Current through Register Vol. 35, No. 18, September 24, 2024
C.
The loan participation agreement shall contain the following:
(1) the names and addresses of all parties
participating in the project by making a contribution of funds to the loan
pool; and
(2) recitals of the
project, definitions, and
(3) a
statement specifying the parties' respective percentages of financial
participation or "share" in the loan pool, such participation shall be
described as a "sale of participation" in the loan or loan subsidy by each
party; and
(4) a statement
describing the manner in which HPL funds will be contributed to the loan pool;
the lending institution shall notify the division that according to the
schedule for disbursements of loan funds to the borrower, a contribution of HPL
funds into the loan pool is necessary; the division shall make an appropriate
request to the department of finance and administration and the state
treasurer's office to effect a contribution of HPL funds into the loan pool;
and
(5) a statement that upon
deposit of the HPL contribution to the loan pool, the HPL contribution shall
accrue interest at the rate of three percent per annum; and
(6) a statement that the lending institution
shall disburse loan funds to the borrower in at least five separate
installments and as provided in Subsection B of 4.10.2.8 NMAC herein;
and
(7) a statement that the
division shall establish an inspection schedule relating to the purposes and
goals of the Historic Preservation Act, authorized uses of the HPL
contributions, and compliance with the development agreement and preservation
covenants and deed restrictions and the secretary's standards; and
(8) a statement that provides that the
lending institution shall establish an inspection schedule relating to
construction progress; and
(9) a
statement that provides that HPL contributions that are not disbursed to the
borrower, as provided in Subsection B of 4.10.2.8 NMAC herein, shall be
returned by the lending institution to the division; and
(10) a statement describing the rates of
interest charged to the borrower for the loan or loan subsidy attributable to
each party who contributed to the loan pool, including the rate charged on the
HPL contribution as stated in Section
18-6-23 NMSA
1978, and other rates charged on funds contributed by the lending institution;
and
(11) a statement indicating the
combined interest rate of the loan or loan subsidy; and
(12) a statement describing the
administration of the loan pool by the lending institution, including that the
lending institution shall:
(a) receive and
deposit the HPD contributions into the loan pool and, within five working days
after receipt of a payment from the borrower, transfer to the division its
share of any collections, including interest due to the division; and
(b) service and manage the loan or loan
subsidy and collateral according to customary and prudent lending
practices;
(c) be responsible for
all aspects of loan origination, servicing, collections, and security;
and
(d) document the loan or loan
subsidy in the form a promissory note, loan agreement, mortgage and other
security agreements(s) that may be required by the lending institution;
and
(e) require that the promissory
note, mortgage and other loan documents provide that events of default include
the borrower's failure to make timely payments of amounts due under the loan or
loan subsidy, comply with the secretary's standards, or comply with the
development agreement and preservation covenants and deed restrictions;
and
(f) ensure that the original
priority of the mortgage extends to each subsequent disbursement of loan
proceeds to the borrower; and
(g)
provide the division with copies of all documents pertaining to the loan or
loan subsidy; and
(h) monitor the
borrower's maintenance of any insurance required on the collateral, payment of
all taxes, fees and other charges assessed or otherwise imposed upon the
collateral; and
(i) promptly notify
the division of any event of default existing for more than thirty days, and of
other significant information relating to the loan; and
(j) upon notification of a default, consult
with the division as to the appropriate course of action and take such agreed
upon action with the prior written approval of the division; and
(13) a statement that the lending
institution shall execute and deliver satisfactions, endorsements, receipts,
discharges or releases as may be necessary in the proper serving and collection
of the loan or loan subsidy; the lending institution shall not modify or
supplement any documents associated with the loan or loan subsidy, agree to any
extension of time or waiver or forgiveness of debt, take or permit any action
that will release the borrower or any guarantor from any obligation or
liability with regard to the loan, or impair the validity or priority of the
lending institution's or division's interest in the collateral unless the
lending institution obtains the division's prior written consent; and
(14) a statement permitting payment of
charges related to loan origination, closing, and other service charges
incurred by the lending institution in its administration of the loan pool, to
be paid from loan funds contributed by the lending institution; and
(15) a statement describing the division's
right to have access to loan or loan subsidy records in the possession of the
lending institution; and
(16) a
statement describing all terms of the loan or loan subsidy issued from the loan
pool, including:
(a) a detailed description of
all repair, restoration or rehabilitation for the project as approved by the
division and any modifications, exhibits or additional documents as approved by
the division and the lending institution; and
(b) a statement that the restoration,
rehabilitation, or repair must be completed within two years from the date the
loan is approved by the division and closed by the lending institution;
and
(c) a statement that the term
of the loan or loan subsidy shall be five years and interest and principal
