State Codes and Statutes

Statutes > California > Hsc > 52510-52519

HEALTH AND SAFETY CODE
SECTION 52510-52519



52510.  The agency may contract with qualified mortgage lenders with
respect to mortgage loans qualified under this part to pay to such
lenders, subject to the provisions of Section 52513, a sum of money
as consideration for a reduction of the effective interest cost to
the purchaser of an owner-occupied housing unit below market interest
rates.
   The buy-down mortgage program conducted under this part may be
applicable to and include mortgage revenue bond financed programs.
With respect to mortgage revenue bond financed programs, "market
interest rate" means the effective mortgage interest rate to the
borrower without the buy-down authorized by this part.



52511.  The agency may make commitments to qualified mortgage
lenders to make contracts for buy-down mortgage plans which conform
to this part.
   The agency may require the payment to the agency of a commitment
fee to cover agency costs in extending such commitments and
associated administrative costs, except that the total of commitment
fees pursuant to this section and the projected recovery of
administrative costs pursuant to Sections 52512 and 52514 shall not
exceed the costs reasonably expected, in a prudent manner, to be
incurred by the agency in the implementation of this part.
   Commitments shall be made by the agency, acting through the policy
committee, in a manner to best serve the purposes of this part and
the interests of the first-time home buyer in the various
geographical areas of this state, in varying forms of ownership where
feasible, and including purchase of previously occupied housing,
existing but not previously occupied housing, and housing to be
constructed (with preference to housing which can be marketable
within three months of the date of the commitment).



52512.  The mortgage loan by a qualified mortgage lender for which a
buy-down contract may be executed by the agency shall be in such
form as determined by the regulations of the agency adopted by the
policy committee. Such a loan shall be for a term of not less than
six years or more than 30 years, but the repayments of principal and
interest on such loan may be scheduled to provide for amortization in
30 years subject to a balloon payment at the end of the loan term.
Such loan shall bear a fixed interest rate yield to the qualified
mortgage lender which shall not exceed market interest as determined
under Section 50080, except that the interest charged to the borrower
may be on a graduated payment schedule as authorized in Section
52513. A qualified mortgage lender may charge to the borrower such
initiation fees, points, or other charges approved by the agency, by
regulation adopted by the policy committee, or otherwise, which may
include administrative costs for the agency.
   Any such loan by a qualified mortgage lender shall not exceed 90
percent of the appraised value of the property under standards
applicable to that lender. A qualified mortgage lender shall agree to
notify the agency of any default on the loan. The agency assumes no
responsibility to the qualified mortgage lender, except for the
contracted payment for the buy-down.



52513.  The terms of the contract with a qualified mortgage lender
for the buy-down mortgage plan shall be established by regulations of
the agency adopted by the policy committee. Payments to a qualified
mortgage lender under such contract shall not exceed the capitalized
cost to the lender of the difference between market interest and the
effective interest rate to the borrower under the buy-down program,
plus any reasonable and demonstrated administrative costs, and
provision shall be made for return by that lender to the agency, for
credit against the borrower's note obtained by the agency pursuant to
Section 52514, of any sums used to purchase a buy-down of the
effective interest to the borrower on the mortgage loan and which
have been unearned by the lender by virtue of prepayment of the
mortgage loan for any reason, prior to the termination of the
buy-down period. The buy-down program shall not result in an
effective interest rate to the borrower which is more than 5 percent
below market interest and such effective rate to the borrower, or
monthly payment by the borrower, shall be adjusted annually in equal
increments until, at the end of the sixth year, it is equal to market
interest as determined at the initiation of the loan, and may, as
determined by regulations of the agency adopted by the policy
committee, exceed market interest in ensuing years in such amount as
is necessary to amortize the security interest of the agency as
provided in Section 52514, if the agency determines pursuant to
Section 52514 that the term of the note and security interest
securing the agency's participation is extended beyond the sixth
year.


