On April 29, 2014, the U.S. Department of Housing and Urban Development (HUD) issued a Mortgagee Letter (ML 2014-08) that addresses nonprofit agencies providing secondary financing (second mortgages) in conjunction with FHA-insured mortgages.
These requirements apply to Impact Fund affordability gap assistance provided in conjunction with an FHA-insured mortgage.
Please follow this guidance to ensure compliance:
- Nonprofit agencies must be approved by HUD and placed on Nonprofit Organization Roster.
- Impact Fund second mortgages will continue to be closed in the name of the nonprofit administrator. However, the assignment of the loan to Minnesota Housing will need to wait until after the first mortgage has been insured by FHA. Administrators need to be in contact with the first mortgage lender to ensure the second mortgage is not assigned to Minnesota Housing before the FHA insurance is in place.