shall be paid in equal installments no less than annually with the first
installment due within one year of the date the loan is closed by the lending
institution; this statement shall also provide that the loan shall be amortized
over a period not to exceed twenty years, with a balloon payment due at the end
of the five year term; in lieu of a balloon payment, the lending institution
may purchase the remaining loan amount due to the division; and
(d) a statement that the loan or loan subsidy
shall be secured by the collateral; and
(e) a statement that all restoration,
rehabilitation, or repair shall be completed in conformity with the secretary's
standards as determined by the division; and
(f) a statement that failure by the borrower
to comply with the secretary's standards shall be an event of default under the
promissory note and the mortgage; and
(g) a statement that the division shall
notify the borrower of any noncompliance with the secretary's standards, that
the borrower has a specific period of time to cure the noncompliance, and if
the default is not cured the division shall notify the lending institution of
the default and the lending institution shall pursue appropriate remedies as
stated in the loan participation agreement, promissory note or mortgage;
and
(h) a statement that the
lending institution shall condition the closing of the loan or loan subsidy
upon the borrower's execution of a development agreement and preservation
covenants and deed restrictions, as described in Subsection D of 4.10.2.13 NMAC
of these regulations, with the historic preservation division; and that if the
loan is repaid prior to the expiration of seven years from the date the loan or
loan subsidy is closed by the lending institution, the covenants and deed
restrictions shall not be extinguished and shall remain in effect until the
termination date of the development agreement and preservation covenant and
deed restriction; and a requirement that this provision be contained in the
mortgage and all other documents evidencing security for the loan or loan
subsidy; and
(i) a statement that
the promissory note, mortgage, and any other documents pertaining to security
for the loan or loan subsidy shall include provisions stating that the
borrower's default in connection with any loan, loan subsidy or other
obligation secured by a lien superior to the mortgage or development agreement
and covenants and deed restrictions shall constitute an event of default of the
mortgage and loan agreement; the division and the lending institution shall
have the right (but not the obligation) to cure any default in connection with
superior liens and charge the costs of curing to the borrower; and
(j) a statement requiring that a construction
sign acknowledging the assistance of the division and the lending institution,
or other participating party, shall be displayed prominently at the project
being restored, rehabilitated or repaired; and
(k) a statement requiring the lending
institution to require the borrower to maintain financial records regarding the
project throughout the term of the loan or loan subsidy and shall make such
records available to the lending institution and the division upon request;
and
(17) a statement
regarding the lending institution's transfer of payments to the division,
including any interest, in conformity with the division's share of
participation in the loan pool; and
(18) a statement regarding quarterly reports
to the participating parties from the lending institution concerning the
project's financial and restoration, rehabilitation or repair status;
and
(19) a statement identifying
the name and address of individuals to whom written notice of matters
concerning the project shall be addressed and directed; and
(20) a statement describing the applicable
law that governs the loan participation agreement; and
(21) a statement providing for severability,
non-assignability, amendment of the loan participation agreement, and
(22) a statement regarding execution of the
loan participation agreement in counterparts; and duly witnessed signatory
lines of the parties.
D.
Development agreement and preservation covenants and deed restrictions: The
division shall enter into a development agreement and preservation covenants
and deed restrictions (see attachment "B" attached hereto) 4.10.2.23 NMAC with
the property owner/borrower to govern the restoration, rehabilitation, or
repair of a project. The development agreement and preservation covenants and
deed restrictions shall contain the following:
(1) the names and addresses of the parties,
including the property owner's heirs, successors and assigns and the date the
agreement is executed; and
(2)
recitals, including a statement that all covenants and deed restrictions shall
run with the land for no less than a period of seven years, shall bind all
future owners and occupants of the property during that time, and be recorded;
and
(3) covenants applicable to the
property owner and that pertain to the owner's obligations to do or refrain
from doing specified activities that affect the condition of the restoration,
rehabilitation or repaired property; and
(4) a statement that nothing in the
development agreement prohibits the owner from obtaining financial assistance
from sources other than the division, provided that the lien of the
preservation covenants and deed restrictions shall not be made subordinate to
any mortgage or other lien interest made in connection with other financial
assistance without the division's approval; and
(5) a statement that the standard of review
for compliance with the covenants and deed restrictions or review of
construction, alteration, repair, maintenance, or casualty damage, shall be the
secretary's standards and any applicable state or local standards;
and
(6) a statement that the
division determines the applicability of the secretary's standards and the
application of alternative standards that the division determines to be
reasonable; and
(7) a provision