52513.5.  (a) If: (1) a loan executed pursuant to Section 52512 is
for a term of less than 30 years or provides for a balloon payment;
(2) the loan has not been prepaid in full or the property has not
been sold or transferred prior to the maturity of the loan; and (3)
the borrower is not in default; the lender shall offer or arrange for
refinancing of the unpaid balance of the loan upon maturity and the
balance of any note due the agency pursuant to Section 52514.
   The refinancing may be provided directly by the lender or another
mortgage lender, or the lender may arrange at the time of making the
loan pursuant to Section 52512 for the refinancing to be provided by
a federally or state-chartered bank or savings and loan association
doing business in this state or by a qualified mortgage banker. As
used in this section "qualified mortgage banker" means a lender (1)
meeting the criteria established by the Government National Mortgage
Association for lenders selling over ten million dollars
($10,000,000) in mortgage loans to that organization annually, and
(2) which either has conducted an ongoing business of mortgage
lending in this state for not less than five years immediately
preceding the making of the loan pursuant to Section 52512, or made
over fifty million dollars ($50,000,000) in mortgage loans in this
state during the 12 months immediately preceding the making of the
loan pursuant to Section 52512. If a refinancing commitment is
arranged by the lender upon the origination of the loan pursuant to
Section 52512, this fact shall be fully and fairly disclosed to the
borrower, a copy of the lender's contract with the bank, savings and
loan association, or qualified mortgage banker making the commitment
shall be supplied to the borrower at that time, and the contract
shall be fully enforceable by the borrower as a third-party
beneficiary thereto, but the lender shall not be a guarantor of the
obligation of the bank, savings and loan association, or qualified
mortgage banker to provide refinancing.
   If the original lender is a federally or state-chartered bank or
savings and loan association doing business in this state or a
qualified mortgage banker, it may provide the refinancing commitment
to the borrower required by this section. In this event, any loan
executed pursuant to Section 53512 shall contain a provision, which
is fully and fairly disclosed to the borrower, which provides that
any assignees or successors in interest of the original lender shall
not be guarantors of the refinancing obligation, in which event the
original lender's refinancing commitment shall be fully enforceable
by the borrower.
   (b) The term of the loan for refinancing shall be established so
that the borrower's repayment schedule provides for the final
installment payment not less than 30 years from the date of
origination of the loan pursuant to Section 52512. However, if loans
at that duration are generally not available, within the meaning of
subdivision (d), the lender or other obligor shall give the borrower
a choice of any form of loan and maturity for that type of loan which
is available at the time of refinancing, within the meaning of
subdivision (d). The lender or other obligor shall inform the
borrower of the types of loans and maturities available for
refinancing under this section not less than 60 days prior to
maturity of the loan executed pursuant to Section 52512.
   (c) The interest rate for the refinancing loan shall not exceed
rates generally available in the market for the type of loan
instrument provided under subdivision (d) at the time of maturity of
the loan pursuant to Section 52512. No loan origination fees shall be
required of the borrower, either as prepaid interest or for
processing services, as a condition of obtaining a refinancing loan
pursuant to this section, but the borrower may be required to pay the
costs of obtaining a policy of title insurance in accordance with
the lender's requirements. The refinancing loan need not be a fixed
interest rate loan, unless that is the type of loan generally offered
to, and utilized by, the public pursuant to subdivision (d).
   (d) The refinancing loan may be any form of loan which, at the
time of refinancing, is generally offered to, and utilized by the
public, for financing housing similar to the borrower's by banks or
savings and loan associations doing business in this state.
   (e) The lender may require as a condition of the refinancing loan
that it be secured by a deed of trust having a lien of first
priority, and may require the borrower to submit a loan application,
at least 60 days prior to the maturity of the loan made pursuant to
Section 52512, including such information about the borrower and the
security property as is ordinarily required of borrowers with respect
to similar loans made by the lender and may impose qualifications on
the borrower or property which are conventionally applied on similar
loans on similar properties at that point in time.



52514.  In consideration for the agency's contract, and performance
of contract, to purchase a buy-down of the effective interest to the
borrower on the mortgage loan, the agency shall obtain a note and
deed of trust from the borrower under terms prescribed by regulations
of the agency adopted by the policy committee. Such note and deed of
trust shall be subordinate to the mortgage loan by a qualified
mortgage lender executed pursuant to this part. The subordinate
mortgage or deed of trust obtained by the agency under this section
may, at the option of the agency exercised upon the initiation of
such note and mortgage, provide that all amounts due and payable
shall be paid at the end of the sixth year or shall be repaid on an
amortized basis commencing with the seventh year and extending
through the 30th year, or some term selected by the agency and
provided in the initiating loan documents between the end of the
sixth year and the end of the 30th year. The amount of the
subordinate note and mortgage shall be equal to the contract amount
advanced by the agency to the qualified mortgage lender to effect the
buy-down, plus interest on those amounts at a rate calculated to
cover the cost of funds to the agency for this program and
administrative costs, less any amounts returned to the agency by the
lender for the credit of the borrower pursuant to Section 52513, and
shall be specified in the note and mortgage upon the initiation of
that note and mortgage.
   The agency may make and execute contracts with the qualified
mortgage lender for the initiation or servicing of the subordinate
mortgage loan. The agency may pay the reasonable value of services
rendered to the agency pursuant to such contracts.
   The notes and mortgages may be held or sold by the agency, or the
agency may create pools of such loans, obligations, and
participations held by the agency and may sell securities backed by
such pools.



52514.5.  All payments to the agency by the borrower on any note
executed pursuant to Section 52514 shall be considered payments of
interest for the purposes of Section 17230 of the Revenue and
Taxation Code.


