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

Heading: Mullica and Park Terrace Prepayment Requests

Text: On October 11, 1988, Mullica sent a letter to the FmHA stating, [t]his letter will serve as a request to pay off the remaining mortgage balance for [Mullica West Apartments]. On March 30, 1989, the FmHA responded that, [a]fter careful consideration, [the FmHA] is unable to accept your offer to prepay the loan on Mullica West Apartments at this time. The letter further advised Mullica of its right to participate in an appeal process and of the opportunity to review any incentives not to prepay. On March 14, 1991, the FmHA informed Mullica that, [b]ased on the material submitted, [Mullica had] demonstrated the ability to pay [its] loan in full. As a result of this ability, the FmHA offered Mullica an incentive loan package that required Mullica to sign a restrictive-use provision obligating the housing to low and moderate income use for 20 years. After further correspondence, on June 18, 1991, Mullica took out an FmHA incentive equity loan. Mullica's incentive loan agreement provides: The borrower and any successors in interest agree to use the housing for the purpose of housing very low-, low- and moderate-income people eligible for occupancy as provided in FmHA regulations then extant during this 20 year period beginning on the date of this mortgage instrument.... No person occupying or wishing to occupy the housing shall be required to vacate or be denied occupancy prior to the close of such 20 year period because of early repayment. The 20-year use restrictions of the incentive loan obligate Mullica to maintain the financed housing for low-to-moderate income renters until 2011. Mullica's incentive loan matures in 2036. On November 19, 1991, Park Terrace sent a letter to the FmHA stating, [t]his letter will serve as a request to pay off the remaining mortgage balance for the [Park Terrace Apartments]. The FmHA responded on June 23, 1992, with a letter stating, [i]n conjunction with your prepayment request, we are making you ... a one-time offer of an equity loan.... as an incentive to keep Park Terrace in low income housing ... Any agreement entered into to accept this incentive will require you to sign a restrictive-use provision obligating the housing to the low-moderate income program for 20 years. On July 16, 1993, after an ensuing application process, Park Terrace took out a new incentive equity loan in the amount of $925,000, which carried a low fixed interest rate. Park Terrace's incentive loan matures in fifty years. The Park Terrace incentive loan agreement contains the following clause: The borrower and any successors in interest agree to use the housing for the purpose of housing low- and moderate-income people eligible for occupancy as provided in Section 515 of Title V of the Housing Act of 1949 and FmHA regulations then extant during this 20 year period beginning the date of this mortgage.... No person occupying or wishing to occupy the housing shall be required to vacate or be denied occupancy prior to the close of such 20 year period because of early repayment. The 20-year use restrictions of the incentive loan obligate Park Terrace to maintain the housing for low and moderate income renters until 2013. The Park Terrace incentive loan matures in 2043.