Section 6-27-16 - Assumption(a) No assumption shall be allowed of any loan made after June 30, 1974.(b) The system may consent to only one assumption of a loan made before July 1, 1974, upon the following conditions: (1) The borrower and buyer shall agree that the interest rate for the loan shall be increased to the interest rate in effect for new loans being made during the allocation period, if the interest rate for the allocation period is more than the interest rate specified in the loan. The borrower and buyer shall agree to sign all documents required to reflect any modification in interest rate;(2) The buyer shall have the creditworthiness to assume the loan;(3) If the buyer is an eligible member, the buyer shall meet the underwriting requirements as the applicant, pursuant to section 6-27-11;(4) If the buyer is not an eligible member, the buyer's monthly mortgage payment shall not exceed twenty-five per cent of the buyer's stable monthly income less any monthly debt payments. If the buyer does not qualify for the loan, the system shall consider on a case-by-case basis a loan with no more than two personal guarantors, endorsers or other cosigners. The guarantee, endorsement or agreement shall not be qualified or limited in any manner. All credit underwriting standards shall apply to the credit evaluation of a guarantor, endorser, or co-signer. The monthly mortgage payment shall not exceed twenty-five per cent of the combined stable monthly income of the buyer and the guarantor, endorser or co-signer less any monthly debt payments. In addition, the buyer's monthly mortgage payment shall not exceed forty per cent of the buyer's stable monthly income less any monthly debt payments;(5) The buyer shall agree to pay a loan assumption fee of one per cent of the loan balance, plus all costs and expenses, including attorney's fees, related to the assumption of the loan;(6) The buyer shall promise the system in writing to occupy the mortgaged property as a principal home for at least one year after the date the assumption of mortgage becomes effective;(7) The mortgage shall continue to be a first lien on the mortgaged property; and(8) The buyer shall agree to make immediate payment in full of all amounts due under the loan upon a further sale or transfer of the mortgaged property. A loan may not be assumed if the person who is applying initially acquired the mortgaged property by way of an agreement of sale and is requesting the system to consent to the buyer's assumption of the underlying loan.
[Eff 2/9/89] (Auth: HRS §§ 88-28, 88-119.5) (Imp: HRS §§ 88-119, 88-119.5)