Page:United States Statutes at Large Volume 100 Part 3.djvu/806

 100 STAT. 2614

PUBLIC LAW 99-514—OCT. 22, 1986

rr ktiiJ'i •^nj.-.'] ence table published by the Federal Housing Administration, and "(II) p r e payments of principal shall be treated •\:-,. ' a s received on the last day of the month in which •,., • the issuer reasonably expects to receive such prepayments. .f..fi; "(C) YIELD ON THE ISSUE.—For purposes of this subsection, the yield on a n issue shall be determined on the basis of— "(i) the issue price (within the m e a n i n g of sections 1273 and 1274), and ., "(ii) a n expected m a t u r i t y for the bonds which is consistent with the assumptions required under subparagraph (B)(iv). "(3) ARBITRAGE AND INVESTMENT GAINS TO BE USED TO REDUCE

COSTS OF OWNER-FINANCING.—

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"(A) IN GENERAL.—An issue shall be t r e a t e d as meeting the requirements of this paragraph only if a n a m o u n t equal to the s u m of— "(i) the excess of— ,1 "(I) the a m o u n t earned on all nonpurpose investments (other than investments a t t r i b u t a b l e to an excess described in this clause), over "(II) the a m o u n t which would have been earned if such investments were invested a t a r a t e equal to the yield on the issue, plus "(ii) any income a t t r i b u t a b l e to the excess described in clause (i), is paid or credited to the mortgagors as rapidly as may be practicable.

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"(B) INVESTMENT GAINS A N D LOSSES.—For

purposes

of

subparagraph (A), in determining the a m o u n t earned on all nonpurpose investments, any gain or loss on the disposition of such investments shall be t a k e n into account. "(C) REDUCTION WHERE ISSUER DOES NOT USE FULL 1.125 PERCENTAGE POINTS UNDER PARAGRAPH (2).—

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"(i) IN GENERAL.—The a m o u n t required to be paid or credited to mortgagors under subparagraph (A) (determined under this paragraph without regard to this subparagraph) shall be reduced by the unused paragraph (2) a m o u n t. "(ii) U N U S E D PARAGRAPH (2) A M O U N T. — For purposes

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of clause (i), the unused paragraph (2) a m o u n t is the a m o u n t which (if it were treated as a n interest payment m a d e by mortgagors) would result in the excess referred to in paragraph (2)(A) being equal to 1.125 percentage points. Such a m o u n t shall be fixed and determined as of the yield determination date. "(D) ELECTION TO PAY UNITED STATES. — Subparagraph (A)

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shall be satisfied with respect to any issue if the issuer elects before issuing the bonds to pay over to the United States— "(i) not less frequently than once each 5 year s after the date of issue, a n a m o u n t equal to 90 percent of the aggregate a m o u n t which would be required to be paid or credited to mortgagors under subparagraph (A) (and not theretofore paid to the United States), and

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