19.4.9.4 Secured Secondary Financing – Private

A. When the RC Director approves secured secondary financing from a private entity, that is secured with a lien against the Mortgaged Property consistent with Program Obligations and reflected in the Firm Commitment, the parties must use Subordination Agreement – Private (form HUD-92907M). Note that the Secondary Financing Rider is no longer in effect.

B. The conditions for secured secondary financing from a private entity differ depending on the section of the National Housing Act through which the mortgage is being insured, including whether it may be secured with a lien on the Project (see, e.g., Sections 8.7 and 14.14).

C. Section 3(c) of the Subordination Agreement – Private contains HUD-required language that must be inserted into the subordinate note. The HUD Closing Attorney should confirm inclusion of the required language.