The provisions found in Sec. 4279.125 apply to loans guaranteed under this subpart, except as provided in paragraphs (a) through (c) of this section. Lenders are encouraged to pass interest-rate savings realized through the secondary market on to the borrower.
(a) The rate on the unguaranteed portion of the loan shall not exceed the rate on the guaranteed portion of the loan by more than 500 basis points;
(b) Variable rate loans will not provide for negative amortization nor will they give the borrower the ability to choose its payment among various options.
(c) Both the guaranteed and unguaranteed portions of the loan must be amortized over the same term, as provided in Sec. 4279.232(a).