This rule was filed as SIC Rule 85-2.
TITLE 2 PUBLIC
FINANCE
CHAPTER 60 INVESTMENT
AND DEPPOSIT OF PUBLIC FUNDS
PART 24 RULES
AND REGULATIONS OF THE NEW MEXICO STATE INVESTMENT
COUNCIL
PERTAINING TO THE THIRD SEVERANCE TAX PERMANENT FUND
SINGLE
FAMILY MORTGAGE POOLING PROGRAM
2.60.24.1 ISSUING
AGENCY: State Investment Council.
[Recompiled 10/1/01]
2.60.24.2 SCOPE: These
rules and regulations apply to the purchase of the conventional mortgage
pass-through certificates in the original amount of up to $87,000,000, reduced
by the principal amount of the certificate authorized by and delivered pursuant
to the council's rule 84-1 [now 2.60.23 NMAC] and by letter agreement of August
29, 1984, as amended. The council's rule 84-1 [now 2.60.23 NMAC] continues to
apply to the purchase of the conventional mortgage pass-through certificate, in
the amount of up to $87,000,000 which was previously authorized by the council.
[Recompiled 10/1/01]
2.60.24.3 STATUTORY
AUTHORITY: These council rules and
regulations are issued under and pursuant to Section 10 of Chapter 306 of the
Laws of 1983 of the state of New Mexico, being Section 7-27-5.3 NMSA 1978, (the
“Pass-through Securities Investment Act”).
[Recompiled 10/1/01]
2.60.24.4 DURATION: [RESERVED]
[Recompiled 10/1/01]
2.60.24.5 EFFECTIVE
DATE: [Filed March 28, 1985]
[Recompiled 10/1/01]
2.60.24.6 OBJECTIVE: These council rules and regulations are
established to effectuate, and shall be applied so as to accomplish, the
general purposes of the Pass-through Securities Investment Act and the
following specific objectives:
A. the expansion of the supply of funds
in the state available for new residential mortgages;
B. promotion of the economic well-being
of the state through increased construction and opportunity for employment;
C. the regulation by the council of the
authority and the mortgage lenders participating in the STM program;
D. the establishment of guidelines by
the council for mortgage loans eligible for inclusion in the mortgage
pass-through security; and
E. the determination of the yield
required to be paid on the mortgage pass-through security pursuant to the
Pass-through Securities Investment Act.
[Recompiled 10/1/01]
2.60.24.7 DEFINITIONS: The following words and terms as used in
these council rules and regulations shall have the following meanings:
A. “Application” shall mean an
application to sell mortgage loans filed by a mortgage lender with the
authority in response to an invitation.
B. “Authority” shall mean the New
Mexico mortgage finance authority, created by the New Mexico Mortgage Finance
Authority Act.
C. “Authority rules and regulations”
shall mean the rules and regulations issued by the authority under and pursuant
to the Mortgage Finance Authority Act, Section 58-18-1, et seq., NMSA
1978, as amended.
D. “Condominiums” shall mean real
estate, portions of which are designated for separate ownership and the
remainder of which is designated for common ownership, as an undivided
interest, solely by the owners of those portions.
E. “Conventional mortgage” shall mean
a mortgage loan which is not guaranteed by the VA or insured by the FHA or the
FmHA.
F. “Council” shall mean the state
investment council of the state acting in connection with the investment of the
state's severance tax permanent fund.
G. “Council rules and regulations”
shall mean these rules and regulations issued by the council under and pursuant
to Section 10 of Chapter 306 of the Laws of 1983 of the state of New Mexico,
being Section 7-27-5.3 NMSA 1978 (the “Pass-through Securities Investment
Act”).
H. “Eligible assumptor” shall mean a
person who meets, at the time the application for assumption of loan is made,
the definition of an eligible mortgagor, and who intends to occupy the single
family residence purchased as his or her principal residence within 30 days
after the closing of the assumption.
I. “Eligible mortgagor” shall mean a
person who is over the age of 18 and a domiciliary of the state, who meets the
credit standards set forth in the guide for servicers.
J. “Family” shall mean a person or a
group of persons, at least one of whom shall be an eligible mortgagor,
consisting of, but not limited to, the head of a household, the spouse, if any,
and children, if any, who are allowable as personal exemptions for federal
income tax purposes.
