TITLE 42

State Affairs and Government

CHAPTER 42-55

Rhode Island Housing and Mortgage Finance Corporation

SECTION 42-55-6



   § 42-55-6  Powers relative to making loans.

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The corporation shall have all of the powers necessary or convenient to carry

out and effectuate the purpose and provisions of this chapter, including the

following powers in addition to others granted in this chapter:



   (1) Make, undertake commitments to make, and participate in

the making of mortgage loans, including without limitation federally insured

mortgage loans, and to make temporary loans and advances in anticipation of

permanent mortgage loans to housing sponsors or health care sponsors to finance

the construction or rehabilitation of, or installation of energy saving

improvements to, residential housing designed and planned for occupancy

primarily by persons and families of low and moderate income or health care

facilities upon the terms and conditions set forth in § 42-55-9;



   (2) Make, undertake commitments to make, and participate in

the making of mortgage loans to persons of low or moderate income who may

purchase residential housing or who own and occupy residential housing used as

security for loans where the proceeds may be dispersed at such time or times

that the corporation may determine, including without limitation persons and

families of low and moderate income who are eligible or potentially eligible

for federally insured mortgage loans or federal mortgage loans. These loans

shall be made only after a determination by the corporation that mortgage loans

are not otherwise available, wholly or in part, from private lenders upon

reasonably equivalent terms and conditions;



   (3) Make, undertake commitments to make, and participate in

the making of loans to persons of low or moderate income for the purpose of

making energy saving improvements to residential housing. Any loan made

pursuant to this paragraph may be secured by a mortgage or otherwise, shall be

repaid, shall bear interest and shall be upon any terms and conditions that may

be determined by the corporation;



   (4) Make and publish rules and regulations respecting the

grant of mortgage loans pursuant to this chapter, the regulation of borrowers,

the admission of tenants and other occupants to housing developments pursuant

to this chapter, and the construction of ancillary commercial facilities;



   (5) Enter into agreements and contracts with housing sponsors

or health care sponsors under the provisions of this chapter;



   (6) Institute any action or proceeding against any housing

sponsor or health care sponsor or persons and families of low and moderate

income receiving a loan under the provisions hereof, or owning any housing

development hereunder in any court of competent jurisdiction in order to

enforce the provisions of this chapter or the terms and provisions of any

agreement or contract between the corporation and the recipients of loans under

the provisions hereof, or to foreclose its mortgage, or to protect the public

interest, the occupants of the housing development, or the stockholders or

creditors, if any, of the sponsor. In connection with an action or proceeding

it may apply for the appointment of a receiver to take over, manage, operate,

and maintain the affairs of the housing sponsor or health care sponsor and the

corporation, through the agent it shall designate, is hereby authorized to

accept the appointment of the receiver of a sponsor when so appointed by a

court of competent jurisdiction. In the event of the reorganization of any

housing sponsor or health care sponsor to the extent possible under the

provisions of law, the reorganization shall be subject to the supervision and

control of the corporation, and no reorganization shall be had without the

prior written consent of the corporation. In the event of a judgment against

any housing sponsor or health care sponsor in any action not pertaining to the

foreclosure of a mortgage, there shall be no sale of any of the real property

included in any housing development, housing project, or health care facilities

hereunder of a sponsor except upon sixty (60) days' written notice to the

corporation. Upon receipt of that notice, the corporation shall take those

steps that in its judgment may be necessary to protect the rights of all

parties;



   (7) Make, undertake commitments to make, and participate in

the making of mortgage loans to persons of low or moderate income for the

purpose of improving septic systems and wells on their residential property to

substantially comply with standards as set by the department of environmental

management and/or the department of health. Any loan made pursuant to this

subdivision may be secured by a mortgage or otherwise shall be repaid, shall

bear interest, and shall be upon those terms and conditions that may be

determined by the corporation;



   (8) Make and participate in the making of grants to assist in

the construction, rehabilitation, or operation of residential housing;



   (9) Make and publish rules and regulations respecting the

making of grants to assist in the construction, rehabilitation, or operation of

residential housing;



   (10) Provide grants to any existing private nonprofit housing

program sponsor for the following use and purpose:



   (i) Establish or expand an existing revolving loan fund, if

the housing program sponsor matches the funds, those grants not to exceed one

hundred thousand dollars ($100,000).



   (ii) Provided, however, that grants shall not be made more

frequently than once per year and that the grants be made from funds held in

the corporation's reserve fund.



