New Mexico Administrative Code › Title 12 - TRADE, COMMERCE AND BANKING › Chapter 21 - COMMUNITY REVITALIZATION AND DEVELOPMENT › Part 3 - LENDING PROCEDURES OF THE MAIN STREET REVOLVING LOAN FUND › Section 12.21.3.13 - COMMITTEE AND DIVISION PROCEDURES

Current through Register Vol. 35, No. 13, July 16, 2024
The committee shall consider loan applications at a regularly
				  scheduled public meeting. The committee will review the application for
				  conformance with the applicable standards and will take action on the
				  application. Such action will take the form of an approval, approval with
				  conditions, tabling or denial. Applicants will be notified of the committee's
				  decisions within 14 calendar or 10 business days of the committee's meeting. If
				  approved division staff will prepare the state's agreement documents for review
				  and approval of the committee.
A. All
				plans, specifications and descriptions for a project shall be included in the
				application. All work that will affect the property during the project time
				frame shall be described, whether or not it is eligible for the state loan
				funding. The application shall be received in the office of the division at
				least 15 business days prior to the committee meeting in which it shall be
				reviewed or an alternate time established by the committee. The division shall
				determine whether the information being presented is complete and adequate for
				committee review. The division shall provide the committee with a staff
				recommendation for the project conformance with applicable standards.
B. Projects must be completed within 24
				months of approval date. Alterations to approved projects must be submitted to
				the division. Major project alterations shall be submitted to the committee for
				action at a regularly scheduled meeting. The committee may assign to the
				division review and approval authority for minor project alterations.
C. Loan participation agreement: The
				committee shall enter into a loan participation agreement with one or more
				lending institutions, a federal entity, or other funding entity, to make MSRL
				funds available for deposit into the loan pool for purposes of the Main Street
				Revolving Loan Act.
D. The loan or
				loan subsidy from the MSRL contributions to the loan pool for a repair,
				restoration or rehabilitation project, shall be governed by the terms of the
				loan participation agreement.
E.
				The loan participation agreement shall contain the following:
(1) the names and street addresses of all
				parties participating in the project by making a contribution of funds to the
				loan pool; and
(2) recitals of the
				project, definitions, and
(3) a
				statement specifying the parties' respective percentages of financial
				participation or "share" in the loan pool, such participation shall be
				described as a "sale of participation" in the loan or loan subsidy by each
				party; and
(4) a statement
				describing the manner in which MSRL funds will be contributed to the loan pool;
				the lending institution shall notify the division that according to the
				schedule for disbursements of loan funds to the borrower, a contribution of
				MSRL funds into the loan pool is necessary; the division shall make an
				appropriate request to the department of finance and administration and the
				state treasurer's office to effect a contribution of MSRL funds into the loan
				pool; and
(5) a statement that upon
				deposit of the MSRLF contribution to the loan pool, the MSRLF contribution
				shall accrue interest at the rate of three percent per annum; and
(6) a statement that the lending institution
				shall disburse loan funds to the borrower in no more than five separate
				installments and as provided in Subsection B of 12.21.3.8 NMAC herein;
				and
(7) a statement that the
				division shall establish an inspection schedule relating to the purposes and
				goals of the Main Street Revolving Loan Act, authorized uses of the MSRL
				contributions, and compliance with the development agreement and preservation
				covenants and deed restrictions and the MSRL standards; and
(8) a statement that provides that the
				lending institution shall establish an inspection schedule relating to
				construction progress; and
(9) a
				statement that provides that MSRLF contributions that are not disbursed to the
				borrower, as provided in Subsection B of 12.21.3.8 NMAC herein, shall be
				returned by the lending institution to the division; and
(10) a statement describing the rates of
				interest charged to the borrower for the loan or loan subsidy attributable to
				each party who contributed to the loan pool, including the rate charged on the
				MSRLF contribution as stated in Section C of
				3-60C-6
				NMSA 1978, and other rates charged on funds contributed by the lending
				institution; and
(11) a statement
				indicating the combined interest rate of the loan or loan subsidy;
				and
(12) a statement describing the
				administration of the loan pool by the lending institution, including that the
				lending institution shall:
(a) receive and
				deposit the MSRLF contributions into the loan pool and, within five working
				days after receipt of a payment from the borrower, transfer to the division its
				share of any collections, including interest due to the division; and
(b) service and manage the loan or loan
				subsidy and collateral according to customary and prudent lending practices;
				and
(c) be responsible for all
				aspects of loan origination, servicing, collections, and security;
				and
(d) document the loan or loan
				subsidy in the form a promissory note, loan agreement, mortgage and other
				security agreements(s) that may be required by the lending institution;
				and
(e) require that the promissory
				note, mortgage and other loan documents provide that events of default include
				the borrower's failure to make timely payments of amounts due under the loan or
				loan subsidy, comply with the standards, or comply with the development
				agreement and covenants and deed restrictions; and
(f) ensure that the original priority of the
				mortgage extends to each subsequent disbursement of loan proceeds to the
				borrower; and
(g) provide the
				division with copies of all documents pertaining to the loan or loan subsidy;
				and
(h) monitor the borrower's
				maintenance of any insurance required on the collateral, payment of all taxes,
