Finance
A Minnesota commercial property buyer needs $2,000,000 in financing. The local bank will only lend $1,000,000. The buyer finds a second lender willing to provide the remaining $1,000,000 as a second mortgage. This financing arrangement is called:
ABridge financing
BConstruction financing
CMezzanine financing or secondary financing✓ Correct
DGap financing
Explanation
Using a combination of first and second mortgage financing to meet the full amount needed is called secondary (or mezzanine) financing. The second mortgage lender accepts higher risk (subordinate position) in exchange for higher interest rates. This layered financing structure is common in Minnesota commercial real estate when the primary lender's LTV limits require additional capital.
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