[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR811.108]

[Page 40-41]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
  CHAPTER VIII--OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL
 
PART 811_TAX EXEMPTION OF OBLIGATIONS OF PUBLIC HOUSING AGENCIES AND 
RELATED AMENDMENTS--Table of Contents
 
Sec. 811.108  Debt service reserve.

    (a) FHA-Insured projects. (1) The debt service reserve shall be 
invested and the income used to pay principal and interest on that 
portion of the obligations which is attributable to the funding of the 
debt service reserve. Any excess investment income shall be added to the 
debt service reserve. In the event such investment income is 
insufficient, surplus cash or residual receipts, to the extent approved 
by the field office, may be used to pay such principal and interest 
costs.

[[Page 41]]

    (2) The debt service reserve and its investment income shall be 
available only for the purpose of paying principal or interest on the 
obligations. The use of the debt service reserve for this purpose shall 
not be a cure for any failure by the owner to make required payments.
    (3) Upon full payment of the principal and interest on the 
obligations (including that portion of the obligations attributable to 
the funding of the debt service reserve), any funds remaining in the 
debt service reserve shall be remitted to HUD.
    (b) Non-FHA-insured projects. (1) Investment income from the debt 
service reserve, up to the amount required for debt service on the bonds 
attributable to the debt service reserve, shall be credited toward the 
owner's debt service payment. Any excess investment income shall be 
added to and become part of the debt service reserve.
    (2) The debt service reserve and investment income thereon shall be 
available only for the purpose of paying principal or interest on the 
obligations. The use of the debt service reserve for this purpose shall 
not be a cure for any failure by the owner to make required payments.
    (3) Upon full payment of the principal and interest on the 
obligations (including that portion of the obligations attributable to 
the funding of the debt service reserve), any funds remaining in the 
debt service reserve shall be remitted to HUD.

[61 FR 14461, Apr. 1, 1996]