52515.  The real property to be purchased by the borrower on a
mortgage loan pursuant to this part shall be an owner-occupied
housing unit, the acquisition price of which does not exceed 90
percent of the average purchase price in the statistical area, except
that such acquisition cost shall not exceed 110 percent of the
average purchase price in a targeted area. The average purchase price
means the purchase price determined by the agency, through action of
the policy committee, for similar owner-occupied units. Such
determinations shall be made not less often than annually for each
statistical area and targeted area.



52516.  The agency shall establish by regulation, adopted by the
policy committee, standards for the eligibility of purchasers of
housing subject to this part. Such individuals shall be first-time
home buyers. Mortgages pursuant to this part cannot be used to
acquire or replace an existing mortgage, except a mortgage which is
security for a construction loan or a bridge loan or similar
temporary initial financing. The purchaser shall be a resident of
California. The qualified mortgage lender shall certify to the
agency, in good faith, after prudent qualification of the purchaser
that the purchaser is qualified under the provisions of this part.
Section 51067 is not applicable to mortgage loans under this part.




52517.  Notwithstanding any other provisions of this part, only
mortgage loans are eligible for buy-down under the provisions of this
part which are presently, or are expected to be, insured in whole or
part by the Federal Housing Administration or guaranteed in whole or
part by the United States Veterans Administration, the Farmers Home
Administration of the United States Department of Agriculture, an
agency of the state, by a private insuring entity authorized to
engage in such business, or by any combination of the above, in
percentages determined by the agency by regulation adopted by the
policy committee, except that such insurance or guarantee need not be
required, in the discretion of the policy committee, if the amount
of the mortgage loan is less than 80 percent of the appraised value
of the property (under standards applicable to that lender) which is
the security for the loan.



52518.  Notwithstanding the provisions of Section 711 of the Civil
Code, the agency shall not permit the assumption of the obligation
under any note or mortgage securing the interest of the agency
pursuant to Section 52514, by a subsequent ineligible purchaser or
transferee of the prior borrower. If the subsequent purchaser or
transferee does not meet the eligibility requirements of this part,
the agency shall require acceleration of repayment of the principal
balance of the loan to be all due and payable upon the sale or
transfer of the property. For purposes of determining eligibility,
the limits on acquisition price, as specified in Section 52515, shall
be determined at the time of the proposed assumption.



52519.  The agency may renegotiate, refinance, foreclose, or
contract for the foreclosure of any mortgage executed pursuant to
Section 52514 which is in default, and may waive any default or
consent to the modification of the terms of any mortgage. With
respect to mortgage loans made pursuant to this part, the agency
shall require that mortgage servicing and foreclosure practices,
including forebearance and recasting of mortgages in default, conform
to agency regulations.
   The agency may commence any action to protect or enforce any right
conferred upon it by any law, mortgage, contract, or other
agreement, and may bid for and purchase property sold in satisfaction
thereof at any foreclosure or other sale or may otherwise acquire
and take possession of such property. In connection with any such
proceeding, the agency may assume any underlying mortgage held by a
qualified mortgage lender or may, as necessary to acquire and take
possession of such property, pay any note in order to remove any
prior encumbrance. Subject to any agreement with bondholders, the
agency may operate, manage, lease, dispose of, and otherwise deal
with such property in such manner as may be necessary to protect the
interest of the agency and the holders of its bonds.


State Codes and Statutes

Statutes > California > Hsc > 52510-52519

HEALTH AND SAFETY CODE
SECTION 52510-52519



52510.  The agency may contract with qualified mortgage lenders with
respect to mortgage loans qualified under this part to pay to such
lenders, subject to the provisions of Section 52513, a sum of money
as consideration for a reduction of the effective interest cost to
the purchaser of an owner-occupied housing unit below market interest
rates.
   The buy-down mortgage program conducted under this part may be
applicable to and include mortgage revenue bond financed programs.
With respect to mortgage revenue bond financed programs, "market
interest rate" means the effective mortgage interest rate to the
borrower without the buy-down authorized by this part.



52511.  The agency may make commitments to qualified mortgage
lenders to make contracts for buy-down mortgage plans which conform
to this part.
   The agency may require the payment to the agency of a commitment
fee to cover agency costs in extending such commitments and
associated administrative costs, except that the total of commitment
fees pursuant to this section and the projected recovery of
administrative costs pursuant to Sections 52512 and 52514 shall not
exceed the costs reasonably expected, in a prudent manner, to be
incurred by the agency in the implementation of this part.
   Commitments shall be made by the agency, acting through the policy
committee, in a manner to best serve the purposes of this part and
the interests of the first-time home buyer in the various
geographical areas of this state, in varying forms of ownership where
feasible, and including purchase of previously occupied housing,
existing but not previously occupied housing, and housing to be
constructed (with preference to housing which can be marketable
within three months of the date of the commitment).



