Regarding Employee Retirement System (ERS) mortgage loans, what is a requirement if the unit is on leased land?

The correct requirement concerning mortgage loans from the Employee Retirement System (ERS) when the unit is on leased land is that the term of the lease must exceed the term of the loan by at least ten years. This stipulation ensures that the borrower has a secure and prolonged occupancy right over the property, which is critical when financing a home on leased land.

Leasing land, as opposed to owning it outright, introduces complexities regarding ownership and use. If the lease were to expire before or shortly after the loan term, the lenders would face significant risks, including the possibility that the borrower could lose their right to the property, thereby affecting the security of the loan. By requiring that the lease term exceeds the loan term by a minimum of ten years, the ERS creates a buffer zone that protects both the borrower and the lender.

This requirement is rooted in the nature of mortgage securities and the necessity for stability and predictability in real estate financing. It reassures lenders that their investment will remain secure for a sufficient period, thereby facilitating lending in situations where the land may not be owned outright.