Payments toward set-aside installments
Primary source
Verbatim text below is from the Electronic Code of Federal Regulations (eCFR), a public-domain U.S. government work. Always verify the current version with the eCFR before relying on it for any legal matter.
Full Text
(a) Interest accrual. (1) Interest will accrue on any principal portion of the set-aside installment at the same rate charged on the balance of the loan.
(2) If the borrower's set-aside installment is for a loan with a limited resource rate and the Agency modifies that limited resource rate, the interest rate on the set-aside portion will be modified concurrently.
(b) Due date. The amount set-aside, including interest accrued on the principal portion of the set-aside, is due on or before the final due date of the loan.
(c) Applying payments. The Agency will apply borrower payments toward set-aside installments first to interest and then to principal.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.