1. What is the Mitchell-Lama Program?
2. What role does the New York City Housing Development Corporation play in the Mitchell-Lama Program and in preserving affordable housing?
3. What are the two programs HDC offers to Mitchell-Lama property owners and how do they work?
4. Can owners take advantage of both HDC programs for refinancing and repair loans?
5. Why is HDC offering two programs?
6. Is there a deadline for taking advantage of either program?
7. What is the cost to HDC?
8. When does the mandatory 15 year lock out begin?
9. Are rent increases expected?
10. What about rent stabilization?
11. How are rent increases determined?
12. What if interest rates go up?

2. What role does the New York City Housing Development Corporation play in the Mitchell-Lama Program and in preserving affordable housing?
The New York City Housing Development Corporation (HDC) holds first mortgages on approximately 75 Mitchell-Lama rental and cooperative housing developments. HDC is now offering the owners and cooperative corporations within HDC's Mitchell-Lama portfolio the opportunity to restructure their first and second mortgages and refinance at a lower interest rate and for a longer period of time. HDC also has a second program, a repair loan program, in which financing is available to owners and cooperative corporations for making necessary capital improvements on buildings in disrepair. Upon entering either program, owners and/or cooperative corporations are required to keep their buildings within the Mitchell-Lama Program. In turn, these programs preserve affordable housing for thousands of New York residents that could potentially be subject to unaffordable rent or maintenance escalations.

3. What are the two programs HDC offers to Mitchell-Lama property owners and how do they work?

A. Mortgage Restructuring Program
Owners and cooperative corporations can restructure their existing HDC first and second mortgages. By refinancing owners and cooperative corporations save in the form of reduced debt service payments and/or receive funds to repair their property. In addition, no interest will be charged on the project's second mortgage and such second mortgage will not be due and payable until prepayment or 90 days after the termination of the first mortgage.

Key Points:

• Mortgages refinanced at lower interest rates and for longer periods of time allowing the developments to maintain level debt service over the next 30 years at or below their current debt service
• Owners must remain in the Mitchell-Lama program for an additional 15 years
• HDC purchases from the City the second mortgage notes held on properties, refinances these mortgages so that they are no longer surplus cash notes and interest ceases to accrue. Past accrued interest is deferred and becomes payable as a balloon payment at the end of the restructured mortgage term.
• HPD will replace HUD as the lead supervisory agency. HPD currently supervises all City-financed Mitchell-Lama developments other than those insured by HUD. After refinancing, HPD will take over supervision of the restructured projects as well.

B. Repair Loan Program
HDC offers owners a repair loan program for preserving the aging Mitchell-Lama housing stock which allows owners to make necessary capital improvements on buildings in need of repair.

Key Points:

• Minimum loan: $100,000
• Maximum loan: $10,000,000
• Owners must remain in the Mitchell-Lama program for an additional 10 years

4. Can owners take advantage of both HDC programs for refinancing and repair loans?
Yes, HDC expects that owners receiving a repair loan will also refinance their mortgages.

5. Why is HDC offering two programs?
The Restructuring Program provides a financing structure to stabilize the developments' cash flow without creating unmanageable debt in the future. The Repair Loan Program is a financing source for owners and cooperatives to be able to make needed capital improvements on their properties.

6. Is there a deadline for taking advantage of either program?
We are meeting with owners on an ongoing basis, after the meetings we request a letter of intent within 30 days.

7. What is the cost to HDC?
HDC is paying the City a portion of the value of the second mortgages and is forgoing any interest that would have continued to accrue. HDC is also absorbing the refinancing costs (title insurance, appraisals and bond related expenses) typically passed on to the borrower. HDC believes that the value of preserving these apartments as affordable housing greatly outweighs any potential lost income to it.

8. When does the mandatory 15 year lock out begin?
At the time the loan is refinanced.

Owners and cooperative corporations are now able, by law, to opt-out of Mitchell-Lama, but in the Restructuring Program they will be required to stay in at least another 15 years. The uncertainty to residents that their buildings will either go to market rent or be privatized is eliminated; the mortgage terms are for approximately 30 years, so there is a potential that the properties will remain in the Mitchell-Lama Program for at least that long.

9. Are rent increases expected?
The restructuring program is not contingent on rent increases. Any rent increases will be related to operating expenses and not the restructuring program because debt service will not be increased under the restructuring program.

10. What about rent stabilization?
Currently properties are not subject to rent stabilization, but there are other rent increase protections under the Mitchell-Lama program.

11. How are rent increases determined?
Currently rent increases for the Mitchell-Lama portfolio financed by HDC are supervised and regulated by HUD. Under the HDC Restructuring Program the Mitchell-Lama properties joining this program will be supervised and regulated by HPD and HDC. Certain properties receiving subsidies from HUD will still be regulated by HUD but direct supervision will be lessened.

12. What if interest rates go up?
HDC has used an assumed interest rate in offering the Restructuring Program. If rates do rise, then it is possible that projects will receive a smaller grant or pay higher interest rate then what has been used in HDC projections. HDC has taken this into consideration and that is why we are asking owners to act now to lock in the current low rate.