   (iii) In the event that the private non-profit housing

program sponsor should cease its operations, all unexpended funds shall revert

back to the corporation;



   (11) Guaranty "homeowners notes".



   (i) A "homeowners note" is the promissory note secured by a

second mortgage of any eligible home buyer made payable to any person, firm,

corporation or other entity loaning money to the eligible home buyer to

purchase his or her principal residence. The homeowners note shall be in a

form, at an interest rate, in denominations and upon other terms and conditions

established in rules and regulations promulgated by the corporation. Homeowners

notes may be used solely to assist in the financing of the purchase of a

principal residence by eligible home buyers.



   (ii) An eligible home buyer is a first-time buyer (defined as

one who has not had an ownership interest in his or her principal residence for

at least three (3) years) whose current income, as defined by federal

regulation, does not exceed the median family income of Rhode Island residents,

as determined annually by the U.S. Department of Housing and Urban Development.



   (iii) The corporation shall qualify eligible borrowers and

issue a commitment to guaranty the homeowners note upon the terms and

conditions set forth in the commitment. The commitment of guaranty will be

valid for four (4) months after the date of issuance by the corporation.



   (iv) The principal face amount of the homeowners note to be

guaranteed shall be determined by a formula to be developed and recalculated by

the corporation, within thirty (30) days after new figures are determined by

the U.S. Department of Housing and Urban Development, as follows:



   (A) The maximum principal amount for which eligible home

buyers may qualify for a guarantee is twenty percent (20%) of the median home

price in the state of Rhode Island, as determined by the U.S. Treasury

Department.



   (B) The formula shall provide for eligibility by increments

of five hundred dollars ($500) with eligibility being rounded up to the next

increment.



   (C) The formula shall provide that a prospective home buyer's

eligibility shall be for a principal amount determined by multiplying: twenty

percent (20%) of the median home price in the state of Rhode Island times (X)

thrice the percentage by which the home buyer falls below the Rhode Island

median family income, up to the maximum amount for which homeowners are

eligible.



   (v) The guaranty shall become effective at the time of

acquisition of the real estate; provided, that the eligible home buyer has

complied with the terms and conditions of the commitment; the eligible home

buyer has granted to the payee of the note a mortgage on the residence subject

only to a purchase money mortgage and real estate taxes not yet due and

payable; and a confirmed copy of the homeowners note and a certified copy of

the recorded mortgage securing the note has been delivered to the corporation.



   (vi) A homeowners note shall mature at the end of seven (7)

years from the date of endorsement or upon the sale or transfer of the title to

the real estate securing the note, whichever shall first occur. Interest shall

accrue, in arrears, from the date of endorsement and become due and payable at

maturity of the homeowners note.



   (vii) The corporation may promulgate any rules and

regulations as may be necessary to implement the homeowners notes program.



   (12) Establish the Environmentally Compromised Home

Opportunity (ECHO) loan program.



   (i) The corporation may make, undertake commitments to make,

and participate in the making of loans to persons owning residential property,

the value of which has been significantly reduced by contamination.



   (ii) Any loan made pursuant to this paragraph may be made on

properties which have been certified by the department of environmental

management as (a) within the boundaries, or directly abutting a site, known to

be impacted by the release of hazardous materials or petroleum, or (b) within

the boundaries, or directly abutting a site, listed on the National Priorities

List as determined by the federal Comprehensive Environmental Response

Compensation and Liability Act (CERCLA, as may from time to time be amended).



   (iii) Any loan made pursuant to this paragraph may be secured

by a mortgage or otherwise, shall be repaid, shall bear interest and shall be

upon any terms and conditions that may be determined by the corporation; the

principal amount of such loan shall not exceed twenty-five thousand dollars

($25,000), but such loan shall not in any way limit any other loan or grant

assistance which may otherwise be available.



   (iv) The corporation shall have no liability under any

environmental statute or regulation due to any loan made pursuant to this

paragraph.



History of Section.

(P.L. 1973, ch. 262, § 1; P.L. 1975, ch. 128, § 2; P.L. 1980, ch.

167, § 2; P.L. 1982, ch. 295, § 4; P.L. 1984, ch. 332, § 1; P.L.

1987, ch. 287, § 1; P.L. 1987, ch. 373, § 1; P.L. 1988, ch. 437,

§ 3; P.L. 1989, ch. 310, § 3; P.L. 2006, ch. 554, § 1; P.L.

2006, ch. 566, § 1.)