Current through Register Vol. 63, No. 9, September 1, 2024
(1) This rule covers proceeds of loans, loan
repayments, and interest earned by a lender. If the proceeds of a loan are used
to purchase an asset, the asset is evaluated under the other rules in this
division of rules.
(2) For purposes
of this rule:
(a) In the OSIP, OSIPM, and QMB
programs:
(A) "Bona fide loan agreement"
means an agreement that:
(i) Is enforceable
under state law;
(ii) Is in effect
at the time the cash proceeds are provided to the borrower; and
(iii) Includes an obligation to repay and a
feasible repayment plan.
(B) "Negotiable loan agreement" means a loan
agreement in which the instrument ownership and the whole amount of money
expressed on its face can be transferred from one person to another (i.e.,
sold) at prevailing market rates.
(b) In all programs:
(A) "Reverse-annuity mortgage" means a
contract with a financial institution (see OAR
461-001-0000) under which the
financial institution provides payments against the equity in
the home that must be repaid when the homeowner dies, sells the home, or
moves.
(B) The proceeds of a home
equity loan or reverse-annuity mortgage (see paragraph (A) of
this subsection) are considered loans.
(3) In all programs, in order to treat
payments as a loan that a member of the financial group (see
OAR 461-110-0530) receives as a
borrower, there must be an oral or written loan agreement. This agreement must
state when repayment of the loan is due to the lender.
(4) Payments for a purported loan that do not
meet the requirements of section (3) of this rule are counted as unearned
income.
(5) When a member of a
financial group receives cash proceeds as a borrower from a
loan that meets the requirements of section (3) of this rule:
(a) In all programs, educational loans are
treated according to OAR
461-145-0150.
(b) In the REF, REFM, SNAP, and TANF
programs, the loan is excluded. If retained after the month of receipt, the
loan proceeds are treated in accordance with OAR
461-140-0070.
(c) In the OSIP, OSIPM, and QMB-DW programs:
(A) If the loan is a bona fide loan
agreement (see paragraph (2)(a)(A) of this rule), the money provided
by the lender is not income but is counted as the borrower's resource if
retained in the month following the month of receipt (notwithstanding OAR
461-140-0070).
(B) If the loan is not a bona fide
loan agreement, the money provided by the lender is counted as income
in the month received and is counted as a resource if retained in the month
following the month it was received.
(d) In the QMB-BAS, QMB-SMB, and QMB-SMF
programs:
(A) If the loan is a bona
fide loan agreement, the money provided by the lender is not
considered income.
(B) If the loan
is not a bona fide loan agreement, the money provided by the
lender is counted as income in the month received.
(C) All money provided by the lender is
excluded as a resource.
(6) In the OSIPM (except OSIPM-EPD) program,
if an individual or a spouse (see OAR
461-001-0000) of an individual
uses funds to purchase a mortgage or to purchase or lend money for a promissory
note or loan:
(a) In a transaction occurring
on or after July 1, 2006:
(A) The balance of
the payments owing to the individual or
spouse of the
individual is a transfer of assets for less than
fair market
value (see OAR
461-001-0000), unless all of the
following requirements are met:
(i) The total
value of the transaction is being repaid to the individual or
spouse of the individual within three months of the life
expectancy per the actuarial life expectancy of that individual as established
by the Period Life Table of the Office of the Chief Actuary of the Social
Security Administration. If the loan, promissory note, or mortgage are jointly
owned by the individual and their spouse, the requirements of
this section are met if the transaction is repaid according to the life
expectancy of either the individual or their spouse.
(ii) Payments are made in equal amounts over
the term of the transaction without any deferrals or balloon
payments.
(iii) The contract is not
cancelled upon the death of the individual receiving the payments under this
transaction.
(iv) No one other than
the estate of the lender is designated as remainder
beneficiary.
(B) If any
of the requirements in paragraph (a)(A) of this section are not met, payments
against the principal and interest are treated as unearned income. The
outstanding principal balance of the loan is excluded as a resource.
(b) In a transaction occurring
before July 1, 2006, or for a transaction occurring on or after July 1, 2006,
that meets all of the requirements of subsection (a) of this section, the loan
is treated as follows:
(A) Interest income is
treated as unearned income.
(B) If
the loan is both a negotiable loan agreement (see paragraph
(2)(a)(B) of this rule) and a bona fide loan agreement, the
loan is counted as a resource valued at the outstanding principal balance.
Payments against the principal are excluded as income.
(C) If the loan does not qualify under
paragraph (B) of this subsection, payments against the principal are counted as
unearned income. The outstanding principal balance of the loan is excluded as a
resource.
(7)
In the OSIP, OSIPM, and QMB-DW programs, if an individual uses funds to
purchase a mortgage or to purchase or lend money for a promissory note or loan:
(a) Interest income is treated as unearned
income.
(b) If the loan is both a
negotiable loan agreement and a bona fide loan
agreement, the loan is counted as a resource of the lender valued at
the outstanding principal balance. Payments against the principal are excluded
as income.
(c) If the loan does not
qualify under subsection (b) of this section, the balance of the loan is
excluded as a resource. The payments against the principal are counted as
income to the lender.
(8)
In the QMB-BAS, QMB-SMB, and QMB-SMF programs, if an individual uses funds to
purchase a mortgage or to purchase or lend money for a promissory note or loan:
(a) Interest income is counted as unearned
income.
(b) Payments against the
principal of all loans are excluded as income.
(9) In all programs other than the OSIP,
OSIPM, and QMB programs:
(a) The interest
payment is counted as unearned income.
(b) The payment of principal is
excluded.
Statutory/Other Authority: ORS
409.050,
411.060,
411.070,
411.404,
411.816,
412.014,
412.049,
413.085 &
414.619
Statutes/Other Implemented: ORS
409.050,
411.060,
411.070,
411.404,
411.816,
412.014,
412.049,
413.085,
414.619, ORS
409.010 &
414.117