Attachment 1

Model Subordinate Note Form

FHA Case No. _____________

PROMISSORY NOTE
[Date]

[Property Address]

1. PARTIES

“Borrower” means each person signing at the end of this Note, and the person’s
successors and assigns. “Secretary” or “Lender” means the Secretary of Housing and Urban
Development and its successors and assigns.

2. BORROWER’S PROMISE TO PAY

In return for a loan received from Lender, Borrower promises to pay the principal sum of
________________ Dollars (U.S. $________), to the order of the Lender.

3. PROMISE TO PAY SECURED

Borrower’s promise to pay is secured by a mortgage, deed of trust or similar security

instrument that is dated the same date as this Note and called the “Security Instrument.” The
Security Instrument protects the Lender from losses, which might result if Borrower defaults
under this Note.

4. MANNER OF PAYMENT

(A) Time

On , [insert maturity date of insured primary mortgage] or, if earlier,

when the first of the following events occurs:

(i) Borrower has paid in full all amounts due under the primary Note and related
mortgage, deed of trust or similar Security Instruments insured by the Secretary, or

(ii) The maturity date of the primary Note has been accelerated, or

(iii) The primary Note and related mortgage, deed of trust or similar Security
Instrument are no longer insured by the Secretary, or

(iv) The property is not occupied by the purchaser as his or her principal
residence.

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 (B) Place

Payment shall be made at the Office of Housing FHA-Comptroller, Director of

Mortgage Insurance Accounting and Servicing, 451 Seventh Street, SW, Washington, DC
20410 or any such other place as Lender may designate in writing by notice to Borrower.

5. BORROWER’S RIGHT TO REPAY

Borrower has the right to pay the debt evidenced by this Note, in whole or in part,
without charge or penalty. If Borrower makes a partial prepayment, there will be no changes in
the due date or in the amount of the monthly payment unless Lender agrees in writing to those
changes.

6. WAIVERS

Borrower and any other person who has obligations under this Note waive the rights or
presentment and notice of dishonor. “Presentment” means the right to require Lender to demand
payment of amounts due. “Notice of dishonor” means the right to require Lender to give notice
to other persons that amounts due have not been paid.

7. OBLIGATIONS OF PERSONS UNDER THIS NOTE

If more than one person signs this Note, each person is fully and personally obligated to
keep all of the promises made in this Note, including the promise to pay the full amount owed.
Any person who is a guarantor, surety or endorser of this Note is also obligated to do these
things. Any person who takes over these obligations, including the obligations of a guarantor,
surety or endorser of this Note, is also obligated to keep all of the promises made in this Note.
Lender may enforce its rights under this Note against each person individually or against all
signatories together. Any one person signing this Note may be required to pay all the amounts
owed under this Note.

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

___________________________(SEAL)
Borrower

___________________________(SEAL)
Borrower

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Attachment 2
Model Subordinate Mortgage Form

FHA Case No. _____________

PARTIAL CLAIM MORTGAGE

THIS SUBORDINATE MORTGAGE (“Security Instrument”) is given on , 20 .

The Mortgagor is ___________________________________________
Whose address is ___________________________________________
(“Borrower”). This Security Instrument is given to the Secretary of Housing and Urban
Development, and whose address is 451 Seventh Street, SW, Washington, DC 20410
(“Lender”). Borrower owes Lender the principal sum of ________ Dollars (U.S. $_______).
This debt is evidenced by Borrower’s note dated the same date as this Security Instrument
(“Note”), which provides for the full debt, if not paid earlier, due and payable on____________.
This Security Instrument secures to Lender: (a) the repayment of the debt evidenced by the Note,
and all renewals, extensions and modifications of the Note; (b) the payment of all other sums,
advanced under Paragraph 7 to protect the security of this Security Instrument; and (c) the
performance of Borrower’s covenants and agreements under this Security Instrument and the
Note. For this purpose, Borrower does hereby mortgage, warrant, grant and convey to the
Lender, with the power of sale the following described property located in ________ County,
[State]:

which has the address of [Street]

[City],
[State] [Zip Code], (“Property Address”);

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 Security Instrument. All of the foregoing is referred
to in this Security Instrument as the “Property.”

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 or record.

THIS SECURITY INSTRUMENT combines uniform covenants for national use and
non-uniform covenants with limited variations by jurisdiction to constitute a uniform security
instrument covering real property.

