Housing Corporation (Utah), Administration

Rule R460-3

Programs of UHC

Notice of Proposed Rule

(Amendment)

DAR File No.: 34019
Filed: 08/26/2010 03:28:26 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose for the amendment to this rule is to eliminate obsolete practices and add clarifying language to define more clearly the scope and administration of Utah Housing Corporation's (UHC) current program offerings. The amendment reflects changes in the mortgage loan and low-income housing tax credit industries as well as efforts made to streamline and increase efficiencies in administering UHC's various programs.

Summary of the rule or change:

Section R460-3-1 changes include: 1) the term "servicer" has been removed when referring to any lender with whom Utah Housing Corporation (UHC) conducts business. This reflects the fact that UHC services 100% of its own loans; 2) the rule is updated to reflect the use of current technology and to eliminate obsolete practices; 3) the rule contains deletions, clarifications, and updates to terminology and procedures utilized in conjunction with the reservation, commitment, and mortgage review process; and 4) clarification of what constitutes "Program Documents", as well as the procedures to be followed by UHC and the lenders with whom it conducts business in the sale and purchase of eligible mortgage loans. Section R460-3-2 changes include: 1) clarification that UHC does not have a standard multifamily mortgage program. Rather, UHC relies on developer's to engage qualified professionals to properly structure a multifamily housing project. UHC retains the right to approve or disapprove the terms of any proposed project; 2) elimination of obsolete practices regarding multifamily mortgage lenders; 3) clarify that publicly offered bonds for multifamily projects must be rated by a national rating service. The bonds may also be privately placed if approved by UHC; and 4) eliminates the section on multifamily mortgage lending as UHC no longer provides mortgage loans for multifamily projects. Section R460-3-3 verbiage has been completely deleted because UHC does not currently a home improvement loan program. The section is now "reserved". Section R460-3-4 changes include: 1) minor wording clarifications; 2) clarification that UHC may forward-allocate federal and state low income housing tax credits to complete a credit reservation, bringing in-line with the qualified allocation plan which provides administrative procedures for the tax credit program; and 3) added clarifying language regarding the establishment and collection of tax credit program fees as well as defining the consequences of a developer being considered "not in good standing". Section R460-3-5 changes include: 1) clarification that UHC may, when conducting its due diligence, interview individuals who have been involved with a project sponsor on a previous housing development; 2) added language to allow for UHC to obtain security for repayment of a loan in any form and amount as is reasonably necessary; 3) added language to clarify that any UHC loan funded by or subject to any state or federal program will be consistent with the rules of such program; and 4) clarification that UHC may require income limits for certain projects that may be lower than the maximum income limits. In Section R460-3-6, added language to clarify that state low-income housing tax credits may be allocated to a project in conjunction with an application for federal low-income housing tax credits or at a later date, as necessary.

State statutory or constitutional authorization for this rule:

• Subsection 9-4-910(1)
• Subsection 9-4-911(4)
• Subsection 9-4-910(5)

Anticipated cost or savings to:

the state budget:

There is no anticipated cost or savings to the state budget because the rule does not apply to the state budget because Subsection 9-4-902(11)(b) states that UHC is a "financially independent body" and therefore, receives no state appropriation. Furthermore, the changes made to this rule are merely clarifying in nature and do not entail any additional program requirements.

local governments:

There is no cost or savings to any local government because the changes made to this rule are merely clarifying in nature. While there is clarifying language regarding fees that may be charged to developers who participate in the Low-Income Housing Tax Credit program (including local government entities such as housing authorities), no fees have been added or deleted beyond the program documents already in place and in use for the past few years.

small businesses:

There is no cost or savings to any small businesses because the changes made to this rule are merely clarifying in nature. While there is clarifying language regarding fees that may be charged to developers who participate in the Multifamily Loan Program and/or the Low-Income Housing Tax Credit program, no fees have been added or deleted beyond those specified in the program documents already in place and in use for the past few years in those programs.

persons other than small businesses, businesses, or local governmental entities:

There is no cost or savings to any other persons because the changes made to this rule are merely clarifying in nature. While there is clarifying language regarding fees that may be charged to developers who participate in the Multifamily Loan Program and/or the Low-Income Housing Tax Credit program, no fees have been added or deleted beyond the program documents already in place and in use for the past few years in those programs.