regarding casualty damage or destruction to the property; and
(8) covenants applicable to the division and
that pertain to conveyance, assignment or transfer of its interest in the
development agreement; and
(9) a
provision regarding inspection of the property; and
(10) a provision describing the division's
remedies to correct violations of the development agreement and preservation
covenants and deed restrictions; and
(11) a provision regarding notice from the
owner to the division in the event the owner proposes to sell the property;
and
(12) a requirement that as long
as the covenants and deed restrictions run with the land, the owner shall
insert the covenants and deed restrictions in any subsequent deed or other
legal instrument by which the owner divests itself of either the fee simple
title to, or its possessory interest in the property; and
(13) a provision regarding recording of the
development agreement and preservation covenants and deed restrictions;
and
(14) provisions regarding
subordination of subsequent mortgages and the rights of the division with
respect to senior liens, which shall require that:
(a) the preservation covenants and deed
restrictions shall have priority over all mortgages, other rights affecting the
property including tax liens, which are granted after execution and recording
of the development agreement;
(b)
the preservation covenants and deed restrictions shall not be extinguished or
terminate upon a mortgagee taking title to the property within seven years of
the date of closing of the loan, as a result of foreclosure or
otherwise;
(c) that the borrower's
default in connection with any loan or other obligation secured by a lien
superior to the mortgage or lien of the covenants and deed restrictions shall
constitute an event of default of the covenants and deed restrictions, and that
the division or lending institution shall have the right to cure any such
default and charge the costs of curing to the borrower;
(d) if a mortgage grants to a mortgagee the
right to receive proceeds of a condemnation proceeding arising from an exercise
of eminent domain as to any part of the property or the right to receive
insurance proceeds as a result of any casualty, hazard or accident occurring to
or about the property, the mortgagee shall have a superior claim to the
insurance and condemnation proceeds and entitled to the same in preference to
the division until the mortgage is paid off and discharged, notwithstanding
that the mortgage is subordinate in priority to the preservation covenants and
deed restrictions; and
(e) if a
mortgagee has received an assignment of the leases, rents and profits of the
property as security or additional security for a loan, the mortgagee shall
have a superior claim to the leases, rents and profits of the property and
shall be entitled to receive same in preference to the division until said
mortgagee's debt is paid off, notwithstanding that the mortgage is subordinate
to the preservation covenants and deed restrictions and
(f) until a mortgagee or purchaser at
foreclosure obtains ownership of the property following foreclosure of its
mortgage or deed in lieu of foreclosure, the mortgagee or purchaser shall have
no obligation, debt or liability under the preservation covenants and deed
restrictions; and
(15) a
statement of the name and address of the individuals to whom written notice is
to be directed; and
(16) a
requirement that upon the request of the division, the owner shall provide
evidence of compliance with terms of the development agreement and preservation
covenants and deed restrictions; and
(17) provisions regarding evidence of
compliance, and interpretation and enforcement of the development agreement and
preservation covenants and deed restrictions; and
(18) an expiration date of the development
agreement and preservation covenants and deed restrictions, and duly witnessed
and notarized signature lines of the owner and the division.
E. Promissory note:
(1) A promissory note signed by the borrower
and evidencing the loan or loan subsidy may be required by the lending
institution. With the inclusion of the requirement of Paragraph (2) of
Subsection E of 4.10.2.13 NMAC below, the form of the note and its terms shall
be determined by the lending institution using customary and prudent lending
practices by lending institutions in New Mexico.
(2) The promissory note shall include a
provision that events of default include without limitation, the borrower's
failure to make timely payments of amounts due under the loan or loan subsidy,
comply with the secretary's standards, or comply with the development agreement
and covenants and deed restrictions.
F. Mortgage:
(1) A mortgage evidencing the security
interest for the loan or loan subsidy may be required by the lending
institution. With the inclusion of the requirement in Paragraph (2) of
Subsection F of 4.10.2.13 NMAC below, the form of the mortgage and its terms
shall be determined by the lending institution using customary and prudent
lending practices for lending institutions in New Mexico.
(2) The mortgage shall include a provision
that events of default include without limitation, the borrower's failure to
make timely payments of amounts due under the loan or loan subsidy, comply with
the secretary's standards, or comply with the development agreement and
covenants and deed restrictions.
G. Loan agreement:
(1) A loan agreement evidencing the loan or
loan subsidy may be required by the lending institution. With the inclusion of
the requirement in Paragraph (2) of Subsection G of 4.10.2.13 NMAC below, the
form of the agreement and its terms shall be determined by the lending
institution using customary and prudent lending practices for lending
institutions in New Mexico.
(2) The
mortgage shall include a provision that events of default include without
limitation, the borrower's failure to make timely payments of amounts due under
the loan or loan subsidy, comply with the secretary's standards, or comply with
the development agreement and covenants and deed restrictions.