My 80/17 loan has a CalSTRS deferred second mortgage. How does that work?
The answer above is accurate regarding the 17% 2nd mortgage. I just want to add that after 5 years, the deferred 17% 2nd mortgage will have grown a lot, plus the repayment is amortized over 25 years which makes it almost feel like an adjustable rate mortgage.
Borrowers are seeing their CalTSRS mortgge payment rise $200-$600/month because of the 2nd mortgage now hitting repayment.
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The CalSTRS 80/17 Program has two Notes and two Deeds of Trust. The 17% second mortgage has a 30 year term that is deferred for a five year period. During this five year period, no payments are required on the second mortgage. At the beginning of the sixth year, monthly payments on the second mortgage will begin. The payment amount is based on the principal balance plus the simple interest that accrued on the second mortgage during the first five years.
