36-55.35 - Terms and conditions of purchase and sale to mortgage lenders of mortgage loans; loans to mortgage lenders.
§ 36-55.35. Terms and conditions of purchase and sale to mortgage lenders ofmortgage loans; loans to mortgage lenders.
A. No obligation shall be eligible for purchase or commitment to purchase byHDA from a mortgage lender hereunder if the date of said obligation precedesthe date of HDA's commitment to purchase such obligation by such number ofyears as shall be determined by HDA and unless at or before the time oftransfer thereof to HDA such mortgage lender certifies:
1. That in its judgment the loan would in all respects be a prudentinvestment; and
2. That the proceeds of sale or its equivalent shall be reinvested asprovided in subsection F of this section, or invested in short-termobligations pending such reinvestment. However, certification shall not berequired in the case of the purchase or commitment to purchase by HDA of amortgage loan held, insured or assisted by the federal government or anyagency or instrumentality thereof.
B. HDA shall purchase mortgage loans at a purchase price equal to theoutstanding principal balance; however, discount from the principal balanceor the payment of a premium may be employed to effect a fair rate of returnwhich in the opinion of HDA is consistent with the obligations of the HDAhereunder and the purposes of this chapter. In addition to the aforesaidpayment of outstanding principal balance HDA shall pay the accrued interestdue thereon, on the date the loan or obligation is delivered against paymenttherefor. The provisions of this subsection shall not apply to the purchaseby HDA of a mortgage loan held, insured or assisted by the federal governmentor any agency or instrumentality thereof, in which case the purchase priceshall be determined by agreement of HDA and the mortgage lender.
C. Loans purchased or sold hereunder may include but shall not be limited toloans which are insured, guaranteed or assisted by the federal government orfor which there is a commitment by the federal government to insure,guarantee or assist such loan.
D. HDA shall from time to time adopt, modify or repeal rules and regulationsgoverning the making of loans to mortgage lenders and the purchase and saleof mortgage loans and the application of the proceeds thereof, includingrules and regulations as to any or all of the following:
1. Procedures for the submission of requests or the invitation of proposalsfor the purchase and sale of mortgage loans or for loans to mortgage lenders;
2. Limitations or restrictions as to number of family units, location orother qualifications or characteristics of residences to be financed byresidential mortgage loans and requirements as to the income limits ofpersons and families of low and moderate income occupying such residences;
3. Restrictions as to the interest rates on residential mortgage loans or thereturn realized therefrom by mortgage lenders;
4. Requirements as to commitments by mortgage lenders with respect toresidential mortgage loans;
5. Schedules of any fees and charges necessary to provide for expenses andreserves of the HDA; and
6. Any other matters related to the duties and the exercise of the powers ofHDA to purchase and sell mortgage loans or to make mortgage loans or otherloans to mortgage lenders.
Such rules and regulations shall be designed to effectuate the generalpurposes of this chapter and the following specific objectives: (i) theexpansion of the supply of funds in the Commonwealth available forresidential mortgage loans; (ii) the provision of the additional housingneeded to remedy the shortage of adequate housing in the Commonwealth andeliminate the existence of a large number of substandard dwellings; and (iii)the restriction of the financial return and benefit to that necessary toprotect against the realization by mortgage lenders of an excessive financialreturn or benefit as determined by prevailing market conditions.
E. The interest rate or rates and other terms of the loans to mortgagelenders made from the proceeds of any issue of bonds of the HDA shall be atleast sufficient so as to assure the payment of said bonds and the interestthereon as the same become due from the amounts received by HDA in repaymentof such loans and interest thereon.
F. HDA shall require as a condition of each loan to a mortgage lender and asa condition of the purchase or the making of a commitment to purchasemortgage loans from a mortgage lender that such mortgage lender within suchperiod of time following the receipt of the proceeds as shall be prescribedby rules and regulations of HDA, shall have entered into written commitmentsto make, and shall thereafter proceed as promptly as practicable to make anddisburse from such proceeds, residential mortgage loans in the Commonwealthof Virginia having a stated maturity of not less than twenty years from thedate thereof in an aggregate principal amount equal to the amount of suchproceeds. HDA shall not purchase nor make commitment to purchase mortgageloans or obligations from a mortgage lender from which it has previouslypurchased mortgage loans nor make a loan to a mortgage lender to which it haspreviously made a loan unless said mortgage lender has either restored ormade commitments to restore to its portfolio of residential mortgage loans inthe Commonwealth of Virginia, residential mortgage loans having a statedmaturity of not less than twenty years from the date thereof in an aggregateprincipal amount equal to either the proceeds of prior sale or the amount ofprior loan to said mortgage lender. HDA may require the submission to it byeach mortgage lender of evidence satisfactory to it of the making of such newresidential mortgage loans. The provisions of this subsection shall not applyto the purchase or commitment to purchase by HDA of a mortgage loan held,insured or assisted by the federal government or any agency orinstrumentality thereof.
G. HDA shall require that such loans to mortgage lenders shall beadditionally secured as to payment of both principal and interest by a pledgeof and lien upon collateral security in such amounts as HDA shall byresolution determine to be necessary to assure the payment of such loans andthe interest thereon as the same become due. Such collateral security shallconsist of (a) direct obligations of, or obligations guaranteed by, theUnited States of America or the Commonwealth of Virginia; (b) bonds,debentures, notes or other evidences of indebtedness, satisfactory to theHDA, issued by any of the following federal agencies: Bank for Cooperatives,Federal Intermediate Credit Bank, Federal Home Loan Bank System,Export-Import Bank of Washington, Federal Land Banks, the Federal NationalMortgage Association or the Government National Mortgage Association; (c)direct obligations of or obligations guaranteed by the Commonwealth; or (d)mortgages insured or guaranteed, upon terms and conditions satisfactory tothe HDA, by the federal government or private mortgage insurance companies asto payment of principal and interest.
(1972, c. 830; 1975, c. 536; 1982, c. 101; 1996, c. 298.)