Opinion ID: 209417
Heading Depth: 3
Heading Rank: 2

Heading: Passage of ELIHPA and HCDA

Text: In the years after these and many other similar loans were made pursuant to sections 515 and 521 of the Housing Act, Congress became concerned that increasing numbers of the loans were being prepaid, thus decreasing the available amount of housing for low-to-moderate income occupants. See Franconia, 536 U.S. at 135-36, 122 S.Ct. 1993. In light of these concerns, Congress passed the Emergency Low Income Housing and Preservation Act of 1987 (ELIHPA) [4] and the Housing and Community Development Act of 1992 (HCDA). [5] ELIHPA amend[s] the Housing Act of 1949 to impose permanent restrictions upon prepayment of § 515 mortgages entered into before December 21, 1979. Id. at 136, 122 S.Ct. 1993. ELIHPA mandates that before the FmHA can accept prepayment of a section 515 mortgage, the [FmHA] shall make reasonable efforts to enter into an agreement with the borrower under which the borrower will make a binding commitment to extend the low income use of the assisted housing and related facilities for not less than the 20-year period beginning on the date on which the agreement is executed. 42 U.S.C. § 1472(c)(4)(A). ELIHPA provides that the FmHA may include incentives in such an agreement, including an increase in the rate of return on investment, reduction of the interest rate on the loan, and an additional loan to the borrower. Franconia, 536 U.S. at 136, 122 S.Ct. 1993 (citing 42 U.S.C. § 1472(c)(4)(B)). If, however, after a reasonable period an agreement cannot be reached between the borrower and the FmHA, the borrower seeking prepayment must offer to sell the assisted housing and related facilities involved to any qualified nonprofit organization or public agency at a fair market value. 42 U.S.C. § 1472(c)(5)(A)(i). An offer of prepayment may be accepted if such an offer to buy the property is not made within 180 days. [6] Id. § (c)(5)(A)(ii). The regulations implementing ELIHPA create a process for the FmHA's determination of prepayment requests, by which the FmHA `develops an incentive offer,' making a `reasonable effort... to enter into an agreement with the borrower to maintain the housing for low-income use that takes into consideration the economic loss the borrower may suffer by foregoing [sic] prepayment.' Franconia, 536 U.S. at 137, 122 S.Ct. 1993 (quoting 7 C.F.R. § 1965.210 (2002)). If no such agreement can be reached, the FmHA will proceed to make the requisite statutory determinations before any prepayment can be accepted. Id.