§623. Terms and conditions of the purchase and sale to mortgage lenders of mortgage

Link to law: http://legislature.vermont.gov/statutes/section/10/025/00623
Published: 2015

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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.)
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