As the law was written, after twenty years from the date of initial occupancy, the mortgagor is permitted to prepay its mortgage loan and the development to be released from Mitchell Lama regulation.

Over 80 of the Mitchell-Lama developments that were initially financed by the City through the sale of revenue bonds were refinanced by HDC between 1978 and 1980. In 2004, HDC had over 27,000 Mitchell-Lama apartments in its portfolio. Since most of these properties were constructed 25 years ago, many owners contemplated paying off their mortgages. This would have enabled them to opt-out of the program and raise rents to market value if no other protections were in place.

HDC created its Mitchell-Lama Preservation Program in order to protect the tenants living in these developments and ensure the long-term affordability.

The program has two components:

• Repair Loan Program
  The HDC Repair Loan Program is an effort to preserve Mitchell-Lama housing by offering a loan to owners in order to make needed capital improvements. HDC committed $75 million of its corporate reserves to finance this program. Since 2004, over $60 million in loans have closed - preserving 7,000 units under this program.
   
• Mortgage Restructuring Program
  HDC is offering owners within its insured Mitchell-Lama portfolio the chance to restructure the first and second mortgages held on the properties. The mortgages would be refinanced at a lower cost to the owner and for a longer period of time. Savings can be taken in the form of further reduction of payments or as funds to repair the property. The second mortgages on the properties are currently owned by the City through the Department of Housing Preservation and Development (HPD). HDC will purchase the second mortgages from the City.