42 U.S.C. § 12808 — Second mortgage assistance for first-time homebuyers

(a) In general: The Secretary must offer a model program where local governments give loans, secured by second mortgages, with deferred interest and principal payments, to first-time homebuyers. (b) Homeownership counseling: The program must provide counseling to assisted first-time homebuyers, covering (1) counseling before and after buying the property, (2) help finding suitable, affordable properties, (3) financial management help, (4) help understanding mortgage transactions and sales contracts, and (5) help fixing credit problems that could block the purchase. (c) Eligibility requirements: A deferred second-mortgage loan may be given if (1) the buyer is a first-time homebuyer, (2) the property is a single-family home and the buyer's main residence, and (3) the loan's principal does not exceed 30% of the buyer's purchase price. (d) Payment terms: (1) Period of deferral — principal and interest payments are deferred for at least 5 years starting when the buyer acquires the residence. (2) Interest rate — the rate on the unpaid balance must be at least 4%. (3) Repayment period — the loan is repaid over 15 years, starting when the deferral period ends. (e) Security: A deferred payment loan under this section must be secured by a lien on the property, and that lien must rank below the first mortgage.