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	Community Investment Notice February 8, 2006 Notice No. 0001 AHP Retention Period for Rural Development Section 502 Program Dear Community Lending Partner: If your organization has been or will be involved with projects financed with mortgage loans under the USDA’s Rural Development Section 502 Mutual Self-Help Housing Loan Program, we are pleased to report that the Federal Housing Finance Board has clarified that the 5-year retention period for Affordable Housing Program subsidy commences on the closing date of the Section 502 Program mortgage loan, not on the date construction is completed (which may occur 12 to 18 months after the closing date). The timing of the start of the retention period is important because it affects the calculation of subsidy repayments resulting from resale and refinancing occurring within the 5-year retention period. In processing resale or refinancing transactions involving RD-financed units, please refer to the instructions and calculation templates for repayment or subsidy assumption available on the Bank’s website in the Community Investment section under Procedures/AHP/Repayment. Please provide the Bank with a copy of the HUD-1 closing statement pertinent to the unit being sold or refinanced along with the repayment or subordination paperwork. If you have any questions, please call me at (415) 616-2762 or Alicia Valine, Compliance Specialist, at (415) 616-2925. Sincerely, Louise Holmes Assistant Vice President, Compliance Manager

Community Investment Notice

February 8, 2006
Notice No. 0001

AHP Retention Period for Rural Development Section 502 Program

Dear Community Lending Partner:

If your organization has been or will be involved with projects financed with mortgage loans under the USDA’s Rural Development Section 502 Mutual Self-Help Housing Loan Program, we are pleased to report that the Federal Housing Finance Board has clarified that the 5-year retention period for Affordable Housing Program subsidy commences on the closing date of the Section 502 Program mortgage loan, not on the date construction is completed (which may occur 12 to 18 months after the closing date).

The timing of the start of the retention period is important because it affects the calculation of subsidy repayments resulting from resale and refinancing occurring within the 5-year retention period. In processing resale or refinancing transactions involving RD-financed units, please refer to the instructions and calculation templates for repayment or subsidy assumption available on the Bank’s website in the Community Investment section under Procedures/AHP/Repayment.

Please provide the Bank with a copy of the HUD-1 closing statement pertinent to the unit being sold or refinanced along with the repayment or subordination paperwork.

If you have any questions, please call me at (415) 616-2762 or Alicia Valine, Compliance Specialist, at (415) 616-2925.

Sincerely,

Louise Holmes
Assistant Vice President, Compliance Manager

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