52512.  The mortgage loan by a qualified mortgage lender for which a
buy-down contract may be executed by the agency shall be in such
form as determined by the regulations of the agency adopted by the
policy committee. Such a loan shall be for a term of not less than
six years or more than 30 years, but the repayments of principal and
interest on such loan may be scheduled to provide for amortization in
30 years subject to a balloon payment at the end of the loan term.
Such loan shall bear a fixed interest rate yield to the qualified
mortgage lender which shall not exceed market interest as determined
under Section 50080, except that the interest charged to the borrower
may be on a graduated payment schedule as authorized in Section
52513. A qualified mortgage lender may charge to the borrower such
initiation fees, points, or other charges approved by the agency, by
regulation adopted by the policy committee, or otherwise, which may
include administrative costs for the agency.
   Any such loan by a qualified mortgage lender shall not exceed 90
percent of the appraised value of the property under standards
applicable to that lender. A qualified mortgage lender shall agree to
notify the agency of any default on the loan. The agency assumes no
responsibility to the qualified mortgage lender, except for the
contracted payment for the buy-down.



52513.  The terms of the contract with a qualified mortgage lender
for the buy-down mortgage plan shall be established by regulations of
the agency adopted by the policy committee. Payments to a qualified
mortgage lender under such contract shall not exceed the capitalized
cost to the lender of the difference between market interest and the
effective interest rate to the borrower under the buy-down program,
plus any reasonable and demonstrated administrative costs, and
provision shall be made for return by that lender to the agency, for
credit against the borrower's note obtained by the agency pursuant to
Section 52514, of any sums used to purchase a buy-down of the
effective interest to the borrower on the mortgage loan and which
have been unearned by the lender by virtue of prepayment of the
mortgage loan for any reason, prior to the termination of the
buy-down period. The buy-down program shall not result in an
effective interest rate to the borrower which is more than 5 percent
below market interest and such effective rate to the borrower, or
monthly payment by the borrower, shall be adjusted annually in equal
increments until, at the end of the sixth year, it is equal to market
interest as determined at the initiation of the loan, and may, as
determined by regulations of the agency adopted by the policy
committee, exceed market interest in ensuing years in such amount as
is necessary to amortize the security interest of the agency as
provided in Section 52514, if the agency determines pursuant to
Section 52514 that the term of the note and security interest
securing the agency's participation is extended beyond the sixth
year.


52513.5.  (a) If: (1) a loan executed pursuant to Section 52512 is
for a term of less than 30 years or provides for a balloon payment;
(2) the loan has not been prepaid in full or the property has not
been sold or transferred prior to the maturity of the loan; and (3)
the borrower is not in default; the lender shall offer or arrange for
refinancing of the unpaid balance of the loan upon maturity and the
balance of any note due the agency pursuant to Section 52514.
   The refinancing may be provided directly by the lender or another
mortgage lender, or the lender may arrange at the time of making the
loan pursuant to Section 52512 for the refinancing to be provided by
a federally or state-chartered bank or savings and loan association
doing business in this state or by a qualified mortgage banker. As
used in this section "qualified mortgage banker" means a lender (1)
meeting the criteria established by the Government National Mortgage
Association for lenders selling over ten million dollars
($10,000,000) in mortgage loans to that organization annually, and
(2) which either has conducted an ongoing business of mortgage
lending in this state for not less than five years immediately
preceding the making of the loan pursuant to Section 52512, or made
over fifty million dollars ($50,000,000) in mortgage loans in this
state during the 12 months immediately preceding the making of the
loan pursuant to Section 52512. If a refinancing commitment is
arranged by the lender upon the origination of the loan pursuant to
Section 52512, this fact shall be fully and fairly disclosed to the
borrower, a copy of the lender's contract with the bank, savings and
loan association, or qualified mortgage banker making the commitment
shall be supplied to the borrower at that time, and the contract
shall be fully enforceable by the borrower as a third-party
beneficiary thereto, but the lender shall not be a guarantor of the
obligation of the bank, savings and loan association, or qualified
mortgage banker to provide refinancing.
   If the original lender is a federally or state-chartered bank or
savings and loan association doing business in this state or a
qualified mortgage banker, it may provide the refinancing commitment
to the borrower required by this section. In this event, any loan
executed pursuant to Section 53512 shall contain a provision, which
is fully and fairly disclosed to the borrower, which provides that
any assignees or successors in interest of the original lender shall
not be guarantors of the refinancing obligation, in which event the
original lender's refinancing commitment shall be fully enforceable
by the borrower.
   (b) The term of the loan for refinancing shall be established so
that the borrower's repayment schedule provides for the final
installment payment not less than 30 years from the date of
origination of the loan pursuant to Section 52512. However, if loans
at that duration are generally not available, within the meaning of
subdivision (d), the lender or other obligor shall give the borrower
a choice of any form of loan and maturity for that type of loan which
is available at the time of refinancing, within the meaning of
subdivision (d). The lender or other obligor shall inform the
borrower of the types of loans and maturities available for
refinancing under this section not less than 60 days prior to
maturity of the loan executed pursuant to Section 52512.
   (c) The interest rate for the refinancing loan shall not exceed
rates generally available in the market for the type of loan
instrument provided under subdivision (d) at the time of maturity of
the loan pursuant to Section 52512. No loan origination fees shall be
required of the borrower, either as prepaid interest or for
processing services, as a condition of obtaining a refinancing loan
pursuant to this section, but the borrower may be required to pay the
costs of obtaining a policy of title insurance in accordance with
the lender's requirements. The refinancing loan need not be a fixed
interest rate loan, unless that is the type of loan generally offered
to, and utilized by, the public pursuant to subdivision (d).
   (d) The refinancing loan may be any form of loan which, at the
time of refinancing, is generally offered to, and utilized by the
public, for financing housing similar to the borrower's by banks or
savings and loan associations doing business in this state.
   (e) The lender may require as a condition of the refinancing loan
that it be secured by a deed of trust having a lien of first
priority, and may require the borrower to submit a loan application,
at least 60 days prior to the maturity of the loan made pursuant to
Section 52512, including such information about the borrower and the
security property as is ordinarily required of borrowers with respect
to similar loans made by the lender and may impose qualifications on
the borrower or property which are conventionally applied on similar
loans on similar properties at that point in time.