Compliance costs for affected persons:

There are no anticipated additional compliance costs (in addition to existing compliance costs) for persons affected by this rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

While there may be no demonstrable savings to be realized from the implementation of these changes, the efficiencies gained by UHC business partners through the elimination of obsolete practices and the increased used of technology may bring some incremental savings to those entities. At the least, the changes will make it easier for UHC and its business partners to more effectively fulfill UHC's mission of providing Utahn's with financing for affordable housing.

Grant S. Whitaker, Pres and CEO, Utah Housing Corp

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Housing Corporation (Utah)
Administration
2479 LAKE PARK BLVD
WEST VALLEY CITY, UT 84120

Direct questions regarding this rule to:

• Jonathan Hanks at the above address, by phone at 801-902-8221, by FAX at 801-902-8321, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

10/15/2010

This rule may become effective on:

10/22/2010

Authorized by:

Grant Whitaker, Senior Vice President

R460. Housing Corporation, Administration.

R460-3. Programs of UHC.

R460-3-1. Single-Family Mortgage Program.

(1) Eligible mortgage lender[ and servicer].

(a) To be eligible to participate in the single-family mortgage program, a mortgage lender [or servicer] must have as one of its principal purposes the origination of mortgage loans in its usual and regular course of business[, and must be, or must be affiliated with, an eligible servicer under criteria established by UHC in its program documents].

(b) UHC may establish criteria that mortgage lenders [and servicers] must meet relating to approved mortgagee status by the Federal Housing Administration, Rural Housing Service or Department of Veterans Affairs, the financial condition of the mortgage lender[ or servicer], the number of mortgage loan originations during a period specified by UHC, the length of time a mortgage loan origination office has been maintained in the state, seller/servicer approval by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation[, the servicing history of the mortgage lender or servicer], and other criteria as UHC deems necessary to maintain a safe and sound program and to establish that mortgage loans are a part of a mortgage lender's [or servicer's] usual and regular business activities and that the mortgage lender [or servicer] possesses the capability to make [and to service]and to have adequate financial resources to fund [single-family] mortgage loans.

(c) UHC may require that mortgage lenders , from time to time, [and servicers] furnish to UHC [a certificate of qualification and other] evidence as UHC may request to confirm a mortgage lender's [or servicer's] eligibility to participate in the single-family mortgage program.

(d) A[n eligible] mortgage lender [and servicer] shall employ and maintain qualified personnel to carry out the obligations arising under contracts with UHC.

(e) All transactions between a mortgage lender and UHC shall be subject to the relevant single-family mortgage program contract documents which may include the following: participation agreement, selling supplement, mortgage purchase agreement ("MPA"), notice of availability of funds, MPA request, and other documents deemed necessary by UHC ("Program Documents").

(2) [Invitation to participate or notice of availability of funds;]Mortgage purchase agreement request; mortgage purchase agreement.

(a) UHC may distribute to [eligible] mortgage lenders via any electronic, digital, or written means, any interest rate and/or program changes affecting single-family mortgage loans[invitations to participate, notices of availability of funds, or other similar documents, relating to the single-family mortgage program in anticipation of the availability of funds. Each invitation or notice may indicate any limitations on the aggregate principal amount of mortgages that may be offered to UHC and the approximate date that UHC expects to have funds available to finance mortgages].

(b) Mortgage lenders may submit one or more mortgage purchase agreement requests to UHC via electronic, digital or written means as specified by UHC, in which an amount of funds is requested for a specific mortgage loan that the mortgage lender is processing.[Accompanying each invitation shall be an application agreement, or other similar document, to be completed by mortgage lenders and returned to UHC within the time limit specified.]

(c) UHC may require that each [application agreement]mortgage purchase agreement request submitted by a mortgage lender be accompanied by an application or other fee in an amount specified [in the application agreement]by UHC in its Program Documents. The fee shall not be refunded or accrue interest payable by UHC, unless otherwise specified by UHC in the [invitation to participate]Program Documents.

(d) Upon receipt of a mortgage purchase agreement request, UHC may deliver to the mortgage lender a mortgage purchase agreement confirming UHC's commitment to purchase the specified mortgage loan. The [application]mortgage purchase agreement [and the obligations arising thereunder may not be revoked or withdrawn without the consent of UHC, but] shall terminate automatically if [a notice of acceptance or similar document is not mailed, as evidenced by postmark, or delivered to] the mortgage lender [by]fails to deliver all necessary Program Documents with respect to the mortgage loan to UHC on or prior to the date specified in the [application agreement]Program Documents.[

(e) UHC shall specify in its notice of acceptance the aggregate principal amount of mortgages that it agrees to finance, which amount shall constitute the commitment. If the financing of mortgage loans is to be funded from the proceeds of the sale of UHC bonds, all commitments are subject to the sale of bonds by UHC.

