Section 457-314-7 - Contracts; Fees and ExpensesAn applicant must enter into a contract with the Authority regarding the funds to be disbursed. At a minimum, the contract must specify:
A. That each applicant shall establish its own revolving loan fund with the monies it receives from the Authority. An applicant may make loans from its own fund within the parameters of this rule.B. A loan payment default rate that will be acceptable to the Authority during the term of the contract. To the extent the applicant's actual default rate exceeds that set forth in the contract, the Authority (1) may require that all loans which the applicant proposes to make thereafter be approved by the Authority, until the applicant brings its loan payment default rate into compliance with the contract, and(2) may require that the applicant pay to the Authority an amount equal to the difference between the acceptable default rate set forth in the contract and the actual default rate. A loan payment default shall be defined as any payment that is ninety (90) days or more past due.C. That the funds are to be disbursed in periodic installments as the applicant commits to make loans to eligible borrowers, up to the original amount of the total disbursement.D. That the applicant will use program funds only for eligible projects, and as otherwise set forth in this rule.E. That the applicant will operate its loan program in substantial conformance with its proposal to the Authority.F. That except as set forth in Section 6(C), the applicant shall be responsible for review of loan applications from eligible borrowers, determination of eligibility of those borrowers and feasibility of the project and/or approval or denial of those applications. The applicant's determination shall be final in the case of loans under $150,000 or in the case of denials in any amount. In all cases, the applicant must have the Authority's approval of any loans of $150,000 or more.G. That officers or employees of the applicant or members of any credit committees of the applicant shall be barred from participation in any way and any decision regarding projects which that officer, employee or member has a direct or indirect personal financial interest.H. That the Authority may withhold further funding and may require repayment of any undisbursed loan funds and loan repayments including an assignment of all loan documents if the applicant is in breach of its contract.I. That the applicant may not use any monies disbursed from the fund (including that portion of loan repayments from borrowers that represent principal repayment) for administrative expenses but may charge a commitment fee of up to two percent (2%) and may use actual interest earnings, not to exceed seven percent (7%) of its outstanding program loans annually, on loans to cover reasonable operating costs, including loan fund management, technical assistance and education. To the extent interest earnings on outstanding program loans accrue, but are not paid by borrowers, these earnings may be used, when and if collected, to offset operating costs which have not been previously paid by other program loan commitment fees and interest earnings, subject to the limitations set forth in this paragraph.J. That the applicant shall pay an annual fund administration fee to the Authority equal to one percent (1%) of the amount of the applicant's total disbursement which has been received by the applicant to date. To the extent that fund monies have not been disbursed, the Authority is entitled to a fund administration fee equal to one percent (1%) of those undisbursed amounts, to be derived from interest earned thereon. All such fund administration fees payable by applicants shall be determined and payable beginning on the first anniversary date of the applicant's contract. The Authority may, in its sole discretion, voluntarily reduce the amount of annual fund administration fees for all applicants if the Authority determines that such a fee reduction is warranted. Any such fee reduction may be for a specified period.K. That any amounts disbursed to an applicant must be lent to the intended borrower within three (3) months of the applicant's receipt. If not lent within three (3) months, any such monies must be returned to the Authority's fund upon request of the Authority with a written explanation as to why the loan was not made.L. Such other terms and conditions as the Authority deems appropriate.94- 457 C.M.R. ch. 314, § 7