Current through Register Vol. 51, No. 6, March 22, 2024
A. Loan Amount. The loan amount may not exceed the lesser of:
(1) An amount which, when added to the outstanding balance of the superior mortgage lien or liens, does not exceed 100 percent of the value of the eligible residence as determined by the Program, except that in an extraordinary case, approved by written determination of the Director of the Program, the amount may be increased to an amount up to 110 percent of the value of the eligible residence;
(2) The maximum amount for which the borrower is eligible under Regulation .06A;
(3) The amount the borrower reasonably can be expected to be able to afford to repay, in the estimation of the Program; or
(4) The maximum loan amount for the Program, as determined by the Secretary from time to time.
B. Interest Rates. The Secretary, by written determination, shall set an interest rate or rates for Program loans, from time to time, taking into account rates available in the conventional housing market and the household income and assets of the borrowers to be served by the Program.
C. Loan Term. On the stated date for the borrower to begin repayment of the loan, the maximum loan term shall be either 20 years, or, if an appraisal is required, the appraised estimated remaining economic life of the property, whichever is less.
D. Security for Loans.
(1) A loan shall be secured by a mortgage on the property in the form required by the Department which shall be recorded in the land records of the county in which the property is located.
(2) The mortgage securing the Program loan may be subordinate to one or two other mortgage liens if the requirements of Regulation .04C(3) are fulfilled.
E. Late Charges. A late charge, as permitted by law, may be imposed.
F. Prepayment Penalty. A prepayment penalty may not be charged.
G. Insurance.
(1) Hazard Insurance. The borrower shall maintain fire and extended coverage insurance at the borrower's expense in an amount not less than the sum of the loan and any other indebtedness secured by the eligible residence, up to the value of the improvements located on the property.
(2) Flood Insurance. If the improvements are located in a 100-year plain, as designated by the United States Department of Housing and Urban Development, then the eligible residence shall be covered by a flood plain insurance policy in an amount equal to the lesser of the maximum amount of insurance available, or the sum of the loan and any other indebtedness secured by the residence.
(3) Terms and Conditions. Each insurance policy shall meet the following minimum requirements plus any additional requirements which may be set by the Department:
(a) Be written by companies acceptable to the Department;
(b) Be written by companies which are reputable and financially sound, as determined by the Department;
(c) Be in force upon the closing of the loan;
(d) Contain a standard mortgagee endorsement attached to or printed in the policy naming the Department as mortgagee;
(e) Name the Department as loss payee and additional insured;
(f) Provide for notification to the Department before termination; and
(g) Contain terms and coverage satisfactory to the Department.
H. Change of Ownership. The loan shall become due and payable upon the sale or transfer of the real property securing the loan unless the transfer is to a spouse, divorced spouse, or child who resides at the mortgaged property, or the transfer is otherwise in accordance with federal law.
I. Appraisal. The Program may require an appraisal of the eligible residence submitted by an appraiser, and in a form and manner acceptable to the Program. The appraisal may be required to estimate the remaining economic life of the property.
