Current through Register Vol. XLI, No. 50, December 13, 2024
Section 88-1-2 - Description of program2.1. General purpose. -- The Legislature of West Virginia has created and established the State Mortgage and Industrial Development Pool from which the Board of Investments shall make available for investment in single-family mortgage loans the sum of twenty million dollars ($20,000,000) on June 11, 1982, the sum of twenty million dollars ($20,000,000) on October 1, 1982, and the sum of ten million dollars ($10,000,000) on January 1, 1983. Unless sooner invested in single-family mortgage loans, the funds revert to the exclusive control of the Board of Investments one (1) year from the date on which the funds become part of the Mortgage Investment Pool.2.2. Definitions. -- The following terms have the following meanings when used in these regulations: (a) "Act" means article eighteen-b of chapter thirty-one of the Code of West Virginia, 1931, as amended.(b) "Approved Servicer" means any person legally authorized to engage in the business of servicing loans of the general character of Program Loans in the state, having one or more offices in the state at which residential mortgage loans are originated and which has been approved by and entered into a Program Loan Servicing Agreement with the Board of Investments. An Approved Servicer which is a bank or savings and loan association must be under the supervision of the Department of Banking of the state or be a national banking association or a federal savings and loan association having its principal place of business in the state.(c) "Closing Costs" mean the fees and charges customarily collected by a lender from a borrower in a residential real estate mortgage loan transaction, to pay real estate taxes, mortgage insurance premiums, property insurance premiums, mortgagee title insurance premiums, survey fees, fees for preparation of the deed, deed of trust, settlement statement and related documents, escrows for future payment of taxes and insurance, official fees and fees for notarizing deeds and other documents, appraisal fees, credit reports and other items of a similar nature.(d) "Eligible Borrower" means a person or family, irrespective of race, sex, national origin, religion or location in this State, whose gross family income for each of the two (2) calendar years preceding the year in which the commitment to make the Program Loan is issued is fifty thousand dollars ($50,000) or less, and who is otherwise eligible under these regulations, who uses the proceeds of a Program Loan solely for the purpose of (i) purchasing real estate upon which is situate an Eligible Single-Family Dwelling, (ii) the construction of an Eligible Single-Family Dwelling upon real estate by the Eligible Borrower to provide housing for only himself and his family, (iii) the payment of a loan theretofore made for the construction of an Eligible Single-Family Dwelling or (iv) purchasing real estate upon which is situate an Eligible Single-Family Dwelling and making additions or improvements thereto.(e) "Eligible Single-Family Dwelling" means a detached unit on a separate piece of land used solely for the housing of one (1) family, and only one family, which family owns the Eligible Single-Family Dwelling and the land, and includes townhouses or row houses owned and used by an Eligible Borrower as a residential dwelling, excluding mobile homes or double-wide units. The land for an Eligible Single-Family Dwelling may not be more or less than that needed for basic livability, as determined by the Housing Development Fund.(f) "Mortgage Investment Pool" means the portion of the State Mortgage and Industrial Development Investment Pool created under the Act, in the total amount of fifty million dollars ($50,000,000), required by the Act to be invested by the Housing Development Fund.(g) "Participating Lender" means any lending institution licensed to do business in the state authorized to engage in the business of making loans of the general character of Program Loans and which is approved by and enters into a Program Loan Purchase Agreement with the Board of Investments. A Participating Lender which is a bank or savings and loan association must be under the supervision of the Department of Banking of the state or be a national banking association or a federal savings and loan association having its principal place of business in the state.(h) "Program Loan" means a loan from the Mortgage Investment Pool, made by a Participating Lender to an Eligible Borrower pursuant to these regulations.(i) "Real Estate Broker" means, with respect to the sale of an Eligible Single-Family Dwelling, any person, partnership, association or corporation, who for a fee, commission or other valuable consideration or with the intention or expectation of receiving or collecting the same, performs any of the services or activities necessary to cause him or it to be considered a real estate broker within the meaning of West Virginia Code, section one, article twelve, chapter forty-seven et seq.(j) "State" means the State of West Virginia.2.3. Terms of Program Loans. -- Program Loans shall be subject to the following requirements: (a) Amount of loan. -- The original principal amount of a Program Loan may not exceed seventy-five thousand dollars ($75,000).(b) Term of loan. -- The principal of an interest on a Program Loan shall be amortized over a period not to exceed thirty (30) years.