52514.  In consideration for the agency's contract, and performance
of contract, to purchase a buy-down of the effective interest to the
borrower on the mortgage loan, the agency shall obtain a note and
deed of trust from the borrower under terms prescribed by regulations
of the agency adopted by the policy committee. Such note and deed of
trust shall be subordinate to the mortgage loan by a qualified
mortgage lender executed pursuant to this part. The subordinate
mortgage or deed of trust obtained by the agency under this section
may, at the option of the agency exercised upon the initiation of
such note and mortgage, provide that all amounts due and payable
shall be paid at the end of the sixth year or shall be repaid on an
amortized basis commencing with the seventh year and extending
through the 30th year, or some term selected by the agency and
provided in the initiating loan documents between the end of the
sixth year and the end of the 30th year. The amount of the
subordinate note and mortgage shall be equal to the contract amount
advanced by the agency to the qualified mortgage lender to effect the
buy-down, plus interest on those amounts at a rate calculated to
cover the cost of funds to the agency for this program and
administrative costs, less any amounts returned to the agency by the
lender for the credit of the borrower pursuant to Section 52513, and
shall be specified in the note and mortgage upon the initiation of
that note and mortgage.
   The agency may make and execute contracts with the qualified
mortgage lender for the initiation or servicing of the subordinate
mortgage loan. The agency may pay the reasonable value of services
rendered to the agency pursuant to such contracts.
   The notes and mortgages may be held or sold by the agency, or the
agency may create pools of such loans, obligations, and
participations held by the agency and may sell securities backed by
such pools.



52514.5.  All payments to the agency by the borrower on any note
executed pursuant to Section 52514 shall be considered payments of
interest for the purposes of Section 17230 of the Revenue and
Taxation Code.


52515.  The real property to be purchased by the borrower on a
mortgage loan pursuant to this part shall be an owner-occupied
housing unit, the acquisition price of which does not exceed 90
percent of the average purchase price in the statistical area, except
that such acquisition cost shall not exceed 110 percent of the
average purchase price in a targeted area. The average purchase price
means the purchase price determined by the agency, through action of
the policy committee, for similar owner-occupied units. Such
determinations shall be made not less often than annually for each
statistical area and targeted area.



52516.  The agency shall establish by regulation, adopted by the
policy committee, standards for the eligibility of purchasers of
housing subject to this part. Such individuals shall be first-time
home buyers. Mortgages pursuant to this part cannot be used to
acquire or replace an existing mortgage, except a mortgage which is
security for a construction loan or a bridge loan or similar
temporary initial financing. The purchaser shall be a resident of
California. The qualified mortgage lender shall certify to the
agency, in good faith, after prudent qualification of the purchaser
that the purchaser is qualified under the provisions of this part.
Section 51067 is not applicable to mortgage loans under this part.




52517.  Notwithstanding any other provisions of this part, only
mortgage loans are eligible for buy-down under the provisions of this
part which are presently, or are expected to be, insured in whole or
part by the Federal Housing Administration or guaranteed in whole or
part by the United States Veterans Administration, the Farmers Home
Administration of the United States Department of Agriculture, an
agency of the state, by a private insuring entity authorized to
engage in such business, or by any combination of the above, in
percentages determined by the agency by regulation adopted by the
policy committee, except that such insurance or guarantee need not be
required, in the discretion of the policy committee, if the amount
of the mortgage loan is less than 80 percent of the appraised value
of the property (under standards applicable to that lender) which is
the security for the loan.



