Secondary Financing

Conditions:

• • The Tax Credit advance, when combined with the FHA-Insured First Mortgage may not result in cash back to the borrower.
• • The Second Lien may not exceed the total amount needed for the Down Payment, Closing Costs, and Prepaid Expenses.
• • Secondary financing may be “soft” (silent) or require a monthly repayment.
• • If payments are required, they must be included within the qualifying ratios and, when combined with the First Mortgage, cannot exceed the Borrower’s reasonable ability to pay.
• • Payments must be deferred for at least 36 months to not be included in the qualifying ratios.
• • If the Tax Credit advance loan has a short term for repayment, it must also provide that if the Borrower fails to repay by the designated deadline, Principal and Interest Payments begin automatically or the loan converts to a “Soft” Second.
• • The Secondary Financing may not require a Balloon Payment before Ten years.