(c) Interest rate; future rate increase. -- The initial interest rate on a Program Loan may not exceed the monthly index of long-term United States bond yields for the calendar month preceding the date on which the commitment for such loan is made, and for purposes of these regulations the monthly index of long-term United States government bond yields means the monthly unweighted average of the daily unweighted average of the closing bid yield quotations in the over-the-counter market for all outstanding United States Treasury bond issues which mature twenty (20) years or more from the date the index is calculated, but shall not include such bonds as are redeemable at par for repayment of federal estate taxes. In no event, however, may the initial interest rate be less than ten percent (10%) per annum, nor greater than twelve percent (12%) per annum, plus one-half percent (1/2%) per year to compensate the person providing servicing for the Program Loan. At the option of the Housing Development Fund, the promissory note or deed of trust pertaining to the Program Loan may provide that on the tenth anniversary date of the Program Loan the interest rate will increase to the lesser of (i) fourteen percent (14%) per annum or (ii) two percent (2%) above the monthly index of long-term United States government bond yields, as defined above, for the calendar month preceding the month in which such rate increase occurs; however, the interest rate may not be increased if the Eligible Borrower presents evidence that his average gross income for the two (2) years prior to the date on which such interest rate increase is to occur is no more than one-sixth (1/6) greater than his average gross income was at the time the Program Loan was made. If a Program Loan was assumed prior to its tenth anniversary, the income increase test will be based on the income of the assumer on the date the Program Loan was assumed. In the event such interest rate is increased, the Housing Development Fund may provide in the promissory note or deed of trust that the monthly payments of principal and interest will increase so as to fully amortize the then unpaid principal balance at such increased interest rate over the remaining life of the Program Loan.(d) Interest during construction. -- In the case of a Program Loan made to finance the construction of an Eligible Dwelling or to finance construction of improvements to an Eligible Dwelling, the promissory note may provide for the payment of interest only, based on unpaid principal loan balances during the anticipated construction period, which interest period shall be in addition to the thirty (30) year term over which the Program Loan will be amortized.(e) Basis for determining maximum loan amount. -- In no event may the original principal amount of a Program Loan exceed eighty-five percent (85%) of the lesser of the appraised value or the current sale price of the Eligible Single-Family Dwelling. For a construction loan the original principal amount may not exceed the least of (i) eighty-five percent (85%) of the total of the appraised value of the unimproved lot and the estimated appraised value of the improvements, (ii) eighty-five percent (85%) of the total of the appraised value of the unimproved lot and the amount of the construction contract or (iii) the total of the amount of the construction contract and the unpaid balance of any indebtedness secured by a deed of trust on the unimproved lot.(f) Security for loan. -- Each Program Loan will be secured by a first lien deed of trust on the Eligible Single-Family Dwelling, subject only to such permitted encumbrances as provided for in the Procedural Guide issued by the Housing Development Fund.(g) Mortgage insurance. -- Each loan must be insured for at least twenty percent (20%) of its amount either by the Federal Housing Administration ("FHA"), the Veterans Administration ("VA") or a private mortgage insurance company licensed in the state.(h) No refinancing. -- A Program Loan may not be made to refinance existing indebtedness of an Eligible Borrower, except bona fide construction loans obtained to finance the construction of an Eligible Single-Family Dwelling.(i) Assumption of Program Loans. -- If an Eligible Single-Family Dwelling is purchased by a person or family who is qualified as an Eligible Borrower within the meaning of these regulations, the Program Loan may be assumed by such purchaser. A purchaser will satisfy the income requirement if his gross family income for each of the two (2) calendar years preceding the assumption does not exceed the sum of fifty thousand dollars ($50,000), adjusted upward or downward to reflect the percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers. All items published by the Bureau of Labor Statistics, U.S. Department of Labor (1967 = 100), between June, 1982 and the corresponding index figure for the quarter preceding the date of the assumption. If that index should be discontinued, the most nearly comparable available index may be used.(j) Buyers' and sellers' certificate. -- As a condition to making a Program Loan, the Participating Lender shall obtain a certificate from the buyers and sellers of the Eligible Single-Family Dwelling, in form prescribed by the Housing Development Fund, that the sellers have not, within the two (2) year period preceding the date of the purchase contract or if none the date of sale, offered the Eligible Single-Family Dwelling to the Eligible Borrower for a price less than the sale price.