80-003 Code Vt. R. 80-140-003-X - LOANS-SINGLE FAMILY MORTGAGE

Section 1 Authority

These Rules and Regulations are issued under and pursuant to the authority granted to Vermont Housing Finance Agency by 10 V.S.A. § 622 and § 623.

Section 2 Purpose and Objectives

These Rules and Regulations are established to effectuate, and shall be applied so as to accomplish, the general purposes of the Vermont Housing Finance Agency Act to promote the expansion of the supply of funds in the State available for mortgages on residential housing and to encourage an adequate supply of safe and decent housing at reasonable costs.

Section 3 Definitions

(1) Unless a different meaning is required from the context in which they are used herein, all words and terms which are defined in the Vermont Housing Finance Agency Act are used in these Rules and Regulations as defined in the Act.

(2) Subject to the provisions of subsection 3(1) above, the following words or terms as used in these Rules and Regulations shall have the following meanings:

(a) "Act" shall mean the Vermont Housing Finance Agency Act, 10 V.S.A., Chapter 25, as amended.

(b) "Developmentally Disabled" means a person with a developmental disability as defined in 42 U.S.C. Sec. 6001.

(c) "Elderly" means a person aged 62 or older or the spouse of such person.

(d) "Forward Commitment Mortgage Loan" means Mortgage Loans made by a Mortgage Lender to Persons and Families of Low and Moderate Income after the execution of a Mortgage Loan Purchase Agreement and pursuant to the terms thereof.

(e) "Group Home" means a residential housing unit intended to house three or more elderly, handicapped or developmentally disabled residents (plus a supervisor's apartment, if provided) in a family-style household.

(f) "Handicapped Person" means any person who has a physical or mental impairment which substantially limits one or more major life activities, such as caring for one's self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning and working.

(g) "Loan-to-Value Ratio" means the ratio at the time of purchase of a Qualified Mortgage Loan by the Agency of the outstanding principal amount of the principal of the Qualified Mortgage Loan to (i) the value of the mortgaged property as determined by a Qualified Appraiser or (ii) the purchase price of the mortgaged property, whichever is lower.

(h) "Mortgage Loan Application and Commitment" means the application of a Mortgage Lender to the Agency for the sale of Qualified Mortgage Loans to the Agency constituting a binding commitment for such sale by the Mortgage Lender.

(i) "Mortgage Loan Purchase Agreement" means an agreement and between the Agency and a Mortgage Lender providing for the sale of Qualified Mortgage Loans to the Agency pursuant to a Mortgage Loan Application and Commitment.

(j) "Mortgage Loan Servicing Agreement" means an agreement by and between the Agency and Mortgage Lender providing for the servicing of Qualified Mortgage Loans by such Mortgage Lender under which Qualified Mortgage Loans are purchased by the Agency pursuant to a Mortgage Loan Purchase Agreement.

(k) "Persons and Families of Low and Moderate Income" includes persons and families so defined from time to time by the Agency for purposes of its single-family programs, having due regard for changing economic conditions and the criteria set forth in 10 V.S.A. § 601(11).

(l) "Portfolio Mortgage Loan" means Mortgage Loans made prior to the execution of a Mortgage Loan Purchase Agreement for the purchase or refinancing of residential housing whether or not for occupancy by Persons and Families of Low and Moderate Income in the State of Vermont made prior to the execution of a mortgage purchase agreement havingthe reinvestment requirements stated herein.

(m) "Qualified Appraiser" means a person licensed by the State of Vermont as an appraiser of real estate.

(n) "Qualified Mortgage Loan" means a Mortgage Loan insured or guaranteed pursuant to Qualified Mortgage Loan Enabling Legislation, or a Mortgage Loan insured by a private mortgage loan insurance company approved by the Agency pursuant to a policy of insurance which meets the security requirements of the Act as determined by the Agency, or an uninsured and non-guaranteed Mortgage Loan, provided that the outstanding principal amount of such Mortgage Loan is not greater than seventy-five percent (75%) of the value of the mortgaged property at the timee of purchase of the Mortgage Loan by the Agency.

(o) "Qualified Mortgage Loan Enabling Legislation" means the National Housing Act of 1949, being Public Law 479, 73rd Congress, 48 Stat. 12 U.S.C. 1701 et. seq. in the case of Mortgage Loans insured by the Federal Housing Administration; the Servicemen's Readjustment Act, being Title 38 of U.S.C., Section 1801 et. seq., in the case of Mortgage Loans guaranteed by the Veterans Administation; the Farmers Home Administration Act, being 42 U.S.C. 1471, in the case of Mortgage Loans insured by the Farmers Home Administration; and the Vermont Housing Finance Agency Act, being Title 10, Vermont Statutes Annotated, Chapter 18, in the case of Mortgage Loans guaranteed by the Vermont Home Mortgage Guarantee Board or its predecessor, Vermont Home Mortgage Credit Agency.

(p) "Qualified Private Mortgage Insurer" means an insurer qualified to do business in the State of Vermont and qualified to provide insurance on mortgages purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.

(q) "Rehabilitation Mortgage Loan" means a loan made to the present or intended occupant of Residential Housing by a Mortgage Lender for the rehabilitation, improvement and repair of residential housing and facilities incidental thereto undertaken primarily to provide Residential Housing located in the State.

(t) "Residential Housing" means single or multifamily residential housing units comprised of not more than four such units designed and used primarily to provide the principal dwelling accommodations for persons or families, including the land and improvements thereon.

