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Regulatory Agreement for Multifamily Housing Projects U.S. Department of Housing And Urban Development Office of Housing Federal Housing Commissioner Under Sections 207, 220, 221(d)(4), 231 and 232, Except Nonprofits Project Number 092 -11264 Mortgagee DOUGHERTY MORTGAGE LLC Amount of Mortgage Note $2,791,100.00 Date As of May 1,2010 Mortgage Recorded State Minnesota Book County Anoka Page Date Concurrently herewith Originally endorsed for insurance under Section 207 pursuant to Section 223(f) This Agreement entered into this as of the 1" day of May, 2010 between LINO LAKES HOUSING LIMITED PARTNERSHIP, a Minnesota limited partnership, whose address is 162 Mississippi River Boulevard South, Suite One, St. Paul, Minnesota 55105, its successors and assigns (hereinafter referred to as "Owners ") and the SECRETARY OF HOUSING AND URBAN DEVELOPMENT and his successors (hereinafter referred to as "Secretary "). In consideration of the endorsement for insurance by the Secretary of the above described note or in consideration of the consent of the Secretary to the transfer of the mortgaged property or the sale and conveyance of the mortgaged property by the Secretary. and in order to comply with the requirements of the National Housing Act. as amended, and the Regulations adopted by the Secretary pursuant thereto, Owners agree for themselves, their successors and assigns. that in connection with the mortgaged property and the project operated thereon and so long as the contract of mortgage insurance continues in effect. and during such further period of time as the Secretary shall be the owner. holder or reinsurer of the mortgage, or during any time the Secretary is obligated to insure a mortgage on the mortgaged property: 1. Owners, except as limited by paragraph 17 hereof, assume and agree to make promptly all payments due under the note and mortgage. 2. (a) Owners shall establish or continue to maintain a separate reserve fund for replacements by the allocation to such reserve fund in a separate account with the mortgagee or in a safe and responsible depository designated by the mortgagee, concurrently with the beginning of payments towards amortization of the principal of the mortgage insured or held by the Secretary of (i) an amount equal to $1,272.92 per month for the reserve for replacements deposit, unless a different date or amount are approved in writing by the Secretary. The amounts of the monthly deposits to the reserve fund for replacements shall be subject to change in accordance with the requirements of the Secretary. In connection therewith. every ten (10) years. the Owners shall obtain a physical and capital needs assessment report (covering a period of at least twelve (12) years or two (2) years beyond the remaining term of the mortgage. whichever is shorter) for the Secretary to evaluate. The cost of such report may be paid from the reserve fund for replacements. In addition to the required monthly deposits to the said reserve funds. the Owners shall make an initial deposit to the reserve fund for replacements in the amount of $128,150.00. Such funds. whether in the form of a cash deposit or invested in obligations of. or fully guaranteed as to principal by, the United States of America shall at all times be under the control of the mortgagee. Disbursements from such fund. whether for the purpose of effecting replacement of structural elements and mechanical equipment of the project or for any other purpose, may be made only after receiving the consent in writing of the Secretary. In the event that the owner is unable to make a mortgage note payment on the due date and that payment cannot be made prior to the due day of the next such installment or when the mortgagee has agreed to forgo making an election to assign the mortgage to the Secretary based on a monetary default. or to withdraw an election already made, the Secretary is authorized to instruct the mortgagee to withdraw funds from the reserve fund for replacements to be applied to the mortgage payment in order to prevent or cure the default. In addition. in the event of a default in the terms of the mortgage. pursuant to which the loan has been accelerated, the Secretary may apply or authorize the application of the balance in such funds to the amount due on the mortgage debt as accelerated. (b) Where Owners are acquiring a project already subject to an insured mortgage, a reserve fund for replacements to be established will be equal to the amount due to be in such fund under existing agreements or charter provisions at the time Owners acquire such project. and payments hereunder shall begin with the first payment due on the mortgage after acquisition, unless some other method of establishing and maintaining the fund is approved in writing by the Secretary. 3. Real property covered by the mortgage and this agreement is described in Exhibit A attached hereto. (This paragraph 4 is not applicable to cases insured under Section 232.) 4. (a) Owners shall make dwelling accommodation and services of the project available to occupants at charges not exceeding those established in accordance with a rental schedule Replaces FHA -2466 which may be used until supply exhausted 370937v1 SJB LN140 -23 Page 1 of 10 Form HUD -92466 (11/2002) ref Handbook 4571.1 • • •