(k) Permitted fees and charges. -- Participating Lenders will collect an amount equal to two percent (2%) of the original amount of the Program Loan from the person who sells the Eligible Single-Family Dwelling to the Eligible Borrower and one percent (1%) from the Real Estate Broker, if any. If the Eligible Borrower purchases an unimproved lot with Program Loan proceeds, the Participating Lender will collect from the seller an amount equal to two percent (2%) of the sales price of the lot. In the event the Program Loan will be used by an Eligible Borrower to finance the construction of an Eligible Single-Family Dwelling on a lot already owned by the Eligible Borrower, or if the seller in the transaction is selling the Eligible Borrower only an unimproved lot, the Participating Lender may collect from the Eligible Borrower (i) an amount not exceeding one percent (1%) of the original amount of the Program Loan sufficient to reimburse the Participating Lender, after applying any amount collected from the seller of any unimproved lot, for its expenses in originating the Program Loan, (ii) an amount not exceeding one half (1/2) of one percent (1%) of the original amount of the Program Loan necessary to pay the costs of the Housing Development Fund in making the Program Loan and processing the application and (iii) an amount necessary to pay the first year's premium for mortgage insurance for the Program Loan. In addition, the Participating Lender may collect from the Eligible Borrower reasonable Closing Costs. In the case of a construction loan, the Participating Lender may, in addition to the above fees and charges, charge and collect from a contractor entering into a construction contract with the Eligible Borrower an amount not exceeding one percent (1%) of the original amount of the Program Loan necessary to reimburse the Participating Lender for its costs in administering the construction loan and may charge such contractor fees not exceeding one hundred dollars ($100) for inspecting work performed under the construction contract.2.4. Origination and servicing of program loans. -- The Board of Investments will contract for the origination and servicing of Program Loans as follows:(a) Origination. -- The Board of Investments will enter into a Program Loan Purchase Agreement with each Participating Lender pursuant to which the Participating Lender will originate, and the Housing Development Fund will purchase on behalf of the Board of Investments, Program Loans. The form of such Program Loan Purchase Agreement will be provided by the Housing Development Fund and is referred to later in these regulations.(b) Servicing. -- The Board of Investments will enter into a Program Loan Servicing Agreement with each Approved Servicer to provide for the servicing of Program Loans, and in addition the Board of Investments may contract with a "Master Servicer" to administer and coordinate the servicing of Program Loans. The form of Program Loan Servicing Agreement is provided by the Housing Development Fund and is referred to later in these regulations. In no event, will the total annual fee for servicing a Program Loan exceed an amount equal to one half (1/2) of one percent (1%) of the outstanding principal balance of the Program Loan.2.5. Allocation of funds and mortgage investment pool. -- In the interest of assuring to the fullest extent possible that Program Loans will be fairly distributed and made available to residents of the state without regard to the area of the state in which they reside, funds in the Mortgage Investment Pool will be allocated among the counties of the state on the basis of the respective populations of such counties according to the 1980 United States Census, but in no case will a county be entitled to fewer than one (1) Program Loan. If the Housing Development Fund determines as of the date three (3) months after each segment of funds is made available to the Mortgage Investment Pool that the funds allocated to a county or counties will not be used for Program Loans, the Housing Development Fund may reallocate such funds in the manner deemed most likely to maximize the making of Program Loans. The Housing Development Fund has determined that the amount of twelve million five hundred thousand dollars ($12,500,000), which the act requires to be designated and restricted to new and never occupied single-family residential units, will be made available from the funds to be provided to the Mortgage Investment Pool on June 11, 1982, subject to the right of the Housing Development Fund to allocate funds later to be provided to the Mortgage Investment Pool to such twelve million five hundred thousand dollars (12,500,000) requirement in order to maximize the making of Program Loans.2.6. Approval of Program Loans; submission of applications. -- Program Loans will be made to persons determined by the Housing Development Fund to be Eligible Borrowers in the order in which the complete loan applications are approved by the Housing Development Fund. No applications or other Program Loan documents may be dated prior to June 11, 1982, and all applications sent to the Housing Development Fund by United States mail must be postmarked not earlier than June 11, 1982. The Housing Development Fund will maintain a log for each business day showing the date on which each application is received, and all applications received each day will be selected at random and numbered sequentially. Completed loan applications will be considered for approval based first upon the date received and then upon assigned number. Completed loan applications will be approved until the entire fifty million dollars ($50,000,000) Mortgage Investment Pool is committed, i.e., approvals shall not be allocated to the three (3) segments of funds to be made available for the Mortgage Investment Pool, unless the Housing Development Fund determines it to be in the best interest of the Program. If any application in the judgment of the Housing Development Fund is incomplete or deficient, the application will lose its priority. The Housing Development Fund may, in its discretion, return the application to the Participating Lender or retain the application and request appropriate corrective action or additional documentation from the Participating Lender.