RD 3550-12 Subsidy Repayment Agreement

Form RD 3550-12
(Rev. 9-06)

United States Department of Agriculture
Rural Housing Service

Form Approved
OMB No. 0575-0172

SUBSIDY REPAYMENT AGREEMENT
Only one agreement should be executed by the subject borrower for the subject property. The agreement is completed at the closing of
the first Agency loan to the borrower regardless of whether or not they qualify for payment assistance at that time.
1. As required under section 521 of the Housing Act of 1949 (42 U.S.C. 1490a), subsidy received in accordance with a loan under
section 502 of the Housing Act of 1949 is repayable to the Government upon the disposition or nonoccupancy of the security
property. Deferred mortgage payments are included as subsidy under this agreement.
2. When I fail to occupy or transfer title to my home, recapture is due. If I refinance or otherwise pay in full without transfer of title
and continue to occupy the property, the amount of recapture will be calculated but, payment of recapture can be deferred, interest
free, until the property is subsequently sold or vacated. If deferred, the Government mortgage can be subordinated but will not be
released nor the promissory note satisfied until the Government is paid in full. In situations where deferment of recapture is an
option, recapture will be discounted 25% if paid in full at time of settlement.
3. Calculating Original Equity.
For Self-Help loans, the market value is the appraised value as determined at the time of loan approval/obligation, which is subject to
completion per plans and specifications. If the house is not ultimately finished under the Self-Help program, an amended agreement
using the market value definition for all other transactions as outlined below must be completed.
For all other transactions, the market value is the lower of the:
Sales price, construction/rehabilitation cost, or total of these costs, whichever is applicable
OR
Appraised value as determined at the time of loan approval/obligation.
If the applicant owns the building site free and clear or if an existing non-Agency debt on the site without a dwelling will not be
refinanced with Agency funds, the market value will be the lower of the appraised value or the construction cost plus the value of the
site.
Market value of property located at:
____________________________________________
____________________________________________

$ _______

Less Prior Liens

$ _______ Held by ____________
$ _______ Held by ____________

Less Subordinate Affordable Housing Products

$ _______ Held by ____________
$ _______ Held by ____________
$ _______
$ _______

Less Rural Development Single Family Housing Loans
Equals Original Equity (If negative number use “0”)
Percent of Original Equity
(Determined by dividing original equity by the market value)

$ _______%

4. If all loans are not subject to recapture, or if all loans subject to recapture are not being paid, the amount to be recaptured is
computed according to the following formula. Divide the balance of loans subject to recapture that are being paid by the balance of all
open loans. Multiply the result by 100 to determine the percent of the outstanding balance of open loans being paid.

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number.
The valid OMB control number for this information collection is 0575-0172. The time required to complete this information collection is estimated to average 5
minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing
and reviewing the collection of information.

5.
months
loan
outstanding
0 - 59
60 - 119
120 - 179
180 - 239
240 - 299
300 - 359
360 & up

1%
.50
.50
.50
.50
.50
.50
.47

1.1
2%
.50
.50
.50
.50
.50
.45
.40

Average interest rate paid
2.1
3.1
4.1
3%
4%
5%
.50
.50
.44
.50
.49
.42
.50
.48
.40
.49
.42
.36
.46
.38
.33
.40
.34
.29
.36
.31
.26

5.1
6%
.32
.31
.30
.26
.24
.21
.19

6. Calculating Recapture
Current Market value
LESS
Original amount of prior liens and subordinate affordable housing products,
RHS balance,
Reasonable closing costs,
Principal reduction at note rate,
Original equity (see paragraph 3), and
Capital improvements (see 7 CFR part 3550).
EQUALS
Appreciation value. (If this is a positive value, continue.)
TIMES
Percentage in paragraph 4 (if applicable),
Percentage in paragraph 5, and
Return on borrower’s original equity (100% - percentage in paragraph 3).
EQUALS
Value appreciation subject to recapture. Recapture due equals the lesser of this figure or
the amount of subidy received.
Borrower agrees to pay recapture in accordance with this agreement.
Borrower

Date

Borrower

Date

6.1
7%
.22
.21
.20
.18
.17
.14
.13

>7%
.11
.11
.10
.09
.09
.09
.09