52518.  Notwithstanding the provisions of Section 711 of the Civil
Code, the agency shall not permit the assumption of the obligation
under any note or mortgage securing the interest of the agency
pursuant to Section 52514, by a subsequent ineligible purchaser or
transferee of the prior borrower. If the subsequent purchaser or
transferee does not meet the eligibility requirements of this part,
the agency shall require acceleration of repayment of the principal
balance of the loan to be all due and payable upon the sale or
transfer of the property. For purposes of determining eligibility,
the limits on acquisition price, as specified in Section 52515, shall
be determined at the time of the proposed assumption.



52519.  The agency may renegotiate, refinance, foreclose, or
contract for the foreclosure of any mortgage executed pursuant to
Section 52514 which is in default, and may waive any default or
consent to the modification of the terms of any mortgage. With
respect to mortgage loans made pursuant to this part, the agency
shall require that mortgage servicing and foreclosure practices,
including forebearance and recasting of mortgages in default, conform
to agency regulations.
   The agency may commence any action to protect or enforce any right
conferred upon it by any law, mortgage, contract, or other
agreement, and may bid for and purchase property sold in satisfaction
thereof at any foreclosure or other sale or may otherwise acquire
and take possession of such property. In connection with any such
proceeding, the agency may assume any underlying mortgage held by a
qualified mortgage lender or may, as necessary to acquire and take
possession of such property, pay any note in order to remove any
prior encumbrance. Subject to any agreement with bondholders, the
agency may operate, manage, lease, dispose of, and otherwise deal
with such property in such manner as may be necessary to protect the
interest of the agency and the holders of its bonds.



State Codes and Statutes

State Codes and Statutes

Statutes > California > Hsc > 52510-52519

HEALTH AND SAFETY CODE
SECTION 52510-52519



52510.  The agency may contract with qualified mortgage lenders with
respect to mortgage loans qualified under this part to pay to such
lenders, subject to the provisions of Section 52513, a sum of money
as consideration for a reduction of the effective interest cost to
the purchaser of an owner-occupied housing unit below market interest
rates.
   The buy-down mortgage program conducted under this part may be
applicable to and include mortgage revenue bond financed programs.
With respect to mortgage revenue bond financed programs, "market
interest rate" means the effective mortgage interest rate to the
borrower without the buy-down authorized by this part.



52511.  The agency may make commitments to qualified mortgage
lenders to make contracts for buy-down mortgage plans which conform
to this part.
   The agency may require the payment to the agency of a commitment
fee to cover agency costs in extending such commitments and
associated administrative costs, except that the total of commitment
fees pursuant to this section and the projected recovery of
administrative costs pursuant to Sections 52512 and 52514 shall not
exceed the costs reasonably expected, in a prudent manner, to be
incurred by the agency in the implementation of this part.
   Commitments shall be made by the agency, acting through the policy
committee, in a manner to best serve the purposes of this part and
the interests of the first-time home buyer in the various
geographical areas of this state, in varying forms of ownership where
feasible, and including purchase of previously occupied housing,
existing but not previously occupied housing, and housing to be
constructed (with preference to housing which can be marketable
within three months of the date of the commitment).



52512.  The mortgage loan by a qualified mortgage lender for which a
buy-down contract may be executed by the agency shall be in such
form as determined by the regulations of the agency adopted by the
policy committee. Such a loan shall be for a term of not less than
six years or more than 30 years, but the repayments of principal and
interest on such loan may be scheduled to provide for amortization in
30 years subject to a balloon payment at the end of the loan term.
Such loan shall bear a fixed interest rate yield to the qualified
mortgage lender which shall not exceed market interest as determined
under Section 50080, except that the interest charged to the borrower
may be on a graduated payment schedule as authorized in Section
52513. A qualified mortgage lender may charge to the borrower such
initiation fees, points, or other charges approved by the agency, by
regulation adopted by the policy committee, or otherwise, which may
include administrative costs for the agency.
   Any such loan by a qualified mortgage lender shall not exceed 90
percent of the appraised value of the property under standards
applicable to that lender. A qualified mortgage lender shall agree to
notify the agency of any default on the loan. The agency assumes no
responsibility to the qualified mortgage lender, except for the
contracted payment for the buy-down.



