Connecticut Administrative Code › Title 8 - Zoning, Planning, Housing, Economic and Community Development › 84 - Home Ownership Program › Section 8-84-2 - Loans

Current through July 10, 2024
(a) The loans shall be limited to first mortgage construction loans, first mortgage loans insured by the federal housing commissioner or guaranteed by the administrator of veterans affairs to the extent provided for by the Servicemen's Readjustment Act of 1944, as amended, and second mortgage loans guaranteed by the administrator of veterans affairs and qualifying as secondary loans under the Servicemen's Readjustment Act of 1944, as amended.
(b) No construction loan to a borrower eligible as such because an operative builder shall involve a principal obligation in excess of eighty per cent of the estimate of value of the mortgaged property as established by the federal housing commissioner.
(c) No temporary construction loan shall have a maturity in excess of eight months from the date of closing, except that the date of maturity may be extended with the approval of the commissioner.
(d) Each loan not a temporary construction loan shall have a maturity satisfactory to the commissioner and, if insured or guaranteed, to the federal housing commissioner or the administrator of veterans affairs, respectively.
(e) All loans except construction loans shall bear interest at such yearly rate, not in excess of two per cent, as may be determined by the commissioner.
(f) Construction loans shall bear interest at such yearly rate, not in excess of three and one-half per cent, as may be determined by the commissioner.
(g) Each loan not a temporary construction loan shall contain complete amortization provisions satisfactory to the commissioner and, if insured or guaranteed, to the federal housing commissioner or the administrator of veterans affairs, respectively. The sum of the principal and interest payments shall be substantially the same in each month and shall come due on the first of the month.
(h) Each first mortgage loan shall be secured by a mortgage which is a valid first lien on an estate in fee simple. Each second mortgage loan shall be secured by a mortgage which is a valid second lien on an estate in fee simple.
(i) Each note evidencing a loan insured by the federal housing commissioner and the mortgage securing such loan shall be on forms approved by said commissioner; each note evidencing a loan guaranteed by the administrator of veterans affairs and the mortgage securing such loan shall be on forms approved by said administrator; each note evidencing a construction loan and the mortgage securing such loan shall be on forms approved by the public works commissioner.
(j) Disbursements of construction loans shall be made in installments. No disbursement shall exceed a reasonable percentage of the value of the work in place at the time the disbursement is made, less the amount of previous disbursements. The number of installments and the stages at which they will be made shall be indicated clearly in the loan agreement.
(k) Each permanent loan, the proceeds of which are to be disbursed during the construction of a dwelling on the mortgaged premises, shall provide that the construction shall be completed within eight months from the date of the loan.
(l) No construction loan shall be made unless and until the federal housing commissioner has issued a conditional commitment for mortgage insurance on a permanent loan, provided a construction loan may be made to an eligible buyer who is a veteran of World War II on issuance of a certificate of reasonable value and on a prior approval or automatic basis as determined by the public works commissioner. In no event shall the aggregate of the disbursements made under a construction loan prior to the issuance of a final compliance inspection report by the federal housing commissioner or the administrator of veterans affairs exceed eighty per cent of the estimate of value of the mortgaged property as established by said commissioner or administrator.
(m) Commitments by the state to make construction loans shall be cancelable at the will of the state when the construction has not been started within a reasonable time.
(n) In the case of a construction loan the borrower, if eligible as such because an operative builder, shall agree not to offer to sell or resell the property to any purchaser except an eligible buyer for a period of sixty days from the date fixed by the federal housing commissioner as the date of completion of construction.