To be considered Soft Financing, the subordinate loan must comply with all of the following:
|Term||For All Soft Financing...|
|Events of Default||
Acceleration must only be for noncompliance with required affordability restrictions.
For example, for loans subject to the Tax Credit Exchange Program per Section 1602 of the American Recovery and Reinvestment Tax Act of 2009, repayment must only be required for noncompliance with required affordability restrictions.
|Subordination||Subordination must comply with Part III, Chapter 7: Multifamily Affordable Housing Properties, Section 704.08: Subordination Agreement.|
Soft Financing may have:
- a nominal interest rate (e.g., 1% or 2%);
- interest that does not accrue;
- principal payments that do not fully amortize the subordinate loan over its term; or
- a loan term significantly longer than the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents or a mortgage debt obligation with a Fannie Mae credit enhancement.
term, with the subordinate loan either
- being forgiven over time or at its maturity date, or
- due only upon the sale of the PropertyPropertyMultifamily residential property securing the Mortgage Loan and including the land (or Leasehold interest in land), Improvements, and personal property (as defined in the Uniform Commercial Code). .