Iowa Administrative Code › Agency 265 - Iowa Finance Authority › Chapter 45 - Manufactured Housing Program Fund › Rule 265-45.6 - Linked Deposits

Current through Register Vol. 47, No. 3, July 24, 2024
The process to create a linked deposit shall be as
				follows:
(1) Once a financial
			 institution or lender has received a completed loan application from a
			 borrower, the financial institution or lender shall notify the authority via a
			 linked deposit reservation request. The reservation request shall be on a form
			 which is created and may be periodically updated by the authority and which may
			 be in a paper format or an online web-based format at the authority's
			 discretion. The authority shall review the reservation request; if the
			 reservation request is approved, the authority shall tentatively reserve an
			 amount in or available to the fund for up to 60 days for a linked deposit for
			 the mortgage loan that was the subject of the request. No reservation shall be
			 made if the requested mortgage loan amount exceeds the amount(s) in and
			 available to the fund. The reservation shall be terminated if the mortgage loan
			 does not close within the 60-day period. If the reservation request is not
			 approved, the authority shall notify the financial institution or lender that
			 originated the mortgage loan and state the reason why the request was not
			 approved.
(2) The financial
			 institution or lender that originated the mortgage loan shall review the
			 borrower's mortgage loan application, applying ordinary manufactured housing
			 lending underwriting criteria. If the loan application is approved by the
			 financial institution or lender, the financial institution or lender shall
			 submit a request to the authority for a linked deposit. The request shall be on
			 a form which is created and may be periodically updated by the authority and
			 which may be in a paper format or an online web-based format at the authority's
			 discretion.
(3) Upon receipt of a
			 linked deposit request, the authority shall review the information provided and
			 make a determination as to whether the mortgage loan is eligible under the
			 program's criteria. If necessary, the authority may request additional
			 information. If the mortgage loan is determined eligible, the authority shall,
			 if necessary to make the linked deposit, transfer moneys from one or more of
			 the revolving funds, at the authority's discretion, into the fund to ensure
			 there is a sufficient amount available in the fund to make the linked deposit.
			 The authority shall then deposit with the financial institution an amount equal
			 to the principal amount of the mortgage loan via automated clearing house (ACH)
			 money transfer. The linked deposit shall not be security for the mortgage loan
			 or for the interlender loan, if any, nor shall it be a loan guarantee. The
			 lender or financial institution making the mortgage loan shall bear all
			 financial risk for the mortgage loan. The financial institution shall bear all
			 financial risk for any interlender loan. If the mortgage loan is determined
			 ineligible, the authority shall notify the financial institution or lender that
			 originated the mortgage loan and state the reason why the request was not
			 approved.
(4) The authority shall
			 receive monthly bank statements for the linked deposit account.
(5) The moneys in the linked deposit account
			 shall remain in the account for the duration of the mortgage loan. Annually, as
			 of June 30, the financial institution or lender that originated the mortgage
			 loan shall notify the authority of the amount of principal that has been repaid
			 on the mortgage loan during the previous 12 months. The authority shall then
			 withdraw from the linked deposit account an amount equal to the principal that
			 was repaid on the mortgage loan during the previous year so that the amount of
			 the linked deposit equals the outstanding principal balance of the mortgage
			 loan.
(6) If a financial
			 institution has more than one mortgage loan in the program, the linked deposits
			 for those mortgage loans may be maintained in a single account.
(7) The linked deposit for a mortgage loan
			 shall be withdrawn in full if the mortgage loan is paid off, if the
			 manufactured home purchased with the mortgage loan proceeds is destroyed, or if
			 the borrower defaults on the mortgage loan.
(8) The linked deposit account shall bear
			 interest at a rate of not less than 1 percent per annum.