(f) The mortgage lender and UHC shall confirm the commitment by executing a mortgage purchase agreement and the mortgage lender shall pay a commitment fee to UHC as specified in the invitation to participate. The mortgage purchase agreement shall be executed and delivered to UHC on or before the date specified in the notice of acceptance.

(g) When a notice of availability of funds is distributed to eligible mortgage lenders in lieu of an invitation to participate, each notice of availability of funds shall be accompanied by reservation procedures, or other similar document, setting forth the procedures by which an eligible mortgage lender may reserve funds for the purchase of mortgage loans.

(h) The reservation procedures may require that each mortgage lender, within a period of time to be designated by UHC, provide to UHC documentation with respect to a mortgage loan accompanied by a commitment fee in an amount specified by UHC, to preserve the reservation of funds. Upon receipt of such documentation, UHC may deliver to the mortgage lender a mortgage purchase agreement for each commitment reservation made.]

(3) Single-family mortgage loans.

(a) [For each]From time to time, UHC may develop individualized single-family mortgage program s designed to meet the needs of certain populations. In such cases, UHC shall establish maximum fees that may be charged or collected, final mortgage delivery date, interest rate, and loan term. Fee requirements shall be uniformly applied to all mortgage lenders, without preference of one mortgage lender over another.

(b) All mortgage loans shall be made to finance single-family residential housing located in the state which conform to the requirements of the [applicable] single-family mortgage program or any other requirements specified in the Program Documents.[ All transactions between the mortgage lender and UHC shall be subject to the relevant program documents which may include the following: invitation to participate, notice of availability of funds, application agreement, notice of acceptance, reservation procedures, mortgage purchase agreement, selling agreement, servicing agreement and accounting and reporting agreement, and other program documents deemed necessary by UHC, applicable to the particular program.]

(c) [UHC may allocate available funds among one or more participating mortgage lenders.] UHC may provide priority allocations to make mortgage financing available to persons qualified for any of UHC's single-family programs or in targeted, rural, inner city or other areas experiencing difficulty securing mortgage loans to make housing available to persons of low and moderate income.

(d) [All mortgage loans shall conform to the requirements contained in the mortgage purchase agreement between UHC and the mortgage lender. All mortgage loans shall be secured or collateralized as required in the mortgage purchase agreement.]Each mortgage loan purchased by UHC shall conform to the credit underwriting, property valuation, hazard insurance, title insurance, mortgage insurance, security and collateralization, and all other requirements of the Program Documents. Closings or deliveries must occur on or before the date established in Program Documents. UHC shall have the right to decline to finance any mortgage loan if, in the reasonable opinion of UHC, the mortgage loan does not meet all requirements of the [mortgage purchase agreement]Program Documents.

[(e) The mortgage lender shall close and deliver eligible mortgage loans to UHC for financing until the amount of the commitment has been reached. Closings or deliveries must occur on or before the date established in the mortgage purchase agreement.

(f) Each mortgage loan financed by UHC shall conform to the credit underwriting, property valuation, hazard insurance, title insurance, mortgage insurance, and all other requirements of the applicable mortgage purchase agreement.

](4) Income limits of [mortgagors]borrowers.

UHC shall establish and may amend maximum income limits for low and moderate income persons eligible as [mortgagors]borrowers. The limits shall not exceed 140% of median income as determined by UHC. UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall give public notice as required by state law. UHC shall make information concerning the limits available to interested persons, including potential [mortgagors and loan applicants]borrowers, and shall incorporate the limits as terms of the [mortgage purchase agreements]Program Documents.

(5) Acquisition cost [and appraised value] limits.

UHC shall establish and may amend maximum acquisition cost [and appraised value] limits for residential housing qualified for UHC financing. The acquisition cost of residential housing is the cost of acquiring a completed residential housing unit and shall include all amounts paid in cash or in kind for all structures, fixtures, improvements, and land. [The appraised value limits shall not exceed the applicable acquisition cost limits by more than $4,000.] UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall give public notice as required by state law. UHC shall make information concerning the maximum acquisition cost [and appraised value] limits available to interested persons including loan applicants and potential mortgagors, and shall incorporate the limits as terms of the [mortgage purchase agreements]Program Documents.

(6) Assumption of single-family mortgage loans.

