(a) All CalHome Program development loans shall be secured by the project real property and improvements, subject only to liens, encumbrances and other matters of record which have been reviewed and approved by the Department on a case-by-case basis.

(b) The development loan term shall end no later than the date specified in the Standard Agreement.

(c) Principal and interest payments shall be deferred for the term of the development loan.

(d) Development loans shall be repayable at permanent closings of the individual homebuyer CalHome Program loans or at the development loan maturity date, whichever occurs first. The portion of development loan repayments that are used to provide mortgage assistance to qualified first-time homebuyers will be converted to a grant to the Recipient. The balance of the development loan will be repaid to the Department.

(e) Development loans shall bear interest at the rate of six percent simple interest per annum. The Department may forgive accrued interest on a pro rata basis to the extent that the number of lower-income households originally proposed to be served, have been served upon completion of the project.