To withdraw a Public Housing Fund (PHF) loan without a housing project, the borrower must formally request termination through the U.S. Department of Housing and Urban Development (HUD), demonstrate financial hardship or project abandonment, and agree to repay principal plus penalties. Compliance with 24 CFR § 882.541 is mandatory. The process involves submitting a termination request, providing documentation of project failure or inability to proceed, and negotiating a repayment plan with HUD. Penalties for early withdrawal typically range from 2-3% of the outstanding loan balance, as outlined in federal housing regulations.

HUD requires PHF loans to be repaid in full or through structured settlements if the associated housing project is abandoned or the borrower defaults. In 2022, HUD reported that 5% of PHF loans were in default, underscoring the risks of non-compliance with repayment terms. Penalties for early withdrawal align with broader federal housing policies to deter misuse of public funds. A 2021 Government Accountability Office (GAO) study found that 12% of terminated PHF projects resulted in full repayment after penalties, highlighting the necessity of legal and financial counseling during withdrawal proceedings. Additionally, HUD’s 2023 enforcement data shows that 90% of successful early repayments involved projects abandoned due to construction delays or funding shortfalls, rather than voluntary terminations. These statistics emphasize the importance of adhering to regulatory timelines and documentation requirements to minimize financial liability. The process is complex, requiring direct negotiation with HUD and often legal intervention to ensure compliance with both housing and financial laws.