(a) UHC shall establish and may amend conditions and requirements for the assumption of mortgage loans. The conditions and requirements for the assumption of mortgage loans may vary between the different series of bonds and mortgage insurers or guarantors under which the various mortgage loans have been [financed]purchased.

(b) Conditions and requirements for the assumption of mortgage loans may include the following: acquisition cost limits for the residential housing; income limits for the assuming purchaser; the establishment of a limit, expressed as a percentage of the assuming purchaser's income, of the purchaser's monthly housing expenses; a requirement that the purchaser not own any other properties financed under any other UHC program; and any other requirements and qualifications deemed necessary or advisable by UHC. Purchasers, who assume mortgage loans, shall generally be required to satisfy the same requirements that applied to the original borrower.

(c) UHC may impose limits on the maximum amount of assumption fees that may be charged [by servicers] in connection with the assumption of mortgage loans.

(d) UHC may require the continuing liability of the original borrowers in connection with the assumption of mortgage loans.

(e) The required documentation for the assumption of mortgage loans may include documents deemed necessary by UHC, applicable to the particular program.

(7) Limitation of frequency of loan applications.

UHC may establish limitations on the frequency with which a Mortgage Lender, on behalf of a particular mortgage applicant or co-applicant , may request a mortgage purchase agreement[commitment reservation] or otherwise apply for a reservation of mortgage loan funds if UHC deems a limitation to be necessary to ensure the efficient and equitable allocation of funds.

(8) Definitions.

(a) As used herein, "Mortgage Lender" shall mean a mortgage lender that UHC has determined to be an eligible mortgage lender in accordance with this Rule.

(b) As used herein, "Mortgage Loan" shall mean a loan secured by a deed of trust or mortgage on a single-family residence that UHC has determined to be an eligible mortgage loan in accordance with this Rule.

 

R460-3-2. Multifamily Mortgage Programs.

(1) [Eligible mortgage lender and servicer]No Standard Program.

(a) UHC does not have a standard financing program for bond financed multifamily rental housing. It is the developer's responsibility to engage professionals to assist in obtaining adequate bond credit enhancement and in structuring a sale or placement of the bonds. UHC, as issuer, reserves the right to approve or disapprove the terms of any proposed project or the bond financing enhancement or structure.[To be eligible to participate in the multifamily programs, a mortgage lender or servicer must have as one of its principal purposes the origination of mortgage loans in its usual and regular course of business and must be, or must be affiliated with, an eligible servicer under criteria established by UHC in its program documents.]

(b) The sole source of repayment of the bonds, including all interest and any premiums, for a multifamily rental housing project shall be the revenue sources related to the project financed by the bonds. Neither the bonds nor any interest or premium shall constitute a general indebtedness of UHC.[UHC may establish criteria that mortgage lenders and servicers must meet, relating to approved mortgagee status by the Federal Housing Administration, Rural Housing Service or Department of Veterans Affairs, the financial condition of the mortgage lender or servicer, the number of mortgage loan originations during a period specified by UHC, the length of time a mortgage loan origination office has been maintained in the state, seller/servicer approval by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, the servicing history of the mortgage lender or servicer, and other criteria as UHC deems necessary to maintain a safe and sound program, and to establish that mortgage loans are a part of the mortgage lender's or servicer's usual and regular business activities and that the mortgage lender or servicer possesses the capability to make and service mortgage loans on multifamily developments.]

(c) One or more national rating services must rate publicly offered bonds issued by UHC. A minimum rating as determined by UHC is required, unless specifically waived for good cause. A type of credit enhancement backing the bonds must be in place to increase the probability that the bond holders will be repaid even if the project and its underlying mortgage loan defaults. UHC reserves the right to approve all forms of credit enhancement for the bonds. With certain restrictions, UHC may permit bonds privately placed with institutional investors to be unrated.[UHC may require that mortgage lenders and servicers furnish to UHC a certificate of qualification and other evidence as UHC may request to confirm a mortgage lender's or servicer's eligibility to participate in the multifamily mortgage program.]

(d) Publicly offered bonds issued by UHC shall be sold to underwriter(s) with the financial backing and capability to generate cash at closing equal to the amount of the bonds, regardless of whether the bonds have been resold to investors. UHC may appoint underwriters requested by the developer; however, UHC reserves the right to approve any underwriter, and may appoint co-underwriters, as it deems appropriate.[An eligible mortgage lender and servicer shall employ and maintain qualified personnel to carry out the obligations arising under contracts with UHC.]

(2) [Invitation to participate or notice of availability of funds; contracts]Legal Opinions.