				fees and other charges assessed or otherwise imposed upon the collateral;
				and
(i) promptly notify the
				committee and division of any event of default existing for more than thirty
				days, and of other significant information relating to the loan; and
(j) upon notification of a default, consult
				with the division as to the appropriate course of action and take such agreed
				upon action with the prior written approval of the division; and
(13) a statement that the lending
				institution shall execute and deliver satisfactions, endorsements, receipts,
				discharges or releases as may be necessary in the proper serving and collection
				of the loan or loan subsidy; the lending institution shall not modify or
				supplement any documents associated with the loan or loan subsidy, agree to any
				extension of time or waiver or forgiveness of debt, take or permit any action
				that will release the borrower or any guarantor from any obligation or
				liability with regard to the loan, or impair the validity or priority of the
				lending institution's or committee's interest in the collateral unless the
				lending institution obtains the committee's prior written consent;
				and
(14) a statement permitting
				payment of charges related to loan origination, closing, and other service
				charges incurred by the lending institution in its administration of the loan
				pool, to be paid from loan funds contributed by the lending institution;
				and
(15) a statement describing the
				committee and division's right to have access to loan or loan subsidy records
				in the possession of the lending institution; and
(16) a statement describing all terms of the
				loan or loan subsidy issued from the loan pool, including:
(a) a detailed description of all repair,
				restoration or rehabilitation for the project as approved by the division and
				any modifications, exhibits or additional documents as approved by the division
				and the lending institution; and
(b) a statement that the restoration,
				rehabilitation, or repair must be completed within two years from the date the
				loan is approved by the division and closed by the lending institution;
				and
(c) a statement that the term
				of the loan or loan subsidy shall be five years and interest and principal
				shall be paid in equal installments no less than annually with the first
				installment due within one year of the date the loan is closed by the lending
				institution; this statement shall also provide that the loan shall be amortized
				over a period not to exceed twenty years, with a balloon payment due at the end
				of the five year term; in lieu of a balloon payment, the lending institution
				may purchase the remaining loan amount due to the division; and
(d) a statement that the loan or loan subsidy
				shall be secured by the collateral; and
(e) a statement that all restoration,
				rehabilitation, or repair shall be completed in conformity with the MSRL fund
				standards for rehabilitation as determined by the division; and
(f) a statement that failure by the borrower
				to comply with the standards shall be an event of default under the promissory
				note and the mortgage; and
(g) a
				statement that the division shall notify the borrower of any noncompliance with
				the standards, that the borrower has a specific period of time to cure the
				noncompliance, and if the default is not cured the division shall notify the
				lending institution of the default and the lending institution shall pursue
				appropriate remedies as stated in the loan participation agreement, promissory
				note or mortgage; and
(h) a
				statement that the lending institution shall condition the closing of the loan
				or loan subsidy upon the borrower's execution of a development agreement and
				covenants and deed restrictions with the committee, as described in Subsection
				F of 12.21.3.13 NMAC of these regulations; and that if the loan is repaid prior
				to the expiration of five years from the date the loan or loan subsidy is
				closed by the lending institution, the covenants and deed restrictions shall
				not be extinguished and shall remain in effect until the termination date of
				the development agreement and covenant and deed restriction; and a requirement
				that this provision be contained in the mortgage and all other documents
				evidencing security for the loan or loan subsidy; and
(i) a statement that the promissory note,
				mortgage, and any other documents pertaining to security for the loan or loan
				subsidy shall include provisions stating that the borrower's default in
				connection with any loan, loan subsidy or other obligation secured by a lien
				superior to the mortgage or development agreement and covenants and deed
				restrictions shall constitute an event of default of the mortgage and loan
				agreement; the division and the lending institution shall have the right (but
				not the obligation) to cure any default in connection with superior liens and
				charge the costs of curing to the borrower; and
(j) a statement requiring that a construction
				sign acknowledging the assistance of the MSRL, division and the lending
				institution, or other participating party, shall be displayed prominently at
				the project being restored, rehabilitated or repaired; and
(k) a statement requiring the lending
				institution to require the borrower to maintain financial records regarding the
				project throughout the term of the loan or loan subsidy and shall make such
				records available to the lending institution and the division upon request;
				and
(17) a statement
				regarding the lending institution's transfer of payments to the division,
				including any interest, in conformity with the division's share of
				participation in the loan pool; and
(18) a statement regarding quarterly reports
				to the participating parties from the lending institution concerning the
				project's financial and restoration, rehabilitation or repair status;
				and
(19) a statement identifying
				the name and street address of individuals to whom written notice of matters
				concerning the project shall be addressed and directed; and
(20) a statement describing the applicable
				law that governs the loan participation agreement; and
(21) a statement providing for severability,
				non-assignability, amendment of the loan participation agreement, and
(22) a statement regarding execution of the
				loan participation agreement in counterparts; and duly witnessed signatory
				lines of the parties.