[§201H-163]  Restrictions on borrower. Every loan made under this subpart shall be subject to the followingconditions:

(1)  The borrower shall expend no portion of theborrower's downpayment loan for purposes other than to make a downpayment forthe purchase of a residential property;

(2)  The residential property purchased with thedownpayment loan and mortgaged to the State to secure the repayment of the loanshall not be sold or assigned without the prior approval in writing of thecorporation and the first mortgage lender;

(3)  The borrower shall pay when due all taxes, liens,judgments, or assessments that may be lawfully levied against the residentialproperty and all costs and expenses of any foreclosure of the mortgage made tothe State;

(4)  The borrower shall maintain fire and casualtyinsurance in amounts equal to the replacement value of all improvements andinsurable portions of the residential property with an insurance companyauthorized to do business in the State.  All proceeds of that insurance shallbe made payable to the first mortgage lender and the corporation as theirrespective interests may appear at the time of any loss or damage.  Subject tothe rules of the corporation, in the event of any loss or damage to theimprovements or property covered by the insurance, the proceeds receivable bythe State shall be applied toward the reconstruction of the improvements orproperty destroyed or damaged, unless otherwise determined by the corporationon behalf of the State; and

(5)  The borrower shall maintain the improvements ingood repair.

All of the conditions in paragraphs (1) through(5) shall be a part of any downpayment mortgage executed under this subpart,regardless of whether or not they are expressly incorporated in the mortgage document.[L 2006, c 180, pt of §4]