(a) UHC appoints bond counsel to render any opinion with respect to the tax exemption of the interest on the bonds.[UHC may distribute to eligible mortgage lenders invitations to participate, notices of availability of funds or other similar documents relating to the multifamily programs in anticipation of the availability of funds. Each invitation may indicate any limitations on the aggregate principal amount of mortgage loans that may be financed under UHC's program and the approximate date that UHC expects to have funds available to finance mortgage loans.]

(b) [Accompanying each invitation shall be an application agreement to be completed by eligible mortgage lenders and returned to UHC within the time limit specified]Any other opinions regarding UHC that may be required by other parties to a bond transaction will be rendered by counsel appointed by UHC but paid for by the developer.

[(c) UHC may require that each application agreement submitted by an eligible mortgage lender be accompanied by an application fee in an amount specified by UHC in the application agreement. The fee shall not be refunded or accrue interest payable by UHC unless otherwise specified in the invitation to participate.

(d) The application agreement and the obligations arising thereunder may not be revoked or withdrawn by the mortgage lender without the consent of UHC but shall terminate automatically if a notice of acceptance or similar document is not mailed, as evidenced by postmark, or delivered to the mortgage lender by UHC on or prior to the date as specified in the application agreement.

(e) UHC shall specify in its notice of acceptance the aggregate principal amount of mortgage loans that it agrees to finance, which amount shall constitute the commitment. All commitments are subject to the sale of bonds by UHC.

(f) The mortgage lender and UHC shall confirm the commitment by executing a binding contract, and the mortgage lender shall pay a commitment fee to UHC as specified in the invitation to participate. The contract shall be executed and delivered to UHC on or before the date specified in the notice of acceptance.

](3) [Multifamily mortgage loans.

(a) For each multifamily program, UHC shall establish fees, final mortgage delivery or closing date, interest rate and loan terms. Fee requirements shall be uniformly applied to all mortgage lenders or residential housing development, without preference of one mortgage lender or development over another.

(b) All mortgage loans must be made to provide financing for multifamily developments located in the state which conform to the requirements of the applicable multifamily program. All transactions between the mortgage lender and UHC shall be subject to the relevant program documents and contracts which may include the following: invitation to participate, application agreement, mortgage purchase agreement, servicing agreement, accounting and reporting agreement, deposit agreement, housing development agreement and other program documents applicable to the particular program approved by UHC.

(c) UHC may allocate available funds among one or more participating mortgage lenders. UHC may provide priority allocations to make mortgage loan financing available in targeted, rural, inner city and other areas experiencing difficulty securing mortgage loans to make rental housing available to persons of low and moderate income.

(d) All multifamily developments must conform to the requirements contained in the relevant program documents. UHC may establish priorities for number of units, number of rooms, amenities and other characteristics of residential rental housing to be financed by UHC. UHC shall have the right to eliminate any multifamily development from financing if, in the reasonable opinion of UHC, the development does not meet all conditions or priorities of the relevant program documents.

(e) The mortgage lender shall close and deliver eligible mortgage loans to UHC until the amount of the commitment has been reached. Closings or deliveries must occur on or before the final date established in the contract between UHC and the mortgage lender.

(f) Each mortgage loan shall conform to the credit underwriting, property valuation, hazard insurance, title insurance, mortgage insurance, and all other requirements of the applicable contract between the mortgage lender and UHC.

(4)] Income limits of qualifying tenants.

UHC shall establish and may amend maximum income limits for low and moderate income persons eligible as qualifying tenants of multifamily developments. The limits shall not exceed 130% of median income as determined by UHC. UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall give public notice as required by state law. UHC shall make information concerning the limits available to interested persons including potential renters and [development owners]developers and shall incorporate the limits into appropriate [program] documents.

( 4[5]) Eligible [mortgagors]developers/owners.

(a) To be eligible to participate in the multifamily [programs]financings, the mortgagor/owner may be an individual, a [proprietorship]limited liability company, a partnership or a corporation having the legal capacity and authority to borrow money for the purposes of constructing, owning and operating a multifamily development.

(b) UHC may establish criteria relating to the credit worthiness and the financial, construction and operating capacity of the [mortgagor]developer/owner as UHC deems necessary to maintain a secure program and to provide decent, safe and sanitary rental housing. Alternatively, in situations where UHC will be issuing bonds the proceeds of which will be loaned to the developer/owner, UHC may rely on the due diligence of the underwriters or purchasers of the bonds and/or the issuer of the credit enhancement for the bonds in making the determination that the developer/owner possesses sufficient creditworthiness and sufficient financial, construction and operating capacity.