K. “FDIC” shall mean the federal
deposit insurance corporation.
L. “FHA” shall mean the federal
housing administration.
M. “FmHA” shall mean the farmers home
administration.
N. “FNMA” shall mean the federal
national mortgage association.
O. “FSLIC” shall mean the federal
savings and loan insurance corporation.
P. “Guide for servicers” shall mean
the authority's STM program guide for seller/servicers, as it may be modified
from time to time by the authority.
Q. “Invitation” shall mean the
authority's then current invitation to mortgage lenders for applications to
sell mortgage loans to the authority pursuant to the STM program.
R. “Manufactured housing” shall mean a
modular or pre-manufactured home, built to uniform building code standards,
which is designed to be and, prior to the closing of a mortgage loan on the
home, is, permanently affixed to real property.
S. “Mobile home” shall mean a moveable
or portable housing structure, constructed to be towed on its own chassis and
designed so as to be installed with or without a permanent foundation for
occupancy as a residence and which is not manufactured housing.
T. “Mortgage” shall mean a mortgage,
mortgage deed, deed of trust or other instrument creating a first lien on a fee
interest in real property located within the state.
U. “Mortgage lender” shall mean any
bank, bank or trust company, trust company, mortgage company, mortgage banker,
national banking association, savings bank, savings and loan association, building
and loan association and any other lending institution which meets the
requirements set forth in Section 4 [now 2.60.24.8 NMAC] of the council rules
and regulations.
V. “Mortgage loan” shall mean a
conventional loan:
(1) secured by a mortgage;
(2) made to an eligible
mortgagor to finance the acquisition, construction or rehabilitation of an
owner-occupied single family residence in the state;
(3) the commitment for which
was made by the mortgage lender after the date of submission by the mortgage
lender of its application; and
(4) which meets the
underwriting standards set forth in the guide for servicers. A mortgage loan shall not include a loan the proceeds
of which are used, directly or indirectly, to refinance an existing mortgage
loan or loans for the present mortgagor, unless the primary purpose of such
mortgage loan is to finance the rehabilitation of such single family residence.
W. “Mortgage pass-through security”
shall mean a security issued by the authority in connection with the STM
program representing an undivided interest in a pool of mortgage loans
purchased by the authority pursuant to a notice of acceptance conforming to the
requirements of the Pass-through Securities Investment Act.
X. “NCUAB” shall mean the national
credit union administration board.
Y. “New construction” shall mean a
single family residence that has not been previously occupied.
Z. “Notice of acceptance” shall mean
the authority's notice to the mortgage lender of the acceptance of its
application.
AA. “Owner-occupied” shall mean that the
eligible mortgagor or the eligible assumptor must occupy the single family
residence upon which a mortgage loan is made at the time the mortgage loan is
closed or assumed.
BB. “Pass-through Securities Investment
Act” shall mean Section 10 of Chapter 306 of the Laws of 1983 (being Section
7-27-5.3 NMSA 1978).
CC. “PUD-unit” shall mean a residential
unit within a real estate development of separately owned lots with contiguous
or noncontiguous areas or facilities usually owned by an owners' association in
which the owners of the lots have a stock or membership interest, title to the
real estate under the dwelling units being held by the association, and
membership in the owners' association may not be severed from the ownership of
individual units.
DD. “Rehabilitation” shall mean substantial
renovation or reconstruction, including an increase of living area, of an
existing single family residence, for example, to put such residence in a
decent, safe and sanitary condition or to cause such single family residence to
comply with applicable building codes, and shall not include routine or
ordinary repairs, improvements or maintenance, such as interior decorating,
remodeling or exterior painting, except in conjunction with other substantial
renovation or reconstruction.
EE. “Residential use” shall mean that the
structure is designed primarily for use as the principal residence of the occupant
and shall exclude vacation or “second” homes.
Portions of the structure designed or used for nonresidential purposes
shall not exceed ten percent of the usable square feet of the structure.
FF. “Seller” shall mean the immediate past
owner of the single family residence.
GG. “Severance tax permanent fund” shall
mean the fund created pursuant to Section 7-27-3 NMSA 1978.
