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2.60.23NMAC


Published: 2015

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This rule was filed as SIC Rule 84-1.

 

TITLE 2                 PUBLIC

FINANCE

CHAPTER 60       INVESTMENT

AND DEPOSIT OF PUBLIC FUNDS

PART 23               RULES

AND REGULATIONS OF THE NEW MEXICO STATE INVESTMENT

                                COUNCIL

PERTAINING TO THE SEVERANCE TAX PERMANENT FUND SINGLE

                                FAMILY

MORTGAGE POOLING PROGRAM

 

2.60.23.1               ISSUING

AGENCY:  State Investment Council.

[Recompiled 10/1/01]

 

2.60.23.2               SCOPE:  [RESERVED]

[Recompiled 10/1/01]

 

2.60.23.3               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").  These rules and regulations apply to the

purchase of the conventional mortgage pass-through certificate in the original

amount of up to $87,000,000 authorized by the council by letter of August 29,

1984 or later.  The council's rule 83-1

[repealed] continues to apply to the purchase of the conventional mortgage

pass-through certificate, in the amount of up to $100,000,000 previously

authorized by the council.

[Recompiled 10/1/01]

 

2.60.23.4               DURATION:  [Permanent.]

[Recompiled 10/1/01]

 

2.60.23.5               EFFECTIVE

DATE:  [Filed August 31, 1984]

[Recompiled 10/1/01]

 

2.60.23.6               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]

 

2.60.23.7               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.            "Ccouncil 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.            "FMNA" 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 Section 2.60.23.8 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.

                KK.         "VA" 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]

 

2.60.23.8               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]

 

2.60.23.9               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. 

The allocation 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 the STM program; and

                   

(8)     the minimum allocation to

any mortgage lender shall be $500,000.

                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]

 

2.60.23.10             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]

 

2.60.23.11             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 freely assumable by an eligible

assumptor, if the single family residence will be owner-occupied after

assumption;

                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

security purchased under the "Pass-through Securities Investment Act"

a AA rating or higher.

[Recompiled 10/1/01]

 

2.60.23.12             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.  A portion of the commitment

fee shall be non-refundable.  The

commitment fee or fees may be used for, among other purposes, reimbursing the

authority for all or part of its reasonably-expected administrative costs of

issuing the mortgage pass-through securities and of administering 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]

 

2.60.23.13             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]

 

2.60.23.14             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 2.60.23 NMAC:

Pre-NMAC History:  The

material in this part was derived from that previously filed with the State

Records Center and Archives:

Rule 84-1, Rules and Regulations of the New Mexico State

Investment Council Pertaining to the Severance Tax Permanent Fund Single Family

Mortgage Pooling Program, 8/31/84.

 

History of Repealed Material:  [RESERVED]