EXIT PREMIUM Note

EXIT PREMIUM Note

______, 20____

[Property Address]

[insert identifying number for administrative tracking of note]

THIS NOTE (the “Note”) is given on ______, 20___ by and between [Borrower’s Name] (whether one or more person, hereinafter referred to as “Borrower”) and the Secretary of Housing and Urban Development, whose address is451 Seventh Street, S.W., Washington, D.C., 20410(hereinafter referred to as the “Lender”).

DEFINITIONS

Event of Default.

The term “Event of Default” shall mean any misrepresentation(s) made by the Borrower in the HOPE for Homeowners Consumer Disclosure and Certification.

Initial Equity.

In the event of the occurrence of a Maturity Event or an Event of Default, the Property’s Initial Equity is in the amount of ______($_____). [Insert amount equivalent to: The lesser of--(i) the appraised value of the Property that was used at the time of origination of the HOPE for Homeowners (H4H) Mortgage to underwrite the mortgage and to determine compliance with the maximum loan-to-value ratio at origination established by 12U.S.C. § 1715z-23(e)(2)(B); or (ii) the outstanding amount due under all existing senior mortgages, existing subordinate mortgages, and non-mortgage liens on the Property; minus the original principal amount of the H4H Mortgage.]

Maturity Event.

The refinance of the H4H Mortgage,a sale or any other disposition of all or any part of the Property (including the sale or disposition of a beneficial interest in the Propertyor foreclosure by a senior mortgagee)where there has been no refinance of the H4H Mortgage prior to such sale or disposition.

A Maturity Event shall not include the following:

(a)a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

(b)the granting of a leasehold interest of three (3) years or less not containing an option to purchase;

(c)a transfer to a relative resulting from the death of the Borrower;

(d)a transfer where the spouse or children of the Borrower become an owner of the property;

(e)a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the Borrower becomes an owner of the property; or

(f)a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.

RECITALS

R1.The Borrower has chosen to participate in the HOPE for Homeowners program as established by Title IV of the Housing and Economic Recovery Act of 2008 (the “H4H Program”) as amended by the Emergency Economic Stabilization Act of 2008 and the Helping Families Save Their Homes Act of 2009.

R2.As a participant in the H4H Program, the Borrower has a Federal Housing Administration (FHA) insured first mortgage of even date herewith in the amount of ______[Insert amount of the H4H Mortgage] with ______[Insert First Lienholder Name] secured by the Property as defined herein (the “H4H Mortgage”).

R3.Pursuant to the terms and conditions of the H4H Program, the Borrower shall grant the Lender an equity interest in the Property by executing this Note and an Exit Premium Mortgage (the “EPM”) of even date herewith with the EPM to be secured by a second priority lien against the Property.

NOW, THEREFORE, in exchange of good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged and the mutual covenants herein contained, the parties do hereby agree as follows:

Borrower’s Promise to Pay.

Upon the occurrence of a Maturity Event, the Borrower hereby promises to pay to the order of the Lender principal based on Initial Equity pursuant to the following schedule:

(a)If the Maturity Event occurs during the period that begins on the date the H4H Mortgage becomes FHA-insured (the “Date of Insurance”) and ends one (1) year after the Date of Insurance, the Borrower shall pay the Lender one hundred percent (100%) of Initial Equity.

(b)If the Maturity Event occurs during the period that begins one (1) year following the Date of Insurance and ends two (2) years after such Date of Insurance, the Borrower shall pay the Lender ninety percent (90%) of Initial Equity.

(c)If the Maturity Event occurs during the period that begins two (2) years following the Date of Insurance and ends three (3) years after such Date of Insurance, the Borrower shall pay the Lender eighty percent (80%) of Initial Equity.

(d)If the Maturity Event occurs during the period that begins three (3) years following the Date of Insurance and ends four (4) years after such Date of Insurance, the Borrower shall pay the Lender seventy percent (70%) of Initial Equity.

