California Code of Regulations › Title 22 - Social Security › Division 7 - Health Planning and Facility Construction › Chapter 5 - Health Facility Construction Loan Insurance › Article 2 - General Provisions › Section 91477 - Insurance Premiums

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  Subject to subsection (b) below, the premium rate charged for the insurance of
				  loans by the Office shall be three percent (3%) of the total amount of
				  principal and interest payable over the term of the loan, unless the borrower
				  requests and qualifies for a lower premium rate under subsection (c)
				  below.
(b) Borrowers that use
				  proceeds of a loan newly insured by the Office to refinance a prior loan
				  insured by the Office, or refund bonds insured by the Office, the proceeds of
				  which were used to fund a prior loan (the "Prior Insured Loan") on which the
				  Borrower paid a one time nonrefundable premium shall pay a Refinancing Proceeds
				  Premium rate of 2.2% of the total amount of the principal and interest thereon
				  payable over the term of the loan, which term shall be the same as the
				  remaining term of the loan refinanced, unless the borrower requests and
				  qualifies for a lower Refinancing Proceeds Premium rate under subsection (c).
				  If a portion of the proceeds of the loan or bonds to be newly insured is to be
				  used to refinance the principal balance of a Prior Insured Loan (the
				  "Refinanced Principal") and a portion for new construction, improvements or
				  expansion, reimbursements, or refinancing other debt, the Refinancing Proceeds
				  Premium rate will be applied to the Refinancing Proceeds Principal (defined
				  below) and the applicable premium under subsection (a) or (c) shall be applied
				  to the balance of proceeds of the newly insured loan or bonds. The amount of
				  Refinancing Proceeds Principal shall be determined by applying a fraction, the
				  numerator of which is the dollar amount of Refinanced Principal and the
				  denominator of which is equal to the sum of the Refinanced Principal plus the
				  dollar amount of proceeds used for new construction, improvements or expansion
				  (including related contingency funds and capitalized interest), reimbursements,
				  or refinancing other debt, to the total amount of proceeds of the newly insured
				  loan or bonds including proceeds used for debt service reserve funds, costs of
				  issuance, counsel fees, underwriter's discount, original issue discount, and
				  Cal-Mortgage insurance premiums and fees.
(c) Borrowers that choose to obtain and do
				  obtain a credit rating of CCC or higher from one of the three rating agencies
				  listed below shall qualify for the Discounted Premium rate or the Refinancing
				  Proceeds Premium, as applicable, rate, as applicable, corresponding to the
				  rating. If the Office determines that it is in its best interest, it may allow
				  the use of a credit assessment, credit opinion or equivalent from one of the
				  three rating agencies listed below, using the rating assigned therein instead
				  of the credit rating for this purpose. The borrower shall direct the credit
				  rating agency to send the rating (or credit assessment, opinion, or equivalent)
				  to the Office, with a copy to the borrower.
Rating
								Agencies
Standard &
								Poor's
Moody's
Fitch
Discounted
								Premium
Refinancing Proceeds
								Premium
AAA
Aaa
AAA
-
-
AA+
Aa1
AA+
0.80%
0.50%
AA
Aa2
AA
0.85%
0.55%
AA-
Aa3
AA-
0.90%
0.60%
A+
A1
A+
1.15%
0.65%
A
A2
A
1.20%
0.70%
A-
A3
A-
1.25%
0.75%
BBB+
Baa1
BBB+
1.80%
1.00%
BBB
Baa2
BBB
1.85%
1.05%
BBB-
Baa3
BBB-
1.90%
1.10%
Below Investment
								Grade:
BB+
Ba1
BB+
2.65%
1.85%
BB
Ba2
BB
2.70%
1.90%
BB-
Ba3
BB-
2.75%
1.95%
B+
B1
B+
2.80%
2.00%
B
B2
B
2.85%
2.05%
B-
B3
B-
2.90%
2.10%
CCC
CCC
CCC
2.95%
2.15%
Lower than CCC
3.00%
2.20%
(d)
				  The rating will be used only to determine what premium rate the Office will
				  charge that borrower, if the Office decides to insure a loan to that borrower.
				  The fact that a borrower is able to obtain a CCC rating or above does not
				  entitle that borrower to insurance.
(e) The Office has determined the use of the
				  procedures set forth in (b) and (c) above constitute a system for assessing the
				  relative financial risk of a borrower in compliance with Health and Safety Code
				  section
				  129051.
1. Amendment
					 filed 12-18-81; effective thirtieth day thereafter (Register 81, No.
					 51).
2. Repealer and new section filed 3-20-2001; operative
					 3-20-2001. Amendments filed without review by OAL pursuant to the exemption for
					 regulations which establish or fix rates, prices, or tariffs (Government Code
					 section
					 11340.9(g))
					 (Register 2001, No. 12).
3. Amendment filed 6-28-2012; operative
					 6-28-2012. Submitted to OAL for printing only pursuant to Government Code
					 section
					 11343.8,
					 as exempt from the APA and OAL review pursuant to Government Code section
					 11340.9(g)
					 (Register 2012, No. 26).
Note: Authority cited: Sections
						127010
						and
						129015,
						Health and Safety Code; and Section
						11152,
						Government Code. Reference: Section
						129040,
						Health and Safety Code.