A BMIR mortgage that is eligible low income housing may be prepaid only under a Commissioner-approved plan of action, and an unauthorized prepayment is null and void with the restrictions continuing

bmir.affordability_period.prepaying_a_bmir_mortgage_requires_an_approved_plan_of_action · v1.0.0

Section 221(d)(3) BMIR mortgages sit inside the federal prepayment-preservation regime at 24 CFR part 248. A mortgage INSURED OR HELD BY THE COMMISSIONER UNDER PART 221 AND BEARING A BELOW MARKET INTEREST RATE is 'eligible low income housing' - provided the project is NOT subject to a use restriction imposed by the Commissioner restricting it to low and moderate income use for a period at least equal to the remaining term of the mortgage, and provided that under regulation or contract in effect before 5 February 1988 it is or will within 24 months become eligible for prepayment without prior Commissioner approval. For such a project: AN OWNER MAY PREPAY, AND A MORTGAGEE MAY ACCEPT PREPAYMENT OF, A MORTGAGE ON SUCH PROJECT ONLY IN ACCORDANCE WITH A PLAN OF ACTION APPROVED BY THE COMMISSIONER. Voluntary termination of the mortgage insurance contract under 24 CFR 207.253 takes the same route. The sanction is unusually strong: A MORTGAGEE'S ACCEPTANCE OF A PREPAYMENT IN VIOLATION OF PARAGRAPH (a), OR THE VOLUNTARY TERMINATION OF A MORTGAGE INSURANCE CONTRACT IN VIOLATION OF PARAGRAPH (b), SHALL BE NULL AND VOID AND ANY LOW INCOME AFFORDABILITY RESTRICTIONS ON THE PROJECT SHALL CONTINUE TO APPLY. An unauthorized prepayment therefore does not deregulate the project at all, and is separately grounds for administrative action including rescission of the prepayment or reinstatement of the insurance.

Confidence

high

Effective from

1992-04-08

Consequence model

contract remedy

Last reviewed

2026-09-02