California Code of Regulations › Title 25 - Housing and Community Development › Division 1 - Housing and Community Development › Chapter 7 - Department of Housing and Community Development Programs › Subchapter 14 - California Housing Rehabilitation Program for Owner-Occupied Housing › Article 5 - Program Operations › Section 8057 - Loan Approvals

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The local entity shall review and
					 evaluate each prospective borrower's application for a deferred payment loan to
					 determine whether the requirements of this subchapter would be met if the loan
					 were funded. In performing this review, the local entity shall evaluate whether
					 the State's security interest would be protected and whether the loan funds
					 will be repaid. The local entity's evaluation shall also include a
					 determination on each of the specific criteria set forth below in subdivision
					 (d) of this section.
(b) For those
					 loans which it recommends for funding, the local entity shall submit loan files
					 to the department, which contain copies of the documents described in
					 subdivision (e)(1) of this section, as well as the local entity's determination
					 on each of the specific criteria set forth in subdivision (d) of this section.
					 The department may disapprove a deferred payment loan submitted by the local
					 entity if the deferred payment loan does not meet the requirements of this
					 subchapter, and shall notify the local entity in writing within 30 working days
					 following receipt of the deferred payment loan file of the reasons for
					 denial.
(c) Where there are
					 indications that the prospective borrower may not meet the deferred payment
					 loan requirements of subdivision (a) of this section, the local entity may
					 request departmental approval of the deferred payment loan, providing there are
					 mitigating circumstances, which apply to the prospective borrower.
(d) When reviewing loans for approval, the
					 local entity evaluation shall include determinations on each of the following
					 criteria:
(1) The prospective borrower's loan
					 application is consistent with the performance goals set forth in the Standard
					 Agreement;
(2) the prospective
					 borrower's loan application is complete and accurate;
(3) the deferred payment loan amount is
					 consistent with the requirements of section 8048;
(4) the prospective borrower is eligible
					 pursuant to section 8043;
(5) the
					 loan security shall meet the requirements as specified in section
					 8050;
(6) the prospective
					 borrower's credit report indicates an ability to repay all debts, including:
(A) no credit accounts past due at the time
					 the prospective borrower's deferred payment loan is recorded;
(B) no outstanding unpaid judgments or
					 involuntary liens; and
(C) no
					 bankruptcies, which have not been dismissed prior to deferred payment loan
					 recordation;
(7) the
					 preliminary title report shows:
(A) proper
					 vesting of title with the prospective borrower;
1. If the prospective borrower holds title
					 with another party also who is not applying for the loan, the other party shall
					 sign all required loan documents.
2. In cases where a joint tenancy or
					 tenants-in-common is dissolved, the title documents must be corrected to
					 reflect the change.
(B)
					 the legal description of property;
(C) all encumbrances on the property. Any
					 encumbrances which have been repaid shall be reconveyed and recorded prior to
					 recording of the deferred payment loan; and
(D) no judgments, mechanic liens, or property
					 tax liens due on the property.
(8) the mortgage verification for each
					 existing encumbrance on the property indicates:
(A) a date not more than three months prior
					 to deferred payment loan approval;
(B) that payments are current at the time of
					 verification and, in the past, have not been more than 60 days
					 delinquent;
(C) the financing terms
					 including, but not limited to, variable interest rate, balloon payments, or
					 negatively amortizing loans, which may jeopardize the state's security and the
					 borrower's ability to repay the deferred payment loan; and
(D) the current balance of the mortgage and
					 of any impound accounts for taxes and assessments.
(9) the prospective borrower has demonstrated
					 an ability to maintain the property;
(10) the proposed uses of funds are eligible
					 pursuant to section 8044(a);
(11)
					 the cost estimates and work write-ups adequately describe the existing
					 conditions and problems which require rehabilitation and accurately specify the
					 rehabilitation work, room additions and improvements and accurately specify the
					 work necessary to correct the deficiencies;
(12) the selected contractor's bid proposal
					 is reasonable and meets the requirements of section 8046(e); and
(13) all other provisions of this subchapter
					 have been met.