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City of Ramsey <br /> <br />Page Two <br /> <br />With respect to item 4 detailed above, it is very .important to identify who <br />benefits from this tyj.?_ o_f__fi~n,q_n_ij_n~g~_ A]tho. gh a dt've]opment entity is named <br />on (17~:'Off]-c~"~i--Stat,',,ent ,~ the borrower of the 'tax-ex,.rapt financing, it is <br />.tJ?~_p,~r_cJ!;!sers of th~' I~omes (who pay as m,cl.~ as 2Z .less on their mor.tga_g~ <br />.]~.o~.n:s)._wJ!o_.~_rply__.~£.._£f_i~_t b~i the availability of this tax-exempt financings_ <br />The p,-esence of this type of financing is an advantage to a builder in the <br />same.way as a financing commfftment from a conventional lender. The builder <br />earns his proffft from the construction and sale of residential homes, not by <br />directly benefiting from low interest mortgages on the homes he builds. <br /> <br />~ip~n.~jpg~ Be]ow Market Interest Rate (BMIR) Mortgages are made available <br />through the sale of tax-exempt bonds used to form a mortgage pool. This pool <br />is administered by a trustee-who authorizes a qualified originater/servicer to <br />take loan a~plications, process and close loans. Each loan will have either a <br />minffmum of 20% dok~ payment or will have FHA insurance, a VA guaranty, or Private . <br />Mortgage ]nsurance. Other safeguards are also included in the financing to <br />insure that a quality investment grade financing has been created, one which can <br />obtain a minimum rating from Standard & Poor's or Moody's rating services. The <br />bond proceeds will be invested by the trustee until such time when homes are <br /> ~~ <br /> <br />complete and the loan closings take place. Bonds will be paid off over the <br />course of 30 years approximating the same rate that principal is repaid on the <br />home loans. <br /> <br />S~mma~L I repeat that this is an innovative tool available today to generate <br />low interest mortgages in a ~ery'difficult high interest market. As the proceeds <br />will be used exclusively for new construction, I believe it provides a tremendous <br />opportunity for your'community to insure that desirable residential development <br />will cont~.nue. I am hopeful that the City of Ramsey'.s Council will pass the en- <br />closed preliminary resolution so that this proposal might become a reality. <br /> <br />Very truly yours, <br /> <br />PIPER, 0AFFRAY & HOPWOOD INCORPORATED <br /> <br />WEW: cai <br />Eric. <br /> <br />William E. Waldusky <br />Public Finance Department <br /> <br /> <br />