Note 3 - Mortgage Note Receivable

9 Months Ended

Sep. 30, 2015

Notes

Note 3 - Mortgage Note Receivable

Note 3 – Mortgage Note Receivable

On May 30, 2006, the Partnership purchased the second mortgage for a Local Partnership, Michigan Beach, from the second mortgage holder, PAMI Midatlantic, LLC (“PAMI”) for a purchase price of $4,320,000. The second mortgage had a principal balance of approximately $3,596,000 and accrued interest outstanding at the time of the purchase.

PAMI had filed an action for foreclosure and the appointment of a receivor for the alleged failure to make surplus cash payments and provide required financial reporting. As a result of the purchase, the Partnership was substituted in place of PAMI in the foreclosure action and then the Partnership dismissed the foreclosure action with prejudice on June 9, 2006. The Partnership is the sole limited partner in Michigan Beach.

The second mortgage accrues interest at a fixed rate of 6.11%. Semiannual payments from 50% of surplus cash are required and the note matures in July of 2031. There is an option to the noteholder to accelerate maturity of the second mortgage after October of 2008. Proceeds from the sale of the Partnership were used to pay off the loan in August 2015. The Partnership recorded its mortgage note receivable at the impaired balance of $3,478,000 at December 31, 2014. With respect to the second mortgage from Michigan Beach, the Partnership had fully reserved any accrued interest.