2023 Vermont Statutes › Title 10 - Conservation and Development › Chapter 25 - Vermont Housing Finance Agency › § 623. Terms and conditions of the purchase and sale to mortgage lenders of mortgage loans; loans through mortgage lenders

§ 623. Terms and conditions of the purchase and sale to mortgage lenders of mortgage loans; loans through mortgage lenders
(a) No mortgage or other obligation purchased from a mortgage lender shall be eligible for purchase or commitment to purchase by the Agency hereunder unless at or before the time of transfer thereof to the Agency such mortgage lender certifies:
(1) That in its judgment the loan would in respect of the security therefor be a prudent investment for its own account;
(2) That the proceeds of sale or its equivalent shall be reinvested in new mortgage loans on residential housing for occupancy by persons and families primarily of low and moderate income within the State, or in loans for the rehabilitation of such residential housing, which rehabilitation loans need not be secured by a first mortgage lien, or invested in short-term obligations pending the purchase of those mortgages, or that the mortgage loans purchased or to be purchased by the Agency are new mortgage loans on residential housing for occupancy by persons and families primarily of low and moderate income within the State. However, each such new mortgage loan shall have been initiated for the purpose of sale to the Agency; and
(3) That mortgage loans or rehabilitation loans made by mortgage lenders from the proceeds of sale of mortgages to the Agency shall bear a rate or rates of interest less than the prevailing rate of interest on comparable mortgage loans or rehabilitation loans available in the State without the assistance of the Agency, except when such proceeds arise from the sale to the Agency of new mortgage loans on residential housing for occupancy by persons and families primarily of low and moderate income within the State.
(b) The Agency shall purchase mortgage loans at a purchase price equal to the outstanding principal balance thereof. However, a discount from the principal balance or the payment of a premium may be employed to effect a fair rate of return, as determined by the rate of return on comparable investments under market conditions existing at the time of purchase. In addition to the payment of outstanding principal balance, the Agency shall pay the accrued interest due thereon, on the date the loan or obligation is delivered against payment therefor.
(c) Loans purchased or sold hereunder shall consist of federally insured mortgage loans or loans that are insured, guaranteed, or assisted by the State or by an agency or instrumentality thereof or for which there is a commitment by the United States or the State or an agency or instrumentality thereof to insure, guarantee, or assist such loan, and other mortgage loans that the Agency deems to be of reasonably comparable security.
(d) The Agency shall from time to time adopt, modify, or repeal rules and regulations governing the making of loans to mortgage lenders and the purchase and sale of mortgage loans and the application of the proceeds thereof, including rules and regulations as to any or all of the following:
(1) procedures for the submission of requests or the invitation of proposals for the purchase and sale of mortgage loans or for loans to mortgage lenders;
(2) limitations or restrictions as to location or other qualifications or characteristics of residences to be financed from the proceeds of such purchase or loans;
(3) restrictions as to the interest rates on loans made from the proceeds of purchase of mortgage loans or from loans to mortgage lenders or the return realized therefrom by mortgage lenders;
(4) requirements as to commitments by mortgage lenders with respect to the application of the proceeds of such purchase or loan;
(5) schedules of any fees and charges necessary to provide for expenses and reserves of the Agency;
(6) requirements and specifications as to recourse; and
(7) any other matters related to the duties and the exercise of the powers of the Agency under this section.
(e) The rules and regulations shall be designed to effectuate the general purposes of this chapter and the following specific objectives:
(1) the expansion of the supply of funds in the State available for mortgage loans for residential housing generally and particularly for occupancy by persons and families of low and moderate income;
(2) provision for additional housing or rehabilitated housing needed to remedy the shortage of adequate housing in the State and to eliminate the existence of a large number of substandard dwellings; and
(3) the restriction of the financial return and benefit on mortgage loans for residential housing for persons and families of low and moderate income to that level necessary to protect against the realization of mortgage lenders of a financial return or benefit in excess of prevailing market conditions;
(4) in the case of mortgage loans secured by cooperative interest in cooperative housing corporations, to ensure that the purchase of such mortgage loans with the proceeds of bonds of the Agency will not, without the consent of the Agency, cause such bonds to be “other than qualified mortgage bonds.”
(f) The interest rates and other terms of loans to mortgage lenders made from the proceeds of any issue of bonds of the Agency shall be at least sufficient so as to ensure the payment, from the amounts received by the Agency in repayment of the loans and interest thereon, of the bonds and the interest thereon as the same become due, including bonds and the interest thereon issued by the Agency to fund reserves.
(g) The Agency shall require as a condition of each loan to a mortgage lender:
(1) that the mortgage lender shall on or prior to the 180th day, or such earlier day as shall be prescribed by rules and regulations of the Agency, following the receipt of the loan proceeds, have entered into written commitments to make, and shall thereafter proceed as promptly as practicable to make and disburse from the loan proceeds, mortgage loans on residential housing primarily for occupancy by persons and families of low and moderate income in an aggregate principal amount equal to the amount of the loan less any fees and expenses of the mortgage lender approved by the Agency or loans for the rehabilitation of such residential housing, which rehabilitation loans need not be secured by a first mortgage lien; and
(2) that mortgage loans or rehabilitation loans made by mortgage lenders with the proceeds of a loan to such mortgage lender shall bear a rate or rates of interest less than the prevailing rate of interest on comparable mortgage loans or rehabilitation loans available in the State without the assistance of the Agency.
(h) The Agency may require that the loans to mortgage lenders shall be additionally secured as to payment of both principal and interest by a pledge of and lien upon collateral security in such amounts as the Agency shall by resolution determine to be necessary to ensure the payment of the loans and the interest thereon as they become due. The collateral security shall consist of:
(1) direct obligations of, or obligations guaranteed by the United States of America;
(2) obligations, satisfactory to the Agency, issued by any of the following federal agencies: Bank for Cooperatives, Federal Intermediate Credit Bank, Federal Home Loan Bank System, Federal Land Banks, the Government National Mortgage Association; Federal National Mortgage Association; or Federal Home Loan Mortgage Corporation;
(3) direct obligations of or obligations guaranteed by the State; or
(4) mortgages insured or guaranteed as to payment of principal and interest by the United States of America or an agency or instrumentality thereof or by the State or an agency or instrumentality thereof;
(5) mortgages that the Agency deems to be of reasonably comparable security. (Added 1973, No. 260 (Adj. Sess.), § 3, eff. April 11, 1974; amended 1975, No. 14, § 1, eff. March 17, 1975; 1983, No. 52, § 2, eff. April 23, 1983; 1987, No. 41, § 4; 2005, No. 189 (Adj. Sess.), § 4.)