(e)If the Maturity Event occurs during the period that begins four (4) years following the Date of Insurance and ends five (5) years after such Date of Insurance, the Borrower shall pay the Lender sixty percent (60%) of Initial Equity.

(f)If the Maturity Event occurs during any period that begins five (5) years following the Date of Insurance, the Borrower shall pay the Lender fifty percent (50%) of Initial Equity.

H4H Mortgage Not Eligible for Insurance. Lender agrees that if the H4H Mortgage is determined to be ineligible for insurance under the National Housing Act, the Note shall be void and the Lender shall execute and record a release for the EPM. A written statement of any authorized agent of the Lender dated subsequent to the date hereof, declining to insure the H4H Mortgage, shall be deemed conclusive proof of such ineligibility.
Interest. This Note shall not bear interest unless the principal amount due upon occurrence of a Maturity Event is not paid to Lender. If principal amount due is not paid, the principal sum due pursuant Paragraph 1 of this Note shall bear interest from the date of the Maturity Event at the rate of the current value of funds to the United States Treasury in effect on the date of the Maturity Event. The current value of funds rate is prescribed and published by the Secretary of the Treasury in the Federal Register and the Treasury Fiscal Requirements Manual Bulletins.
Mortgage. This Note is secured by an EPM, deed of trust, or similar security instrument of even date herewith between Borrower and Lender (the “Security Instrument”). The Security Instrument encumbers certain real property located at [Insert Property Address] (the “Property Address”) and more fully described in the Security Instrument (the “Property”).
Payment.

(a)No regular monthly payments are due under this Note. A payment is due upon the occurrence of a Maturity Event pursuant to the terms and schedule provided in Paragraph 1 of this Note.

This Note is a deferred contingent liability. Principal and any interest on this Note and all other sums, which may or shall become due under this Note and the Security Instrument, shall be due and payable upon the occurrence of the Maturity Event (Maturity Date) if (1) not otherwise satisfied in accordance with the provisions of the Security Instrument, or (2) there is an Event of Default.

(b)Payment shall be made at Single Family Notes/H4H, PO Box 105053, Atlanta, GA 30348-5053, or at such place as Lender may designate in writing by notice to Borrower.

Prepayment. Borrower shall not have the right to prepay this Note, in whole or in part.
Grounds for AccelerationofDebt and Event of Default.

Upon the occurrence of an Event of Default, Lender may declare, without notice, immediately due and payable the principal and interest equivalent to the amount of Initial Equity due on this Note and all other sums which may or shall become due under the EPM or this Note.

Payment of Lender’s Costs and Expenses. If Lender has required immediate payment in full, as described above, Lender may require Borrower to pay costs and expenses including reasonable and customary attorney’s fees for enforcing this Note to the extent not prohibited by applicable law. Such fees and costs shall bear interest from the date of disbursement at a rate of the current value of funds to the United States Treasury in effect on the date of the date of disbursement and, at the option of Lender, shall be immediately due and payable. The current value of funds rate is prescribed and published by the Secretary of the Treasury in the Federal Register and the Treasury Fiscal Requirements Manual Bulletins.
Modifications. This Note shall not be modified, amended, changed, discharged, or terminated orally. This Note may only be modified, amended, changed, discharged, or terminated by an agreement in writing signed by the party against whom enforcement of such modification, amendment, change, discharge, or termination is sought.
Notices. Any notice to Borrower provided for in this Note shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to the Property Address or any other address Borrower designates by notice to Lender. Any notice to Lender shall be given by first class mail to Lender's address stated herein or any address Lender designates by notice to Borrower. Any notice provided for in this Note shall be deemed to have been given to Borrower or Lender when given as provided in this paragraph.
Time of the Essence. Time is of the essence as to all dates set forth herein.
Waivers. Borrower and all endorsers, sureties and guarantors jointly and severally waive presentation for payment, demand for payment, notice of nonpayment, notice of protest, notice of dishonor, protest, notice of protest, and any and all lack of diligence or delays in collection or enforcement of this Note.
Successors and Assigns Bound. The covenants and agreements of this Note shall bind and benefit the successors and assigns of Lender and Borrower. The covenants and agreements of Borrower under this Note are not assignable without the prior written consent of Lender.
Governing Law; Severability. This Note shall be governed by Federal law. In the event that any provision or clause of this Note or the Security Instrument conflicts with applicable law, such conflict shall not affect other provisions of this Note or the Security Instrument which can be given effect without the conflicting provision. To this end the provisions of this Note and the Security Instrument are declared to be severable.
Authority to Execute. The representative of Borrower executing this Note represents that he/she has full power, authority and legal right to execute and deliver this Note and that the debt hereunder constitutes a valid and binding obligation of Borrower.

