Section 7408 - Rates and TermsThe following rates and terms apply to all commitments and loans from the Fund.
(a) Commitments of funds to local entities for borrowers.(1) All funds committed from the Fund to local entities shall be loaned to borrowers within a period to be determined by the Department.(2) The Loan Committee may provide for a waiver of interest payments when, and to the extent that, a local entity remits to the Department, in advance on behalf of the borrower, a sum equal to not less than 15 percent of the original principal balance of the loan to the borrower. This sum shall be in lieu of interest. Local entities may choose to make such advance payments when they make loans to borrowers at less than 3 percent.(3) Funds, including loan principal and interest, including any interest attributable to delinquency paid thereon by borrowers, shall be repaid by local entities to the Department promptly as borrowers repay loans to local entities.(b) Loans to local entities for direct rehabilitation and repair by code enforcement agencies. (1) Loans made pursuant to this subsection shall not bear interest, except as provided under (b)(2).(2) Any rehabilitation expenditures pursuant to this subsection shall be made a special assessment or lien against the properties affected and shall require that the full amount collected by the local entities, up to the cost of rehabilitation, and any interest collected on that sum, be promptly repaid to the Fund.(3) Loan funds shall be expended within a period to be determined by the Department.(c) Loans to low or moderate-income owner-occupants of units to be assisted.(1) Loans from local entities to borrowers shall bear simple interest at the rate of 3 percent per annum on the original balance which shall be payable to the local entities when the loan is due.(2) Payment of interest by the borrower may be waived or adjusted to less than 3 percent only when a local entity complies with the requirements of subsection (a)(3).(3) Loans to elderly borrowers shall be due and repayable to the local entity upon sale, conveyance or transfer of the property or any interest therein, although the borrower may repay the entire amount of the loan earlier at his or her discretion. Loans shall also be due and repayable if the elderly borrower no longer occupies the unit as his or her principal residence for reasons other than medical treatment or disability, requiring a temporary alternative residence for the elderly borrower.(4) Loans to non-elderly owner-occupants shall be due and repayable to the local entity if the borrower no longer occupies the unit as his or her principal residence or upon sale, conveyance or transfer of the property or any interest therein to any person other than a person of low or moderate income who is eligible pursuant to Section 7404(f). Loans shall have five-year terms, which may be renewed as long as the property is not transferred, the borrower continues to occupy the property and the borrower's income and assets are such that the deferred payment loan could not be feasibly repaid by refinancing from other sources. A local entity shall only renew loans for one five-year period at a time. A borrower may repay the entire amount of the loan earlier at his or her discretion. If the borrower becomes elderly during the term of the loan, the loan shall be repaid pursuant to subsection (3).(5) Local entities may not approve or agree to any refinancing, assumption or subordination with respect to a Program loan or real property securing the loan without the prior approval of the Department.(d) Loans to owners of rental units. (1) Loans from local entities to borrowers shall bear simple interest at the rate of 3 percent per annum on unpaid principal balance which shall be payable to the local entity when the loan is due.(2) Loans shall have five-year terms unless the local entity and the Department determine that a longer term is required to ensure the economic feasibility of obtaining other rehabilitation financing or accepting subsidies. The initial five-year term may be renewed up to five additional five-year periods for a total term of up to thirty years, as long as the local entity determines that low income households residing in the rental units will benefit, pursuant to the loan agreement. Local entities shall renew loans only for one five-year period at a time unless multiple five-year periods are essential to the feasibility of continuing to benefit low-income households.(3) Local entities may not approve, or agree to any refinancing, assumption or subordination with respect to a Program loan or real property securing the loan without the prior approval of the Department.(e) Incremental repayments to either the Department or local entities shall not be permitted.Cal. Code Regs. Tit. 25, § 7408
1. Amendment filed 10-2-81; effective thirtieth day thereafter (Register 81, No. 40).
2. Amendment of subsection (d)(2) and repealer of subsection (f) filed 11-2-82; effective thirtieth day thereafter (Register 82, No. 45).
3. Editorial correction of subsection (c)(4) filed 1-6-83 (Register 83, No. 2).
4. Amendment filed 6-3-85; effective thirtieth day thereafter (Register 85, No. 23). Note: Authority cited: Section 50662, Health and Safety Code. Reference: Sections 50660-50668, Health and Safety Code.
1. Amendment filed 10-2-81; effective thirtieth day thereafter (Register 81, No. 40).
2. Amendment of subsection (d)(2) and repealer of subsection (f) filed 11-2-82; effective thirtieth day thereafter (Register 82, No. 45).
3. Editorial correction of subsection (c)(4) filed 1-6-83 (Register 83, No. 2).
4. Amendment filed 6-3-85; effective thirtieth day thereafter (Register 85, No. 23).