Epic Associates 84-III, William C. Griffith, Jr. - Page 148




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             of its mortgages to 95 percent in order to help carry the                
             properties.  For the same reason, EPIC's management wanted               
             the loans to be nonrecourse.                                             
                  EPIC found that lenders in the secondary mortgage                   
             market would purchase such loans if the lender's risk,                   
             taking private mortgage insurance into account, was no                   
             greater than 72 percent of the loan.  Thus, in the case of               
             a 95-percent loan, for example, a secondary lender would                 
             require mortgage insurance of at least 25 percent.  In the               
             case of a 90-percent loan, a secondary lender would require              
             mortgage insurance of at least 20 percent, and so on.                    
             Through negotiation, EPIC found that private mortgage                    
             insurance companies were willing to insure nonrecourse                   
             mortgages on residential properties.  As a result of                     
             negotiations with secondary lenders and private mortgage                 
             insurers, EPIC's management found that it could obtain                   
             95-percent nonrecourse financing on single-family houses                 
             and condominiums owned by its investment partnerships.                   
             Finally, EPIC's management found that investors were                     
             willing to purchase interests in the new partnerships                    
             for roughly one-half of the anticipated tax losses; i.e.,                
             a 2-to-1 ratio.  The new partnerships were known internally              
             to EPIC's management as "tax partnerships" to distinguish                
             them from the earlier "income partnerships".                             






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