(a) Loan requirements. A loan made to a family purchasing a home constructed or substantially rehabilitated under the program:
(1) Must be secured by a second mortgage held by HUD on the property involved;
(2) May not exceed $15,000;
(3) May not bear interest;
(4) Is repayable to HUD upon the sale, lease, or other transfer of the property; except, as an alternative, the nonprofit organization may elect to provide the Homeowner Incentive under Sec. 280.55(c) for subsequent sale or transfer of the property (the Homeowner Incentive is not available upon the lease of the property).
(5) Must be applied by the family to the purchase price of the home.
(6) May not be used by the family to provide the downpayment required under Sec. 280.45.
(7) Is subject to such other terms and conditions as HUD may require.
(b) Reimbursement of recipient. Within 30 days after the date of purchase of a home with a loan under this part, HUD will provide the recipient with an amount equal to the amount of the loan. [54 FR 22258, May 22, 1989, as amended at 58 FR 58282, Nov. 1, 1993. Redesignated and amended at 61 FR 42953, 42954, Aug. 19, 1996]