Principal Amount Advanced and Completion Escrows

The full principal amount of each Mortgage Loan in which MHMFA has purchased a Loan Participation must have been advanced to Borrower, advanced in accordance with the direction of Borrower or placed in a completion escrow account. To the extent that any portion of a Mortgage Loan in which MHMFA purchases a Loan Participation is used to finance rehabilitation or improvement of the property an escrow sufficient to finance the completion of the rehabilitationmust be maintained by the Seller. The completion escrow shall be held in trust for the benefit of Borrower, Seller and MHMFA, until such rehabilitation is completed. The completion escrow account may provide for periodic draws against the escrow as portions of the rehabilitation are completed. Note: Once MHMFA has purchased a Loan Participation, interest at the MHMFA Required Rate must be remitted to MHMFAonthe entire Mortgage Loan including any portion held in a completion escrow. The Seller may (a) pay the payments due MHMFA on the amount held in the completion escrow from the interest or profit earned on the temporary investment of funds in the completion escrow and may charge the Borrower for the difference, if any, between the payment due MHMFA and the interest or profits earned from the temporary investment of funds in the completion escrow, or (b) charge the Borrower for the payments due MHMFA on amounts held in the completion escrows, but then must credit the Borrower with all interest or profit earned from the temporary investment of MHMFA funds held in the completion escrows. The Seller is permitted where appropriate to structure the financing of rehabilitation through the use ofconstructionloans or bridge loans with MHMFA purchasing a loan Participation in a final take-out Mortgage Loan upon completion of rehabilitation. In such cases no completion escrows would be required.