All of the provisions of §207.259 of this chapter relating to insurance benefits apply to multifamily project mortgages insured under this subpart, except as provided in this section:

(a) [Reserved]

(b) Below market interest rate mortgages. Where the mortgage has been finally endorsed and the special below market interest rate provided in §221.518(b) is applicable as of the date of default, the 1 percent deduction from insurance benefits prescribed in §207.259(b)(2)(iv) of this chapter shall not be applicable.

(c) Mortgages financed with section 11(b) obligations. Where the funds for a mortgage loan are provided by obligations that are tax-exempt under section 11(b) of the United States Housing Act of 1937 (24 CFR part 811), the one percent deduction from insurance benefits prescribed in §207.259(b)(2)(iv) of this chapter shall not be applicable to claims with respect to multifamily rental housing projects for which a firm commitment for mortgage insurance was issued on or after March 12, 1979.

[36 FR 24587, Dec. 22, 1971, as amended at 44 FR 40890, July 13, 1979; 80 FR 51468, Aug. 25, 2015]