HH. “Single family residence” shall mean
real estate or an interest therein in the state upon which is located or is to
be constructed or located a structure or structures designed for residential
use and consisting of a residence for one family, provided that the owner or
owners of such structure or structures occupy such residence as their principal
residence, and includes a condominium unit or units.
II. “State” shall mean the state of New
Mexico.
JJ. “STM program” shall mean the
severance tax permanent fund single family mortgage pooling program authorized
by this rule 85-2 [now 2.60.24. NMAC].
KK. “IVA” shall mean the veterans'
administration.
LL. “Zero lot line homes” shall mean a
series of individual residences having architectural unity and a common wall
within each unit.
[Recompiled 10/1/01]
2.60.24.8 REQUIREMENTS
FOR MORTGAGE LENDERS: A mortgage lender which desires to
participate in the STM program shall meet the following criteria:
A. If a commercial bank, its deposits
must be insured by FDIC; if a savings institution, its deposits must be insured
by FSLIC; and if a credit union, its deposits must be insured by NCUAB.
B. A mortgage lender must be approved
by the FHA and VA to make FHA or VA loans.
C. A mortgage lender must demonstrate
experience or expertise as determined by the authority in selling mortgage
loans in the secondary market.
D. A mortgage lender must have a net
worth of at least $250,000, and
E. A mortgage lender originating
mortgage loans for the STM program must have its principal office in the state,
and be authorized to initiate mortgages in the state.
[Recompiled 10/1/01]
2.60.24.9 ALLOCATION
OF FUNDS TO MORTGAGE LENDERS:
A. Funds available to the authority by
reason of the sale of its mortgage pass-through securities shall be allocated
by the authority based upon instructions from the council among eligible
mortgage lenders submitting applications.
A preference will be given to mortgage lenders who participated in the
program authorized by the council's rule 84-1 [now 2.60.23 NMAC] (the “STM II
program”) in an amount equal to such mortgage lender's undelivered commitment
under the STM II program. If any funds
remain available after mortgage lenders with an available preference have
received allocations, then the allocation of such available funds shall be
based on the following criteria:
(1) the financial condition of
the mortgage lenders submitting applications;
(2) the amount of residential
mortgage loans made in the state by each mortgage lender submitting
applications during a 24-month period preceding the date of the application;
(3)
the aggregate principal balances of mortgage loans offered for sale by
each mortgage lender compared with the aggregate principal balances of mortgage
loans offered for sale by all mortgage lenders;
(4) the aggregate principal
balances of mortgage loans for new construction offered for sale by each mortgage lender compared with the aggregate
principal balances of mortgage loans for new construction offered for sale by
all mortgage lenders;
(5) the authority's assessment
of the ability of the mortgage lender or its designated servicer to act as
servicer of mortgage loans to be sold to the authority based upon, among other
things, the experience of the mortgage lender or its designated servicer in the
secondary mortgage market;
(6) equitable geographic
distribution of the funds throughout the state, with an emphasis on broad
geographic locations served;
(7) the mortgage lenders'
abilities to deliver allocations, evaluated on the basis of prior performance
in any previous STM program; and
B. The council, or its designee, shall
instruct the authority as to specific allocations of funds to individual
mortgage lenders. These specific
allocations shall be based upon the applications submitted by mortgage lenders,
as well as other information available to
the council and the authority which is pertinent to the criteria set forth in
this section. Allocations of funds by
the council and authority shall be conclusive.
[Recompiled 10/1/01]
2.60.24.10 OBLIGATIONS
OF THE AUTHORITY: With respect to
the STM program, the authority shall comply with the requirements set forth in
this section as well as any other requirements which may be adopted from time
to time by the council to ensure the continuity and efficacy of the STM
program. The authority shall, through
regulation or some other means:
A. provide that at least 60 percent of
the initial aggregate principal balances are earmarked for mortgage loans for
new construction and the authority may not accept deliveries from mortgage
lenders of mortgage loans not for new construction in excess of 40 percent of
the total aggregate allocations; prior to the time that mortgage lenders
deliver the entire total allocation, the issuance by the authority of the
mortgage pass-through security, and the purchase of such security by the
council, consisting of the mortgage loans already delivered, will comply with
the requirements of the Pass-through Securities Investment Act;
B. provide that a fixed limit will be
set on any pre-arranged commitments for new construction by mortgage lenders to
builders or developers;
C. maintain a permanent manned office
in New Mexico;
D. provide that interest rate subsidy
plans be limited to buydowns and pledged accounts during the first three years
of the mortgage loan;
E. provide that re-financings of an
existing mortgage loan or loans for the present mortgagor shall not be included
in the STM program, except in the case of a rehabilitation of a single family
residence, or to replace construction or bridge financing;
F. provide that no loans on mobile
homes may be purchased by mortgage lenders for sale to the authority, however
the authority may consider purchasing mortgage loans on manufactured housing;
G. provide that no more than 50 percent
of the aggregate value of the mortgage loans may be on condominiums, pud-units and zero lot line homes;
H. provide that each mortgage loan to
be included in the mortgage pass-through security be made on an owner-occupied
single family residence;
I. provide that all mortgage loans
issued pursuant to the STM program shall be sold to the authority within nine
months of receipt by the mortgage lender of notice, of acceptance from the
authority.
