NP terms may be extended to applicants who do not qualify for program credit, or for properties that do not qualify as program properties, when it is in the best interest of the Government. NP loans are originated and serviced according to the requirements for program loans except as indicated in this section.
(a) Purpose. NP terms may be offered to expedite:
(1) Sale of an REO property.
(2) Assumption of an existing program loan on new rates and terms. If additional funds are required to purchase the property, the applicant must obtain them from another source.
(3) Conversion of a program loan that has received unauthorized assistance.
(4) Continuation of a loan on a portion of a security property when the remainder is being transferred and the RHS debt is not paid in full.
(b) Terms.
(1) Rate and term:
(i) For an applicant who intends to occupy the property, the term will not exceed 30 years.
(ii) For other applicants, the term will not exceed 10 years. If more favorable terms are necessary to facilitate the sale, the loan may be amortized over a period of up to 20 years with payment in full due not later than 10 years from the date of closing.
(iii) An applicant with an NP loan under paragraph (b)(1)(i) of this section who wishes to retain the property and purchase a new property with RHS credit must purchase the second property according to the terms of paragraph (b)(1)(ii) of this section, even if the new property will serve as the applicant's principal residence.
(2) NP loans are written at the NP interest rate in effect at the time of loan approval.
(3) NP borrowers are not eligible for payment assistance or a moratorium.
(c) Additional requirements.
(1) NP applicants other than public bodies and nonprofit organizations must pay a nonrefundable application fee.
(2) NP applicants must make a down payment based upon the purchase price and whether the applicant intends to personally occupy the property or use it for other purposes.
(3) NP applicants cannot finance loan closing costs or escrow, tax service, or appraisal fees.
(d) Reduced restrictions.
(1) NP applicants need not be unable to obtain other credit in order to receive an NP loan and are not required to refinance with private credit when they are able to do so.
(2) NP applicants are not required to occupy the property.
(3) NP applicants are not subject to leasing restrictions.
(e) Waiver of costs. When the purpose of the loan is the conversion of a program loan that has received unauthorized assistance or continuation of a loan on a portion of a security property when the remainder is being transferred, the application fee, appraisal fee, and down payment may be waived.