16.21 - PURCHASE OF MORTGAGE LOANS.
16.21 PURCHASE OF MORTGAGE LOANS.
1. The authority may purchase, and make advance commitments to
purchase, mortgage loans from mortgage lenders at prices and upon
terms and conditions as it determines subject to this section.
However, the total purchase price for all mortgage loans which the
authority commits to purchase from a mortgage lender at any one time
shall not exceed the total of the unpaid principal balances of the
mortgage loans purchased. Mortgage lenders are authorized to sell
mortgage loans to the authority in accordance with the provisions of
this section and the rules of the authority.
2. The authority shall require as a condition of purchase of
mortgage loans from mortgage lenders that the mortgage lenders,
within a reasonable period after receipt of the purchase price as the
authority prescribes by rule, shall enter into written commitments to
loan and, within a reasonable period thereafter as the authority
prescribes by rule, shall loan an amount equal to the entire purchase
price of the mortgage loans, on new mortgage loans to low or moderate
income families or certify that mortgage loans purchased are mortgage
loans made to low or moderate income families. New mortgage loans to
be made by mortgage lenders shall have terms and conditions as the
authority prescribes by rule. The authority may make a commitment to
purchase mortgage loans from mortgage lenders in advance of the time
such loans are made by mortgage lenders. The authority shall require
as a condition of such commitment that mortgage lenders certify in
writing that all mortgage loans represented by the commitment will be
made to low or moderate income families, and that other authority
specifications will be complied with.
3. The authority shall require the submission to it by each
mortgage lender from which the authority has purchased mortgages, of
evidence satisfactory to the authority of the making of new mortgage
loans to low or moderate income families as required by this section
and in that connection may, through its members, employees or agents,
inspect the books and records of a mortgage lender.
4. Compliance by a mortgage lender with the terms of its
agreement with the authority with respect to the making of new
mortgage loans to low or moderate income families may be enforced by
decree of any district court of this state. The authority may require
as a condition of purchase of mortgage loans from any national
banking association or federally chartered savings and loan
association, the consent of the association to the jurisdiction of
courts of this state over any such proceeding. The authority may also
require as a condition of the authority's purchase of mortgage loans
from a mortgage lender, agreement by the mortgage lender to the
payment of penalties to the authority for violation by the mortgage
lender of its agreement with the authority, and the penalties shall
be recoverable at the suit of the authority.
5. The authority may require as a condition of purchase of a
mortgage loan from a mortgage lender that the mortgage lender
represent and warrant to the authority that:
a. The unpaid principal balance of the mortgage loan and the
interest rate on it have been accurately stated to the authority.
b. The amount of the unpaid principal balance is justly due
and owing.
c. The mortgage lender has no notice of the existence of any
counterclaim, offset or defense asserted by the mortgagor or the
mortgagor's successor in interest.
d. The mortgage loan is evidenced by a bond or promissory
note and a mortgage which has been properly recorded with the
appropriate public official.
e. The mortgage constitutes a valid first lien on the real
property described to the authority subject only to real property
taxes not yet due, installments of assessments not yet due, and
easements and restrictions of record which do not adversely affect,
to a material degree, the use or value of the real property or
improvements on it.
f. The mortgagor is not now in default in the payment of any
installment of principal or interest, escrow funds, real property
taxes or otherwise in the performance of obligations under the
mortgage documents and has not to the knowledge of the mortgage
lender been in default in the performance of any obligation under the
mortgage for a period of longer than sixty days during the life of
the mortgage.
g. The improvements to the mortgaged real property are
covered by a valid and subsisting policy of insurance issued by a
company authorized to issue such policies in this state and providing
fire and extended coverage in amounts as the authority prescribes by
rule.
h. The mortgage loan meets the prevailing investment quality
standards for mortgage loans in this state.
6. A mortgage lender is liable to the authority for damages
suffered by the authority by reason of the untruth of a
representation or the breach of a warranty and, in the event that a
representation proves to be untrue when made or in the event of a
breach of warranty, the mortgage lender shall, at the option of the
authority, repurchase the mortgage loan for the original purchase
price adjusted for amounts subsequently paid on it, as the authority
determines.
7. The authority shall require the recording of an assignment of
a mortgage loan purchased by it from a mortgage lender and shall not
be required to notify the mortgagor of its purchase of the mortgage
loan. The authority shall not be required to inspect or take
possession of the mortgage documents if the mortgage lender from
which the mortgage loan is purchased by the authority enters into a
contract to service the mortgage loan and account to the authority
for it.
8. If a provision of this section is inconsistent with another
provision of law of this state governing mortgage lenders, the
provision of this section controls for the purposes of this section.
Section History: Early Form
[C77, 79, 81, § 220.21] Section History: Recent Form
C93, § 16.21
Referred to in § 16.37