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The Vermont Statutes Online
Title
10
:
Conservation and Development
Chapter
025
:
VERMONT HOUSING FINANCE AGENCY
Subchapter
003
:
POWERS AND DUTIES
§
623. Terms and conditions of the purchase and sale to mortgage lenders of
mortgage loans; loans through mortgage lenders
(a) No mortgage
or other obligation purchased from a mortgage lender shall be eligible for
purchase or commitment to purchase by the agency hereunder unless at or before
the time of transfer thereof to the agency such mortgage lender certifies:
(1) That in its
judgment the loan would in respect of the security therefor be a prudent
investment for its own account;
(2) That the
proceeds of sale or its equivalent shall be reinvested in new mortgage loans on
residential housing for occupancy by persons and families primarily of low and
moderate income within the state, or in loans for the rehabilitation of such
residential housing, which rehabilitation loans need not be secured by a first
mortgage lien, or invested in short-term obligations pending the purchase of
those mortgages, or that the mortgage loans purchased or to be purchased by the
agency are new mortgage loans on residential housing for occupancy by persons
and families primarily of low and moderate income within the state. However,
each such new mortgage loan shall have been initiated for the purpose of sale
to the agency; and
(3) That
mortgage loans or rehabilitation loans made by mortgage lenders from the
proceeds of sale of mortgages to the agency shall bear a rate or rates of
interest less than the prevailing rate of interest on comparable mortgage loans
or rehabilitation loans available in the state without the assistance of the
agency, except when such proceeds arise from the sale to the agency of new
mortgage loans on residential housing for occupancy by persons and families
primarily of low and moderate income within the state.
(b) The agency
shall purchase mortgage loans at a purchase price equal to the outstanding
principal balance thereof. However, a discount from the principal balance or
the payment of a premium may be employed to effect a fair rate of return, as
determined by the rate of return on comparable investments under market
conditions existing at the time of purchase. In addition to the payment of
outstanding principal balance, the agency shall pay the accrued interest due
thereon, on the date the loan or obligation is delivered against payment
therefor.
(c) Loans
purchased or sold hereunder shall consist of federally insured mortgage loans
or loans which are insured, guaranteed or assisted by the state or by an agency
or instrumentality thereof or for which there is a commitment by the United
States or the state or an agency or instrumentality thereof to insure,
guarantee or assist such loan, and other mortgage loans which the agency deems
to be of reasonably comparable security.
(d) The agency
shall from time to time adopt, modify or repeal rules and regulations governing
the making of loans to mortgage lenders and the purchase and sale of mortgage
loans and the application of the proceeds thereof, including but not limited to
rules and regulations as to any or all of the following:
(1) Procedures
for the submission of requests or the invitation of proposals for the purchase
and sale of mortgage loans or for loans to mortgage lenders;
(2) Limitations
or restrictions as to location or other qualifications or characteristics of
residences to be financed from the proceeds of such purchase or loans;
(3) Restrictions
as to the interest rates on loans made from the proceeds of purchase of
mortgage loans or from loans to mortgage lenders or the return realized
therefrom by mortgage lenders;
(4) Requirements
as to commitments by mortgage lenders with respect to the application of the
proceeds of such purchase or loan;
(5) Schedules of
any fees and charges necessary to provide for expenses and reserves of the
agency;
(6) Requirements
and specifications as to recourse; and
(7) Any other
matters related to the duties and the exercise of the powers of the agency
under this section.
(e) The rules
and regulations shall be designed to effectuate the general purposes of this
chapter and the following specific objectives:
(1) the expansion
of the supply of funds in the state available for mortgage loans for
residential housing generally and particularly for occupancy by persons and
families of low and moderate income;
(2) provision
for additional housing or rehabilitated housing needed to remedy the shortage
of adequate housing in the state and to eliminate the existence of a large
number of substandard dwellings; and
(3) the
restriction of the financial return and benefit on mortgage loans for
residential housing for persons and families of low and moderate income to that
level necessary to protect against the realization of mortgage lenders of a
financial return or benefit in excess of prevailing market conditions;
(4) in the case
of mortgage loans secured by cooperative interest in cooperative housing
corporations, to assure that the purchase of such mortgage loans with the
proceeds of bonds of the agency will not, without the consent of the agency,
cause such bonds to be "other than qualified mortgage bonds."
(f) The interest
rates and other terms of loans to mortgage lenders made from the proceeds of
any issue of bonds of the agency shall be at least sufficient so as to assure
the payment, from the amounts received by the agency in repayment of the loans
and interest thereon, of the bonds and the interest thereon as the same become
due, including bonds and the interest thereon issued by the agency to fund
reserves.
(g) The agency
shall require as a condition of each loan to a mortgage lender:
(1) That the
mortgage lender shall on or prior to the 180th day, or such earlier day as
shall be prescribed by rules and regulations of the agency, following the
receipt of the loan proceeds, have entered into written commitments to make,
and shall thereafter proceed as promptly as practicable to make and disburse
from the loan proceeds, mortgage loans on residential housing primarily for
occupancy by persons and families of low and moderate income in an aggregate
principal amount equal to the amount of the loan less any fees and expenses of
the mortgage lender approved by the agency or loans for the rehabilitation of
such residential housing, which rehabilitation loans need not be secured by a
first mortgage lien; and
(2) That
mortgage loans or rehabilitation loans made by mortgage lenders with the
proceeds of a loan to such mortgage lender shall bear a rate or rates of
interest less than the prevailing rate of interest on comparable mortgage loans
or rehabilitation loans available in the state without the assistance of the
agency.
(h) The agency
may require that the loans to mortgage lenders shall be additionally secured as
to payment of both principal and interest by a pledge of and lien upon
collateral security in such amounts as the agency shall by resolution determine
to be necessary to assure the payment of the loans and the interest thereon as
they become due. The collateral security shall consist of:
(1) direct
obligations of, or obligations guaranteed by the United States of America;
(2) obligations,
satisfactory to the agency, issued by any of the following federal agencies:
Bank for Cooperatives, Federal Intermediate Credit Bank, Federal Home Loan Bank
System, Federal Land Banks, the Government National Mortgage Association;
Federal National Mortgage Association; or Federal Home Loan Mortgage
Corporation;
(3) direct
obligations of or obligations guaranteed by the state; or
(4) mortgages
insured or guaranteed as to payment of principal and interest by the United
States of America or an agency or instrumentality thereof or by the state or an
agency or instrumentality thereof;
(5) mortgages
which the agency deems to be of reasonably comparable security. (Added 1973,
No. 260 (Adj. Sess.), § 3, eff. April 11, 1974; amended 1975, No. 14, § 1, eff.
March 17, 1975; 1983, No. 52, § 2, eff. April 23, 1983; 1987, No. 41, § 4;
2005, No. 189 (Adj. Sess.), § 4.)