52513.  The terms of the contract with a qualified mortgage lender
for the buy-down mortgage plan shall be established by regulations of
the agency adopted by the policy committee. Payments to a qualified
mortgage lender under such contract shall not exceed the capitalized
cost to the lender of the difference between market interest and the
effective interest rate to the borrower under the buy-down program,
plus any reasonable and demonstrated administrative costs, and
provision shall be made for return by that lender to the agency, for
credit against the borrower's note obtained by the agency pursuant to
Section 52514, of any sums used to purchase a buy-down of the
effective interest to the borrower on the mortgage loan and which
have been unearned by the lender by virtue of prepayment of the
mortgage loan for any reason, prior to the termination of the
buy-down period. The buy-down program shall not result in an
effective interest rate to the borrower which is more than 5 percent
below market interest and such effective rate to the borrower, or
monthly payment by the borrower, shall be adjusted annually in equal
increments until, at the end of the sixth year, it is equal to market
interest as determined at the initiation of the loan, and may, as
determined by regulations of the agency adopted by the policy
committee, exceed market interest in ensuing years in such amount as
is necessary to amortize the security interest of the agency as
provided in Section 52514, if the agency determines pursuant to
Section 52514 that the term of the note and security interest
securing the agency's participation is extended beyond the sixth
year.


52513.5.  (a) If: (1) a loan executed pursuant to Section 52512 is
for a term of less than 30 years or provides for a balloon payment;
(2) the loan has not been prepaid in full or the property has not
been sold or transferred prior to the maturity of the loan; and (3)
the borrower is not in default; the lender shall offer or arrange for
refinancing of the unpaid balance of the loan upon maturity and the
balance of any note due the agency pursuant to Section 52514.
   The refinancing may be provided directly by the lender or another
mortgage lender, or the lender may arrange at the time of making the
loan pursuant to Section 52512 for the refinancing to be provided by
a federally or state-chartered bank or savings and loan association
doing business in this state or by a qualified mortgage banker. As
used in this section "qualified mortgage banker" means a lender (1)
meeting the criteria established by the Government National Mortgage
Association for lenders selling over ten million dollars
($10,000,000) in mortgage loans to that organization annually, and
(2) which either has conducted an ongoing business of mortgage
lending in this state for not less than five years immediately
preceding the making of the loan pursuant to Section 52512, or made
over fifty million dollars ($50,000,000) in mortgage loans in this
state during the 12 months immediately preceding the making of the
loan pursuant to Section 52512. If a refinancing commitment is
arranged by the lender upon the origination of the loan pursuant to
Section 52512, this fact shall be fully and fairly disclosed to the
borrower, a copy of the lender's contract with the bank, savings and
loan association, or qualified mortgage banker making the commitment
shall be supplied to the borrower at that time, and the contract
shall be fully enforceable by the borrower as a third-party
beneficiary thereto, but the lender shall not be a guarantor of the
obligation of the bank, savings and loan association, or qualified
mortgage banker to provide refinancing.
   If the original lender is a federally or state-chartered bank or
savings and loan association doing business in this state or a
qualified mortgage banker, it may provide the refinancing commitment
to the borrower required by this section. In this event, any loan
executed pursuant to Section 53512 shall contain a provision, which
is fully and fairly disclosed to the borrower, which provides that
any assignees or successors in interest of the original lender shall
not be guarantors of the refinancing obligation, in which event the
original lender's refinancing commitment shall be fully enforceable
by the borrower.
   (b) The term of the loan for refinancing shall be established so
that the borrower's repayment schedule provides for the final
installment payment not less than 30 years from the date of
origination of the loan pursuant to Section 52512. However, if loans
at that duration are generally not available, within the meaning of
subdivision (d), the lender or other obligor shall give the borrower
a choice of any form of loan and maturity for that type of loan which
is available at the time of refinancing, within the meaning of
subdivision (d). The lender or other obligor shall inform the
borrower of the types of loans and maturities available for
refinancing under this section not less than 60 days prior to
maturity of the loan executed pursuant to Section 52512.
   (c) The interest rate for the refinancing loan shall not exceed
rates generally available in the market for the type of loan
instrument provided under subdivision (d) at the time of maturity of
the loan pursuant to Section 52512. No loan origination fees shall be
required of the borrower, either as prepaid interest or for
processing services, as a condition of obtaining a refinancing loan
pursuant to this section, but the borrower may be required to pay the
costs of obtaining a policy of title insurance in accordance with
the lender's requirements. The refinancing loan need not be a fixed
interest rate loan, unless that is the type of loan generally offered
to, and utilized by, the public pursuant to subdivision (d).
   (d) The refinancing loan may be any form of loan which, at the
time of refinancing, is generally offered to, and utilized by the
public, for financing housing similar to the borrower's by banks or
savings and loan associations doing business in this state.
   (e) The lender may require as a condition of the refinancing loan
that it be secured by a deed of trust having a lien of first
priority, and may require the borrower to submit a loan application,
at least 60 days prior to the maturity of the loan made pursuant to
Section 52512, including such information about the borrower and the
security property as is ordinarily required of borrowers with respect
to similar loans made by the lender and may impose qualifications on
the borrower or property which are conventionally applied on similar
loans on similar properties at that point in time.



