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ALIT 1 <br /> FACT SHEET-HUD SECTION 202 HOUSING FUND RESERVATIONS <br /> SECTION 202 DIRECT LOANS: 2aBS 051 <br /> -Section 202 provides direct mortgage loans from HUD to <br /> nonproft sponsors of housing for the elderly and handicapped. <br /> -Loans cover 100% of HUD approved costs for buying <br /> sites, constructing buildings and paying related development <br /> costs such as legal, architectural and consultant fees, interest, <br /> organizational costs, surveys, soil engineering tests. <br /> -Terms are 9% interest for 40 years. <br /> -A Minimum Capital Investment escrow of one-half <br /> percent of the mortgage ($5 per $1000) must be provided by <br /> the 13 orrower for a three year period. For the Carrboro <br /> Apartments, this is approximately $6,500. If not needed <br /> during the three year operating period for major repair items, <br /> the Minimum Capital Escrow is returned with interest. <br /> -Sponsors must be private nonprofit organizations. Not <br /> eligible to receive funds under Section 202 are public bodies, <br /> agencies and instrumentalities of public bodies (such as <br /> housing authorities) and private for-profit organizations. <br /> -The Sponsor must have an IRS determination letter at <br /> the time application is made. <br /> -The mortgage will be in the name of a Borrower <br /> corporation, a separate entity created by the Sponsor solely <br /> for the purpose of borrowing the funds for this Section 202 <br /> project. While the Sponsor has no legal obligation under the <br /> terms of the mortgage, HUD expects full support by the <br /> Sponsor of the Borrower's activities, and will rank proposals on <br /> the strength of such support. <br /> SECTION 8 RENTAL ASSISTANCE; <br /> Each Section 202 Fund Reservation carries with it a <br /> commitment for Section 8 rental assistance for all units for a <br /> 20 year contract period. Rents are guaranteed for all units. <br /> -Residents of a unit pay 30% of their income toward the <br /> rent, HUD Section 8 pays the remainder of the rent. A typical <br /> unit renting for $400 might contain a resident with Social <br /> Security retirement income of $300; the resident would pay <br /> 30% , or $90, and HUD would pay $310. <br /> -All units are limited to occupancy by very low income <br /> persons, below 50% of median income for the county, who are <br /> either elderly (over 62 years old) or handicapped. <br />