-collateralized loan is based on the market value of the dwelling and lot. If located on a farm, the lot size would be a typical lot for a single family housing property.
(3)
Interest reduced from the promissory note rate to six percent under the Soldiers and Sailors Relief Act is not subject to recapture.
(c) Option to defer payment of recapture amounts.
(1)
Borrowers may defer payment of recapture amounts if the loan is repaid, the title does not transfer, and the borrower continues to occupy the property.
(2)
The RHS mortgage securing the deferred recapture amount may be subordinated to permit refinancing if the RHS mortgage will be adequately secured.
(3)
Borrowers eligible to defer recapture may receive a discount on the recapture amount due if the recapture amount is paid along with the final payment, or in the case of a final installment, within 60 days of the date RHS notifies the borrower that recapture may be due.
(1)
The borrower may pay the recapture amount in full or reamortize the existing loan to include the recapture amount.
(2)
If the borrower does not pay the recapture amount or consent to reamortization within 30 days, RHS may proceed with foreclosure.
(e) Assumed loans.
(1)
When a loan subject to recapture is assumed under new rates and terms, the recapture amount may be paid in full by the seller or included in the principal amount assumed by the buyer.
(2)
When a loan is assumed under the terms of the promissory note, recapture amounts will not be due. When the new borrower transfers title or ceases to occupy the property, all subsidy subject to recapture before and after the assumption is due.
(3)
When a borrower has deferred payment of recapture amounts, the deferred recapture amount may be included in the principal amount of the new loan.