(u) "State" means the State of Vermont.

(v) "Value" means the lower of the purchase price or appraised value as determined by a Qualified Appraiser.

Section 4 Program

(a) These Rules and Regulations are adopted to provide for the Agency's program of purchasing Portfolio Mortgage Loans and Forward Commitment Mortgage Loans from Mortgage Lenders.

(b) All Mortgage Loans purchased pursuant to this program shall be Qualified Mortgage Loans.

(c) No Portfolio Mortgage Loans shall be purchased by the Agency unless the Mortgage Lender selling such Mortgage Loan agrees in writing that the proceeds of sale or its equivalent shall be reinvested in New Mortgage Loans on Residential Housing for occupancy by Persons and Families of Low and Moderate Income within the State, or in Rehabilitation Mortgage Loans, which Rehabilitation Loans need not be secured by a first mortgage lien.

(d) No Forward Commitment Mortgage Loan shall be purchased by the Agency unless the Mortgage Loan is made to a Person or Family of Low and Moderate Income, or to a sponsor of a Group Home for the Elderly, Handicapped, or Developmentally Disabled.

(e) Forward Commitment Mortgage Loans and the new Mortgage Loans made by the Mortgage Lender from the reinvestment of proceeds of Portfolio Mortgage Loans as required by Paragraph (c) of this Section shall bear an interest rate below the prevailing interest rate on comparable mortgage loans or rehabilitation loans without the assistance of the Agency.

(f) At or before the time of Closing of the purchase of Mortgage Loans by the Agency, the Mortgage Lender will certify that in its judgment the Mortgage Loan would in respect of the security therefor be a prudent investment for its own account.

(g) The Agency may charge an application fee to be paid by the Mortgage Lender at the time of submission of the Mortgage Loan Application and Commitment, an Agency fee at the time of execution of the Mortgage Loan Purchase Agreement, an Agency fee at the time of delivery of the Mortgage Loans by the Mortgage Lender to the Agency, and/or an annual or other periodic program participation fee.

(h) Forward Commitment Mortgage Loans and the new Mortgage Loans made by the Mortgage Lender from the reinvestment of proceeds of Portfolio Mortgage Loans as required by Paragraph (c) of this Section shall be evidenced by mortgages on forms prepared by or approved by the Agency.

Section 5 Private Mortgage Insurance

Any private mortgage loan insurance company insuring a Qualified Mortgage Loan shall be a Qualified Private Mortgage Insurer. The Agency shall not purchase a Qualified Mortgage Loan insured by a Qualified Private Mortgage Insurer unless the amount of coverage provided for in the policy is at least equal to that portion of the outstanding principal balance of the loan which exceeds seventy-five percent (75%) of the Value of the mortgaged property at the time the Mortgage Loan was made.

Section 6 Procedure

The Agency shall mail a Mortgage Loan Application and Commitment to Mortgage Lenders requesting the same at least seven (7) days in advance of the date all such Mortgage Loan Applications and Commitments must be submitted to the Agency so as to be considered for an allocation of funds, if any. The Mortgage Loan Application and Commitment shall be in the form prescribed by the Agency.

Section 7 Allocation

To the extent that the amounts of the Mortgage Loans proposed to be sold by Mortgage Lenders exceeds the amount of the funds available therefor, funds may, but need not, be allocated by the Agency pro rata, as nearly as practicable, among Mortgage Lenders submitting Mortgage Loan Applications and Commitments therefor, provided however, in making such allocation the Agency may take into consideration proposed maturities and interest rates on the Mortgage Loans, the need for Mortgage Loans in the proposed geographical area to effectuate the public purpose stated in the Act and the capabilities of the Mortgage Lender to act as a servicer. The Agency may also allocate funds on a first-come-first-served basis as reservation requests are submitted by Mortgage Lenders based on actual loan applications by prospective mortgagors.

Section 8 Interest Rate and Other Terms of Mortgage Loan

Mortgage Loans shall bear interest at a rate which shall produce an Adjusted Yield on the Mortgage Loans which shall not exceed the maximum Adjusted Yield permitted in order to prevent Bonds or the Agency from being "Arbitrage Bonds" within the meaning of applicable regulations of the U.S. Treasury Department, but shall otherwise be established by agreement between the Agency and Mortgage Lenders.

Section 9 Supervening Requirements of Federal Law

9.1 Application of this Section

This Section 9 shall apply to any Mortgage Loan to be financed from the proceeds of any Qualified Mortgage Bond, as that term is defined in Section 143 of the Federal Internal Revenue Code of 1986, as the same may be amended or redesignated from time to time (the "Federal Act") and regulations adopted pursuant thereto, as the same may be amended or redesignated from time to time (the "Federal Regulations").

9.2 Controlling Effect of Federal Law

To the extent that the Federal Act or the Federal Regulations are inconsistent with or more restrictive than the provisions of Sections 1 through 8 of these Rules and Regulations, the Federal Act and the Federal Regulations shall control and govern.

9.3 Consistency with Statutory Authority

A decision by the Agency to issue any Qualified Mortgage Bond shall constitute a determination by the Agency that any action required of it under the Federal Act or the Federal Regulations is within the limits or the authority granted to it under the Act.

Notes

80-003 Code Vt. R. 80-140-003-X

Effective Date: May 27, 1982 (Secretary of State Rule Log # 82-20)
AMENDED: March 1, 1995 (Secretary of State Rule Log # 95-15)