BY SIGNING BELOW, Borrower accepts and agrees under seal to the terms and covenants contained in this Note.

BORROWER:

By:______(SEAL)

Name:______

By:______(SEAL)

Name:______

[NOTE: THE FOLLOWING IS A SAMPLE MODEL MORTGAGE FORM THAT IS NOT ADAPTED FOR STATE LAW. THE FHA-APPROVED MORTGAGEE EXTENDING THE FIRST MORTGAGE IS RESPONSIBLE FOR ADAPTING PROVISIONS WITHIN THIS MODEL FORM TO STATE LAW ON BEHALF OF HUD. THE GENERAL SUBSTANCE OF EACH PROVISION SHOULD NOT CHANGE FROM THE MODEL FORM. IF THERE IS A CONFLICT BETWEEN SUBSTANTIVE CONTENT OF A PARTICULAR PROVISION AND STATE LAW, THE MORTGAGEE SHALL CONTACT FHA FOR FURTHER GUIDANCE.]

After Recording Return To:

[Insert where to return recorded document]

______[Space Above This Line For Recording Data]______

[insert identifying number for administrative tracking of mortgage]

EXIT PREMIUM MORTGAGE

THIS exit premium MORTGAGE (the “EPM”) is given on ______, 20___ by and between ______[Insert Borrower’s Name](whether one or more person, hereinafter referred to as “Borrower”) and the Secretary of Housing and Urban Development, whose address is451 Seventh Street, S.W., Washington, D.C., 20410(hereinafter referred to as the “Lender”). [Insert the following language if the EPM is registered with MERS…“with Mortgage Electronic Registration Systems, Inc., organized and existing under the laws of Delaware, with an address and telephone number of P.O. Box 2026, Flint, Michigan 48501-2026, tel. (888) 679-MERS (“MERS”) acting solely as a nominee for Lender and Lender’s successors and assigns. FOR PURPOSES OF RECORDING THIS MORTGAGE, MERS IS THE MORTGAGEE OF RECORD.”]

DEFINITIONS

Event of Default.

The term “Event of Default” shall mean any misrepresentation(s) made by the Borrower on the HOPE for Homeowners Consumer Disclosure and Certification.

Initial Equity.

In the event of the occurrence of an Maturity Eventor an Event of Default, the Property’s Initial Equity is in the amount of ______($_____). [Insert amount equivalent to: The lesser of--(i) the appraised value of the Property that was used at the time of origination of the HOPE for Homeowners (H4H) Mortgage to underwrite the mortgage and to determine compliance with the maximum loan-to-value ratio at origination established by 12U.S.C. § 1715z-23(e)(2)(B); or (ii) the outstanding amount due under all existing senior mortgages, existing subordinate mortgages, and non-mortgage liens on the Property; minus the original principal amount of the H4H Mortgage.]

Maturity Event.

The refinance of the H4H Mortgage,a sale or any other disposition of all or any part of the Property (including the sale or disposition of a beneficial interest in the Propertyor foreclosure by a senior mortgagee) where there has been no refinance of the H4H Mortgage prior to such sale or disposition.

