; (H) the instrument shall require payments to first be due after the end of the 2-year period beginning on the earlier of— (i) the date on which all funds in the account described under subparagraph (B) have been drawn down by the borrower; or (ii) the end of the 1-year period beginning on the date the purchase is made; (I) the instrument shall fully amortize over the 7-year period beginning on the date payments are first due; (J) the instrument shall require immediate redemption if there is more than a 50 percent change in the ownership of the borrower, except via death, compared to the date on which the instrument is purchased; (K) the instrument shall be approved in advance by the Secretary; and (L) the proceeds from such purchase may be used for— (i) expenses of the parent company related to the administration of oversight of such borrower, ownership or operation of such borrower, or to a subsidiary entity of the parent company for same or similar expenses; (ii) the benefit and operation of the property securing the commercial mortgage; (iii) payments of the preferred equity interest, including payments for principal, interest, insurance, taxes, utilities, fees, operating expenses, and payroll expenses; and (iv) lender-required reserves such as capital expenditure reserves. (2) Failure to make payments (A) In general If a borrower fails to make payments due on a preferred equity instrument, the purchase of which is guaranteed under this section— (i) during the first year in which payments are due, the interest rate on the instrument shall increase to 3.5 percent for the remainder of the loan, beginning at the end of the first year; (ii) during the second year in which payments are due, the interest rate on the instrument shall increase to 4.5 percent for the remainder of the loan, beginning at the end of the second year; (iii) during the third year in which payments are due, the interest rate on the instrument shall increase to 5.5 percent for the remainder of the loan, beginning at the end of the third year