52514.  In consideration for the agency's contract, and performance
of contract, to purchase a buy-down of the effective interest to the
borrower on the mortgage loan, the agency shall obtain a note and
deed of trust from the borrower under terms prescribed by regulations
of the agency adopted by the policy committee. Such note and deed of
trust shall be subordinate to the mortgage loan by a qualified
mortgage lender executed pursuant to this part. The subordinate
mortgage or deed of trust obtained by the agency under this section
may, at the option of the agency exercised upon the initiation of
such note and mortgage, provide that all amounts due and payable
shall be paid at the end of the sixth year or shall be repaid on an
amortized basis commencing with the seventh year and extending
through the 30th year, or some term selected by the agency and
provided in the initiating loan documents between the end of the
sixth year and the end of the 30th year. The amount of the
subordinate note and mortgage shall be equal to the contract amount
advanced by the agency to the qualified mortgage lender to effect the
buy-down, plus interest on those amounts at a rate calculated to
cover the cost of funds to the agency for this program and
administrative costs, less any amounts returned to the agency by the
lender for the credit of the borrower pursuant to Section 52513, and
shall be specified in the note and mortgage upon the initiation of
that note and mortgage.
   The agency may make and execute contracts with the qualified
mortgage lender for the initiation or servicing of the subordinate
mortgage loan. The agency may pay the reasonable value of services
rendered to the agency pursuant to such contracts.
   The notes and mortgages may be held or sold by the agency, or the
agency may create pools of such loans, obligations, and
participations held by the agency and may sell securities backed by
such pools.



52514.5.  All payments to the agency by the borrower on any note
executed pursuant to Section 52514 shall be considered payments of
interest for the purposes of Section 17230 of the Revenue and
Taxation Code.


52515.  The real property to be purchased by the borrower on a
mortgage loan pursuant to this part shall be an owner-occupied
housing unit, the acquisition price of which does not exceed 90
percent of the average purchase price in the statistical area, except
that such acquisition cost shall not exceed 110 percent of the
average purchase price in a targeted area. The average purchase price
means the purchase price determined by the agency, through action of
the policy committee, for similar owner-occupied units. Such
determinations shall be made not less often than annually for each
statistical area and targeted area.



52516.  The agency shall establish by regulation, adopted by the
policy committee, standards for the eligibility of purchasers of
housing subject to this part. Such individuals shall be first-time
home buyers. Mortgages pursuant to this part cannot be used to
acquire or replace an existing mortgage, except a mortgage which is
security for a construction loan or a bridge loan or similar
temporary initial financing. The purchaser shall be a resident of
California. The qualified mortgage lender shall certify to the
agency, in good faith, after prudent qualification of the purchaser
that the purchaser is qualified under the provisions of this part.
Section 51067 is not applicable to mortgage loans under this part.




52517.  Notwithstanding any other provisions of this part, only
mortgage loans are eligible for buy-down under the provisions of this
part which are presently, or are expected to be, insured in whole or
part by the Federal Housing Administration or guaranteed in whole or
part by the United States Veterans Administration, the Farmers Home
Administration of the United States Department of Agriculture, an
agency of the state, by a private insuring entity authorized to
engage in such business, or by any combination of the above, in
percentages determined by the agency by regulation adopted by the
policy committee, except that such insurance or guarantee need not be
required, in the discretion of the policy committee, if the amount
of the mortgage loan is less than 80 percent of the appraised value
of the property (under standards applicable to that lender) which is
the security for the loan.



52518.  Notwithstanding the provisions of Section 711 of the Civil
Code, the agency shall not permit the assumption of the obligation
under any note or mortgage securing the interest of the agency
pursuant to Section 52514, by a subsequent ineligible purchaser or
transferee of the prior borrower. If the subsequent purchaser or
transferee does not meet the eligibility requirements of this part,
the agency shall require acceleration of repayment of the principal
balance of the loan to be all due and payable upon the sale or
transfer of the property. For purposes of determining eligibility,
the limits on acquisition price, as specified in Section 52515, shall
be determined at the time of the proposed assumption.



52519.  The agency may renegotiate, refinance, foreclose, or
contract for the foreclosure of any mortgage executed pursuant to
Section 52514 which is in default, and may waive any default or
consent to the modification of the terms of any mortgage. With
respect to mortgage loans made pursuant to this part, the agency
shall require that mortgage servicing and foreclosure practices,
including forebearance and recasting of mortgages in default, conform
to agency regulations.
   The agency may commence any action to protect or enforce any right
conferred upon it by any law, mortgage, contract, or other
agreement, and may bid for and purchase property sold in satisfaction
thereof at any foreclosure or other sale or may otherwise acquire
and take possession of such property. In connection with any such
proceeding, the agency may assume any underlying mortgage held by a
qualified mortgage lender or may, as necessary to acquire and take
possession of such property, pay any note in order to remove any
prior encumbrance. Subject to any agreement with bondholders, the
agency may operate, manage, lease, dispose of, and otherwise deal
with such property in such manner as may be necessary to protect the
interest of the agency and the holders of its bonds.