A Maturity Event shall not include the following:

(a)a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

(b)the granting of a leasehold interest of three (3) years or less not containing an option to purchase;

(c)a transfer to a relative resulting from the death of the Borrower;

(d)a transfer where the spouse or children of the Borrower become an owner of the property;

(f)a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.

RECITALS

R1.Borrower is the owner of property located in ______County, ______more particularly described on Schedule A annexed hereto which has the address of ______[Street], ______, ______, ______[Zip code], (the “Property Address”).

R2.The Borrower has chosen to participate in the HOPE for Homeowners program as established by Title IV of the Housing and Economic Recovery Act of 2008 as amended by the Emergency Economic Stabilization Act of 2008 and the Helping Families Save Their Homes Act of 2009 (the “H4H Program”).

R3.As a participant in the HOPE Program, the Borrower has a Federal Housing Administration (FHA) first mortgage of even date herewith in the amount of ______[Insert amount of the H4H Mortgage] with ______[Insert First Lienholder Name] secured by the Property as defined herein (the “H4H Mortgage”).

R4.Pursuant to the terms and conditions of the H4H Program, the Borrower shall grant the Lender an equity and appreciation interest in the Property by executing anExit Premium Note (the “Note”) and this EPM of even date herewith with thisEPM to be secured by a second priority lienagainst the Property.

1.Borrower promises to pay the principal sum stipulated in the Note and all other sums which may or shall become due under this EPM or the Note, upon the occurrence of a Maturity Event (the “Maturity Date”), if (a) not otherwise satisfied in accordance with the provisions of this EPM or (b) there is an Event of Default.

2.This EPM secures (a) the repayment of the debt evidenced by the Note; (b) the performance of Borrower’s promises and agreements under this EPM and the Note. For this purpose, Borrower hereby mortgages, warrants, grants, and conveys to Lender a security interest, with power of sale, in the Property;

Together with all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this EPM.

Borrower Covenants that Borrower is lawfully seized of the estate hereby conveyed and has the right to mortgage, grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to any encumbrances of record.

Uniform Covenants

Payment of Principal and Interest.

Upon the occurrence of a Maturity Event, the Borrower hereby promises to pay to the order of the Lender principal based on Initial Equity pursuant to the following schedule:

(A)If the Exit Premium Maturity Event occurs during the period that begins on the date the H4H Mortgage becomes FHA-insured (the “Date of Insurance”) and ends one (1) year after the Date of Insurance, the Borrower shall pay the Lender one hundred percent (100%) of Initial Equity.

(B) If the Maturity Event occurs during the period that begins one (1) year following the Date of Insurance and ends two (2) years after such Date of Insurance, the Borrower shall pay the Lender ninety percent (90%) of Initial Equity.

(C)If the Maturity Event occurs during the period that begins two (2) years following the Date of Insurance and ends three (3) years after such Date of Insurance, the Borrower shall pay the Lender eighty percent (80%) of Initial Equity.

(D)If the Maturity Event occurs during the period that begins three (3) years following the Date of Insurance and ends four (4) years after such Date of Insurance, the Borrower shall pay the Lender seventy percent (70%) of Initial Equity.

(E)If the Maturity Event occurs during the period that begins four (4) years following the Date of Insurance and ends five (5) years after such Date of Insurance, the Borrower shall pay the Lender sixty percent (60%) of Initial Equity.

(F)If the Maturity Event occurs during any period that begins five (5) years following the Date of Insurance, the Borrower shall pay the Lender fifty percent (50%) of Initial Equity.

The Note shall not bear interest unless the principal amount due upon occurrence of a Maturity Event is not paid to Lender. If the principal amount due is not paid, the principal sum due pursuant Paragraph 1 of the Note shall bear interest from the date of the Maturity Event at the rate of the current value of funds to the United States Treasury in effect on the date of the Maturity Event. The current value of funds rate is prescribed and published by the Secretary of the Treasury in the Federal Register and the Treasury Fiscal Requirements Manual Bulletins.