Borrower and Lender covenant agree as follows:

UNIFORM COVENANTS.

1. Payment of Principal. Borrower shall pay when due the principal of the debt
evidenced by the Note.
 2. Borrower Not Released; Forbearance By Lender Not a Waiver. Extension of the
time of payment of the sums secured by this Security Instrument granted by Lender to any
successor in interest of Borrower shall not operate to release the liability of the original Borrower
or Borrower’s successor in interest. Lender shall not be required to commence proceedings
against any successor in interest or refuse to extend time for payment or otherwise modify
amortization of the sums secured by this Security Instrument by reason of any demand made by
the original Borrower or Borrower’s successors in interest. Any forbearance by Lender in
exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or
remedy.

3. Successors and Assigns Bound; Joint and Several Liability; Co-signers. The
covenants and agreements of this Security Instrument shall bind and benefit the successors and
assigns of Lender and Borrower. Borrower’s covenants and agreements shall be joint and
several. Any Borrower who co-signs this Security Instrument but does not execute the Note: (a)
is co-signing this Security Instrument only to mortgage, grant and convey that Borrower’s
interest in the Property under the terms of this Security Instrument; (b) is not personally
obligated to pay the sums secured by this Security Instrument; and (c) agrees that Lender and any
other Borrower may agree to extend, modify, forbear or make any accommodations with regard
to the term of this Security Instrument or the Note without that Borrower’s consent.

4. Notices. Any notice to Borrower provided for in this Security Instrument 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: Department of Housing and Urban Development, Attention: Single Family Notes Branch, 451
Seventh Street, SW, Washington, DC 10410 or any address Lender designates by notice to
Borrower. Any notice provided for in this Security Instrument shall be deemed to have been
given to Borrower or Lender when given as provided in this paragraph.

5. Governing Law; Severability. This Security Instrument shall be governed by

Federal law and the law of the jurisdiction in which the Property is located. In the event that any
provision or clause of this Security Instrument or the Note conflicts with applicable law, such
conflict shall not affect other provisions of this Security Instrument or the Note which can be
given effect without the conflicting provision. To this end the provisions of this Security
Instrument and the Note are declared to be severable.

6. Borrower’s Copy. Borrower shall be given one conformed copy of the Note and of
this Security Instrument.

NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as follows:

7. Acceleration; Remedies. [State specific language]

If the Lender’s interest in this Security Instrument is held by the Secretary and the
Secretary requires immediate payment in full under Paragraph 4 of the Subordinate Note, the

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Secretary may invoke the nonjudicial power of sale provided in the Single Family Mortgage
Foreclosure Act of 1994 (“Act”) (12 U.S.C. § 3751 et seq.) by requesting a foreclosure
commissioner designated under the Act to commence foreclosure and to sell the Property as
provided in the Act. Nothing in the preceding sentence shall deprive the Secretary of any rights
otherwise available to a Lender under this paragraph or applicable law.

BY SIGNING BELOW, Borrower accepts and agrees to the terms contained in this
Security Instrument and in any rider(s) executed by Borrower and recorded with it.

Witness:

________________________ _____________________(SEAL)
Borrower

________________________ _____________________(SEAL)
Borrower

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 Instructions for Partial Claim Mortgage
Form

Language Preceding Uniform Covenants

This is a Model Subordinate Mortgage Form. Mortgagees should review this form and make
modifications as needed to fit applicable state and local requirements. Additionally, mortgagees
are encouraged to have their counsel review their subordinate mortgage forms for legal
sufficiency.

Uniform Covenants
Paragraphs 1-6 should have the heading “Uniform Covenants.” The text of these Paragraphs
must be used as presented in the Model Subordinate Mortgage Form without any change. If
change is needed to meet requirements of state or local law, written approval from HUD is
needed before the change is made. Mortgagees may obtain written approval by sending the
proposed modifications in writing to HUD’s loan servicing contractor.

Non-Uniform Covenants
The form should designate the paragraphs beginning with Paragraph 7 “Non-Uniform
Covenants.” Any special language or notices required by applicable law should appear
following the non-uniform covenants provided in the Model.

Signatures
Witness lines may be omitted if state and local law does not require witnesses for mortgages.
HUD does not require the Borrower’s social security number to appear on the mortgage.