(5) Fees and Expenses.

The developer shall be responsible for all fees and expenses incurred in connection with the issuance of any bonds. UHC may charge a developer a fee for issuing the bonds or for performing any services required by UHC.

 

R460-3-3. Home Improvement Loan Programs. (Reserved)

(1) [Eligible lender and servicer.] Reserved.

[ (a) To be eligible to participate in the home improvement programs, a lender must be a mortgage lender or other entity which has as one of its principal purposes the origination and servicing of home improvement loans in its regular, usual and normal course of business.

(b) UHC may establish criteria that lenders must meet, as UHC deems necessary to maintain a safe and sound program, and UHC may establish criteria to determine that making and servicing mortgage loans or home improvement loans are a part of the lender's usual and regular business activities and that the lender possesses the capability to make and service home improvement loans.

(c) The lender or servicer shall employ and maintain qualified personnel to carry out the obligations arising under contracts with UHC.

(2) Invitation to participate or notice of availability of funds; contracts.

(a) UHC may distribute to eligible lenders invitations to participate, notices of availability of funds or other similar documents relating to the home improvement program. Each invitation may indicate any limitations on the aggregate principal amount of loans that may be financed under UHC's program and the approximate date that UHC expects to have funds available to finance the loans.

(b) Accompanying each invitation shall be an application agreement or other similar document, to be completed by lenders and returned to UHC within the time limit specified.

(c) UHC may require that each application agreement submitted by a lender be accompanied by an application fee in an amount specified by the agency in the application agreement. The fee shall not be refunded or accrue interest payable by UHC unless otherwise specified by UHC in the invitation to participate.

(d) The application agreement and the obligations arising thereunder may not be revoked or withdrawn by the lender without the consent of UHC but shall terminate automatically if a notice of acceptance or similar document is not mailed, as evidenced by postmark, or delivered to the lender by UHC on or prior to the date as specified in the application agreement.

(e) UHC shall specify in its notice of acceptance, or other similar document, the aggregate principal amount of home improvement loans that it agrees to finance, which amount shall constitute the commitment. If the financing of home improvement loans is to be funded from the proceeds of the sale of UHC bonds, all commitments are subject to the sale of bonds by UHC.

(f) The lender and UHC shall confirm the commitment by executing a binding contract; and the lender shall pay a commitment fee to UHC as specified in the invitation to participate. The contract shall be executed and delivered to UHC on or before the date specified in the notice of acceptance.

(3) Home improvement loans.

(a) For each home improvement program, UHC shall establish fees, final loan delivery or closing date, loan interest rate, loan security and loan term pursuant to contracts with the lenders. Fee requirements shall be uniformly applied to all lenders, without preference of one lender over another.

(b) All home improvement loans shall be made to provide improvements to residential housing located in the state, which conform to the requirements of the applicable program. All transactions between the lender and UHC shall be subject to the relevant program documents and contracts, which may include the following: invitation to participate, application agreement, notice of acceptance, loan purchase agreement, selling agreement, servicing agreement, accounting and reporting agreement and other program documents applicable to, the particular program approved by UHC.

(c) UHC may allocate available funds among several participating lenders or may allocate funds to only one lender. UHC may provide priority allocations to make financing available in targeted, rural, inner city or other areas experiencing difficulty securing loans.

(d) All home improvement loans shall conform to the requirements contained in the relevant program documents. UHC shall have the right to refuse to fund any home improvement loan if, in the reasonable opinion of UHC, the loan does not meet all the requirements of the relevant program documents.

(e) A lender shall close and deliver eligible loans to UHC until the amount of the commitment has been reached. Closings or deliveries must occur on or before the final date established in the contract between UHC and the lender.

(f) Each home improvement loan shall conform to the credit underwriting, property valuation, hazard insurance, title insurance, loan insurance, and all other requirements of the applicable contract between the lender and UHC.

(4) Eligible borrower/owner.

(a) To be eligible to participate in the home improvement program, a borrower/owner may be one or more related or unrelated individuals provided that the unit, or one unit in cases of two to four family residences, for which financing under the program is made available, is occupied as the principal residence of the borrower/owner as long as there remains an unpaid balance on the home improvement loan.

(b) UHC may establish criteria relating to the credit worthiness and the financial and operating capacity of the borrower/owner as UHC deems necessary to maintain a secure program and to provide decent, safe and sanitary housing.

