a loan from a private lender, Riggs Bank, to construct a housing project. The secured note between Riggs Bank and City Line that covered the mortgage loan contained a provision that prohibited prepayment of the mortgage before twenty years from the date of final endorsement of the note by the Federal Housing Commissioner without prior approval by HUDafter twenty years the mortgage could be prepaid without HUD approval. In return for the HUD-insured low-interest loan, City Line signed a Regulatory Agreement (RA) with HUD, in which it agreed to comply with various restrictions on its housing project such as limitations on tenant income, rental rates, and the permissible rate of return on initial equity to the investors. The RA further provided that it would bind City Line "solong as the contract of mortgage insurance continues in effect, and during such further period of time as the Commissioner shall be the owner, holder or reinsurer of the mortgage," or obligated to insure a mortgage on the property. Thus, the exercise of the prepayment right under the mortgage note would effectively terminate the RA and allow City Line to exit the program.
After the housing project was built, a supplemental note that contained the same restriction on prepayment was signed. The supplemental note brought the total amount of the mortgage up to $4,584,100 to cover a construction cost overrun. The original and supplemental notes were endorsed by the Federal Housing Commissioner on August 30, 1971. On August 27-30, 1971, Riggs Bank sold the mortgage to the Government National