[Recompiled 10/1/01]
2.60.24.11 REQUIREMENTS
FOR MORTGAGE LOANS: All mortgage
loans which are included in any mortgage pass-through security purchased by the
council shall contain the following minimum criteria:
A. be originated by a qualified
mortgage lender;
B. be secured by a single family
residence;
C. be a conventional mortgage;
D. have a maximum term which shall not
be greater than thirty years and a minimum term which shall not be less than
twenty years;
E. be made to an eligible mortgagor;
F. contain no prepayment penalties;
G. be assumable by an eligible
assumptor, if the single family residence will be owner-occupied after
assumption and the eligible assumptor meets the applicable underwriting
criteria;
H. not exceed the dollar limit for FNMA approved mortgages, as
in effect at the time the loans are originated;
I. have a maximum loan-to-value ratio
of 80 percent, however mortgage loans with loan-to-value ratios of up to and
including 95 percent may be, considered for inclusion if such mortgage loans
are subject to primary mortgage insurance in an amount sufficient to provide
that the uninsured portion of the mortgage loan does not exceed 72 percent of
the value of the property;
J. permit the mortgage lender to
charge, as an origination fee, no
more than 2 percent of the amount of the mortgage loan, to be allocated between
the eligible mortgagor and the seller; and
K. such other requirements that an
independent nationally recognized bond rating service would require to give a
sescurity purchased under the “Pass-through Securities Investment Act” a AA
rating or higher.
[Recompiled 10/1/01]
2.60.24.12 FEES
AND CHARGES:
A. A commitment fee or fees shall be
established and collected by the authority from each mortgage lender filing an
application in such amount or amounts as the authority may deem
appropriate. All or a portion of the
commitment fee shall be nonrefundable.
The commitment fee or fees may be used for, among other purposes,
reimbursing the authority for all or part of the reasonably-expected
administrative costs incurred by the authority in connection with the issuance
of the mortgage pass-through securities and the administration of the STM
program.
B. The authority may retain the
difference between the interest rate on the mortgage loan and the face rate of
the mortgage pass-through security to be purchased by the council, as
established by the purchase agreement between the council and the authority,
for its reasonably expected costs of acting as the master servicer for the
mortgage pass-through security and to compensate lending institutions which act
as sub-servicing agents of the authority.
C. The authority may establish such
other charges, premiums and penalties as it shall deem to be necessary in
connection with the administration of the STM program.
[Recompiled 10/1/01]
2.60.24.13 YIELD
TO SEVERANCE TAX PERMANENT FUND: The
yield to the severance tax permanent fund on the mortgage pass-through security
purchased by the council pursuant to the provisions of the Pass-through Securities
Investment Act shall be set from time to time by the council in accordance with
the Pass-through Securities Investment Act.
[Recompiled 10/1/01]
2.60.24.14 AMENDMENT
OF COUNCIL RULES AND REGULATIONS:
The council rules and regulations may be amended by the council at any
time and from time to time.
[Recompiled 10/1/01]
HISTORY OF 2.60.24 NMAC:
Pre-NMAC History: The
material in this part was derived from that previously filed with the State
Records Center and Archives:
85-2, Rules and Regulations of the New Mexico State
Investment council Pertaining to the Third Severance Tax Permanent Fund Single
Family Mortgage Pooling Program, 3/28/85.
History of Repealed Material: [RESERVED]