(5) Income limits of borrowers and qualifying tenants.

UHC shall establish and may amend maximum income limits for persons eligible as participating borrowers, and qualifying tenants of two to four family residences. The limits shall not exceed 140% of median income as determined by UHC. UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall give public notice as required by state law. UHC shall make information concerning the limits available to interested persons including loan applicants and shall incorporate them into the terms of the contracts with the lenders.]

 

R460-3-4. Low-Income Housing Tax Credit Program.

(1) Application procedures.

(a) UHC shall prepare a low-income housing tax credit allocation plan that provides the administration procedures, allocation procedures, and compliance monitoring procedures that UHC will follow in administering the low income housing tax credit program for the state. The allocation plan may be amended by UHC as is necessary to comply with amendments to section 42 of the code or as deemed necessary by UHC to maintain a sound program. UHC shall prepare an application form that shall be used to request an allocation of both federal and state low income housing tax credits for a proposed residential housing development. The allocation plan and application form shall be made available electronically via UHC's website or upon request.

(b) UHC may establish and collect fees payable by low income housing tax credit applicants to cover administrative and legal expenses of UHC incurred in processing and reviewing applications, allocating tax credits , [and] monitoring compliance with the provisions of section 42 of the code , and other program requirements.

(2) Reservation of credits.

(a) UHC shall score and rank all applications according to the procedures set forth in the allocation plan. A reservation of low income housing tax credits allocated to an applicant shall be in an amount determined by UHC and shall be based upon the facts , [and] circumstances , and representations made by the applicant in [of] the application.

(b) UHC may condition a reservation of low-income housing tax credits to an applicant upon any restrictions and conditions UHC believes are consistent with the purpose and intent of the program, and those which will ensure the completion of the residential housing development.

(c) No reservation of low-income housing tax credits may be transferred by an applicant unless the specific written approval of UHC is obtained before the proposed transfer. Any transfer shall be made in writing, with copies of all written documents provided to UHC.

(d) Applicants shall provide UHC with any information that may be requested by UHC in performing its duties and responsibilities required under the low-income housing tax credit program and the allocation plan.

(3) Allocation.

(a) UHC shall enter into an agreement for the carry-over allocation of low-income housing tax credits, or make a final allocation of low-income housing tax credits, to applicants who have received a reservation of low-income housing tax credits upon satisfaction to UHC of all of the conditions to the reservation of the low-income housing tax credits and satisfaction of all other requirements under section 42 of the code and the allocation plan.

(b) UHC may disclose the application materials, or any allocating documents, to the Rural Housing Service, Department of Housing and Urban Development or other state or federal agency as is necessary to comply with state or federal law requiring the review of financial subsidies to low-income housing developments.

(c) As a condition to making any allocation of low-income housing tax credits, UHC may require an applicant to make a deposit, or provide other guarantees of performance, in an amount and manner as determined by UHC to ensure the completion of the residential housing development. Circumstances under which deposits or performance guarantees will be returned or forfeited, in whole or in part, shall be made known to applicants in the allocation plan before the collection of the deposit or performance guarantee.

(d) UHC may reserve or allocate low-income housing tax credits in amounts that are less than amounts requested by housing credit applicants. UHC may also forward-reserve credits from the following calendar year to complete the reservation of credits for an applicant that scored well enough to receive a partial reservation of the current year credits.

(4) Compliance monitoring.

(a) UHC shall prepare a compliance monitoring plan which satisfies the requirements of section 42 of the code.

(b) Recipients of low-income housing tax credits shall provide to UHC documentation, certifications and other evidences of compliance with the provisions of section 42 of the code as required in the compliance monitoring plan or other guidance issued by the IRS.

(c) UHC may establish and collect fees payable by recipients of low income housing tax credits to cover administrative and legal expenses of UHC incurred in on-site and/or office-based physical and file compliance reviews, associated documentation review and data input, internal and external reporting of compliance results, maintenance and updating of IT systems which support the program, or other requirements required under section 42 of the code.

(d) If an applicant for low income housing tax credits is considered not in good standing, as detailed in the allocation plan, UHC may disallow any application in which a disqualified individual or entity is participating in any way. UHC may bar individuals or entities considered not in good standing from submitting low income housing tax credit applications for a period of time not to exceed two continuous tax-credit cycles.

 

R460-3-5. Housing Development Program.

(1) Financial assistance to housing sponsors.

UHC may provide financial assistance to a housing sponsor for the purpose of financing the construction, development, rehabilitation, purchase or operations of residential housing.

