§ 1.25-5T Limitation on aggregate amount of mortgage credit certificates (Temporary). ( a ) *In general.* If the aggregate amount of qualified mortgage credit certificates (as defined in paragraph (b)) issued by an issuer under a qualified mortgage credit certificate program exceeds 20 percent of the nonissued bond amount (as defined in paragraph (c)), the provisions of paragraph (d) shall apply.
( b ) *Aggregate amount of mortgage credit certificates* — ( 1 ) *In general.* The aggregate amount of qualified mortgage credit certificates issued under a qualified mortgage credit certificate program is the sum of the products determined by multiplying— ( i ) The certified indebtedness amount of each qualified mortgage credit certificate issued under that program, by
( ii ) The certificate credit rate with respect to such certificate.
( 2 ) *Examples.* The following examples illustrate the application of this paragraph (b): Example 1. For 1986 City Q has a nonissued bond amount of $100 million. After making a proper election, Q issues 2,000 qualified mortgage credit certificates each with a certificate credit rate of 20 percent and a certified indebtedness amount of $50,000. The aggregate amount of qualified mortgage credit certificates is $20 million (2,000 × (.2 × $50,000)). Since this amount does not exceed 20 percent of the nonissued bond amount (.2 × $100 million = $20 million), Q has complied with the limitation on the aggregate amount of mortgage credit certificates, provided that it does not issue any additional certificates.
Example 2. The facts are the same as in example (1) except that instead of issuing all its certificates at the 20 percent rate, Q issues (i) qualified mortgage credit certificates with a certificate credit rate of 10 percent and an aggregate principal amount of $25 million, (ii) qualified mortgage credit certificates with a certificate credit rate of 40 percent and an aggregate principal amount of $25 million, and (iii) qualified mortgage credit certificates with a certificate credit rate of 30 percent and an aggregate principal amount of $25 million. The aggregate amount of qualified mortgage credit certificates is $20 million ((10 percent of $25 million) plus (40 percent of $25 million) plus (30 percent of $25 million)). Q has complied with the limitation on the aggregate amount of qualified mortgage credit certificates, provided that it does not issue any additional certificates pursuant to the same program.
( c ) *Nonissued bond amount.* The term “nonissued bond amount” means, with respect to any qualified mortgage credit certificate program, the amount of qualified mortgage bonds (as defined in section 103A(c)(1) and the regulations thereunder) which the issuer is otherwise authorized to issue and elects not to issue under section 25(c)(2) and § 1.25-4T(b). The amount of qualified mortgage bonds which an issuing authority is authorized to issue is determined under section 103A(g) and the regulations thereunder; such determination shall take into account any prior elections by the issuer not to issue qualified mortgage bonds, the amount of any reduction in the State ceiling under paragraph (d) of this section, and the aggregate amount of qualified mortgage bonds issued by the issuer prior to its election not to issue qualified mortgage bonds.
( d ) *Noncompliance with limitation on aggregate amount of mortgage credit certificates* — ( 1 ) *In general.* If the provisions of this paragraph apply, the State ceiling under section 103A(g)(4) and the regulations thereunder for the calendar year following the calendar year in which the Commissioner determines the correction amount for the State in which the issuer which exceeded the limitation on the aggregate amount of mortgage credit certificates is located shall be reduced by 1.25 times the correction amount with respect to such failure.
( 2 ) *Correction amount.* ( i ) The term “correction amount” means an amount equal to the excess credit amount divided by .20.
( ii ) The term “excess credit amount” means the excess of— ( A ) The credit amount for any mortgage credit certificate program, over
( B ) The amount which would have been the credit amount for such program had such program met the requirements of section 25(d)(2) and paragraph (a) of this section.
( iii ) The term “credit amount” means the sum of the products determined by multiplying— ( A ) The certified indebtedness amount of each qualified mortgage credit certificate issued under the program, by
( B ) The certificate credit rate with respect to such certificate.
( 3 ) *Example.* The following example illustrates the application of this paragraph: Example. For 1987 City R has a nonissued bond amount of $100 million. City R issues all of its mortgage credit certificates with a certificate credit rate of 20 percent. City R issues certificates with an aggregate certified indebtedness amount of $120 million. The aggregate amount of mortgage credit certificates issued by City R is $24 million, which exceeds 20 percent of the nonissued bond amount. The State ceiling for the calendar year following the calendar year in which the Commissioner determines the correction amount is reduced by $25 million (the correction amount multiplied by 1.25). The correction amount is determined as follows: The credit amount is $24 million (.2 × $120 million); the amount which would have been the credit amount for the program had it met the requirements of section 25(d)(2) is $20 million (.2 × $100 million); the excess credit amount is $4 million ($24 million—$20 million); therefore, the correction amount is $20 million ($4 million/.2).
( 4 ) *Cross-references.* See section 103A(g)(4) and the regulations thereunder with respect to the reduction of the applicable State ceiling.
[T.D. 8023, 50 FR 19353, May 8, 1985]