Code of Maine Rules › 95 - INDEPENDENT AGENCIES › 648 - EFFICIENCY MAINE TRUST › Chapter 110 - PACE PROGRAM REGULATIONS: LOAN UNDERWRITING STANDARDS, CONSUMER DISCLOSURE REQUIREMENTS, TERMS AND CONDITIONS OF PARTICIPATION AND QUALITY ASSURANCE SYSTEM › Section 648-110-3 - UNDERWRITING STANDARDS

Current through 2024-29, July 17, 2024
1.
Requirements.
The following are underwriting requirements for any PACE
				Loan:
A. A PACE Loan must be secured by a PACE
				Mortgage on Qualifying Property;
B.
				The Qualifying Property securing a PACE Loan must be owned by the Borrower.
				Proof of ownership shall be obtained in the form of municipal tax
				records;
C. The maximum amount of
				any PACE Loan shall be fifteen thousand dollars ($15,000) and shall be based on
				total costs including Energy Audit and other costs under the contract for
				Energy Savings Improvements, less any rebate or other financial incentive
				provided by the Trust to the Borrower;
D. The Borrower must demonstrate a Debt to
				Income Ratio of the maximum Total Fixed Payment to Effective Income ratio
				established by Section 4155.1.4. F.2.c. of the U.S Housing and Urban
				Development's Handbook 4155.1 "Mortgage Credit Analysis for Mortgage Insurance"
				as amended, restated or replaced from time-to-time (the "HUD Handbook") up to a
				maximum of 50%.
(1) All Monthly Gross
				Expenses and related debt shall be verified using a credit report (including a
				joint report in the case of joint applicants as the Borrower) from a nationally
				recognized credit reporting agency (the "Credit Report")- In addition,
				information concerning Monthly Gross Expenses obtained in writing from the
				Borrower must be considered.
(2)
				Based on the type and source of the Borrower's income, the following documents,
				none of which may be more than sixty (60) days old as of the date received,
				except for tax returns and quarterly profit and loss statements, shall be
				provided to verify Monthly Gross Income:
(a)
Tax Return:
A signed copy of the most recent federal income tax
				return, including all schedules and forms, if available.
(b)
Employment Income:
Copies of
				the two most recent pay stubs indicating year-to-date earnings.
(c)
Self-Employment Income:
The
				most recent quarterly or year-to-date profit and loss statement or a recent
				series of bank statements to demonstrate income for each self-employed
				Borrower, where such a profit and loss statement is not available.
(d)
Other Income:
(e.g., bonus,
				commission, fee, housing allowance, tips, overtime). A letter from the employer
				or other reliable third party documentation describing the nature of the income
				and indicating that the income will in all probability continue.
(e)
Benefit Income:
(e.g.,
				Social Security, disability, death benefits, pension, public assistance,
				unemployment, adoption assistance). Evidence of the amount, frequency and
				duration of the benefits usually obtained through a monetary or award
				determination letter, disability policy or benefits statement from the
				provider. Also, evidence of receipt of payment, such as copies of the
				Borrower's two most recent bank statements showing the deposit amounts. The
				Trust must determine that the income will continue for at least six (6) months
				in order to include it as part of Borrower's income.
(f)
Rental Income:
Rental income
				should be documented through the Schedule E - Supplemental Income & Loss of
				the federal income tax return. If the Borrower is using income from the rental
				of a portion of the Borrower's principal residence, the income should be
				calculated at 75% of the gross monthly rental income, with the remaining 25%
				considered vacancy loss and maintenance expenses. If the Borrower is using
				rental income from properties other than the Borrower's principal residence the
				income should be 75% of the monthly gross rental income reduced by the monthly
				debt service on the property (i.e., principal, interest, taxes, insurance,
				mortgage insurance and association fees), if applicable.
(g)
Alimony, Separation Maintenance
				& Child Support:
The Borrower is not required to use alimony,
				separation maintenance or child support income to qualify for a PACE Loan. If
				the Borrower chooses to use this income, it should be documented with copies of
				the divorce decree, separation agreement or other legal agreement filed with a
				court, or a court decree that provides for the payment of alimony, separation
				maintenance or child support and states the amount of the award and the period
				of time over which it will be received. Evidence of receipt of payment can be
				documented with copies of the Borrower's two most recent bank statements
				showing the deposits.
E. The term of the PACE Loan shall not exceed
				the average Estimated Useful Life of the financed Energy Savings
				Improvements;
F. All Energy Savings
				Improvements financed through the PACE Loan shall meet the Cost-Effectiveness
				test to the Borrower as prescribed for PACE loans by the Trust from
				time-to-time;
G. All Qualifying
				Property securing a PACE Loan must be:
(1)
				Owned by the Borrower;
(2) Current
				with respect to property taxes and sewer charges;
(3) Free of outstanding and unsatisfied tax
				or sewer liens;
(4) Not be subject
				to a Reverse Mortgage Transaction (as defined in 9-A M.R.S.A. § 8-103-1
				A(Y)); and
(5) Not be subject to a
				mortgage or other lien for which there is a default, foreclosure or delinquency
				that has not been cured, nor any unsatisfied judgment, mechanics, materialmen
				or architect lien;
H.
				The value of the Qualifying Property shall be no less than 100% of the total
				amount of all mortgages and liens thereon, and the proposed PACE Loan. Such
				value will be supported by an appraisal not more than 24 months old or by the
				tax-assessed valuation of the Municipality adjusted by the Municipality's
				assessment ratio for the current year.
I. The Borrower must certify that there are
				no overdue payments on mortgages or other liens secured by such property and
				provide either a certificate from each existing mortgage holder or a recent
				account statement to demonstrate current balances;
J. In cases where PACE Assessments will be
				billed annually or biannually, monthly escrows will be required to be paid by
				Borrower to the Master Servicer.
K.
				Such additional requirements including a minimum credit score, and
				consideration of bankruptcy, foreclosure and charge off history of the Borrower
				may be adopted by the Trust from time-to-time in accordance with prudent
				lending standards.