(a) UHC shall determine that the project proposed by the housing sponsor increases or maintains the supply of affordable, well-planned, well-designed, permanent, temporary transitional or emergency housing for low and moderate income persons.

(b) The housing sponsor shall agree to provide a specified number of units of residential housing for persons whose income do not exceed the maximum income limits established by UHC. The limits shall not exceed 120% of area median income as determined by UHC. UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall give public notice as required by state law. UHC may require that the income limits for a project be lower than the maximum income limits.

(c) The amount of the financial assistance shall not exceed the amount required to achieve financial feasibility in[which UHC determines will] provid ing[e] affordable housing for the intended occupants of the residential housing development.

(d) In determining the amount of financial assistance, UHC shall determine that the costs, including developer fees and reserves, incurred by the housing sponsor with respect to a residential housing development, are not excessively greater than similar housing developments.

(e) The housing sponsor shall agree to the controls and procedures required by UHC to ensure that the financial assistance is used only for the approved purposes.

(f) The housing sponsor shall agree to the continued availability and affordability of the residential housing to low and moderate income persons, pursuant to an enforceable covenant running with the land which is prepared by UHC and recorded with the real estate records of the county in which the residential housing is located.

(g) UHC shall determine that the housing sponsor has the necessary competence, experience and financial capability to complete or operate the residential housing development through an internal review of a sponsor's previous projects and/or through interviews of individuals involved with the sponsor in previous projects.

(h) UHC shall require security for any loan in a form and amount as UHC determines is reasonably necessary to secure repayment. The security shall include a lien on the project property and may also include an irrevocable letter of credit, personal guarantees, security interests in unrelated real or personal property of the developer, assignments of contract rights and interests related to proposed development of the project, and/or power of attorney to replace manager, general partner or other principals of the developer. The lien on the project property may be subordinate to other financing of the project. Loans to non-profit or governmental entities are not required to be secured by personal guarantees.

(i) In the event that UHC makes a loan that is funded by or subject to any federal or state program, the terms of the loan shall be consistent with the requirements of the applicable program, notwithstanding any inconsistency with this Rule.

(j) As used herein, the "amount of financial assistance" means the principal amount of the loan together with the benefit of loan terms that are not typically available in the market, such as low (or no) interest rate, a long maturity date and/or a deferred (or no) amortization period.

(2) Financial assistance to low and moderate income persons.

UHC may provide financial assistance to low and moderate income persons for the purpose of construction, rehabilitation, [or] purchase , and/or financing of residential housing.

(a) UHC shall determine that, in order to make homeownership feasible for certain [specified categories of] low and moderate income persons, financial assistance is necessary to reduce the cost of constructing, rehabilitating, purchasing and/or financing the residential housing.

(b) UHC shall establish and may amend maximum income limits for low and moderate income persons eligible to receive the financial assistance. The limits shall not exceed 120% of median income as determined by UHC. UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall give public notice as required by state law. UHC may require that the income limits for a project be lower than the maximum income limits.

(c) The financial assistance will be provided only to assist with the construction, rehabilitation, purchase , and/or financing of residential housing which does not exceed the maximum acquisition cost and appraised value limits established by UHC. The acquisition cost of residential housing is the cost of acquiring a completed residential housing unit and shall include all amounts paid in such or in kind for all structures, fixtures, and land. UHC shall establish and may amend the limits in open public meetings of UHC for which UHC shall have given public notice as required by state law.

(d) UHC may condition the financial assistance provided to the home-buyer upon its repayment, with or without interest, to UHC.

(3) UHC may agree to provide any financial assistance pursuant to such additional conditions, terms and restrictions to ensure that the financial assistance is used as specified by UHC.

(4) UHC may establish application procedures and forms of applications and may collect fees payable by housing sponsors and/or low and moderate income persons to cover administrative and legal expenses of UHC incurred in processing and reviewing applications.

(5) UHC may provide financial assistance only if sufficient funds exist for that purpose and the financial assistance can be provided without jeopardizing the financial self-sufficiency of UHC.

(6) UHC may provide financial assistance to any subsidiary of UHC for any of the purposes set forth in this rule provided the applicable conditions for such financial assistance are satisfied.

(7) For financial assistance provided under a program established by the Trustees of UHC, the general terms of the financial assistance shall be consistent with the requirements of the program and the specific terms shall be determined by the President or another officer designated by the President. For all other financial assistance, the general terms shall be determined by the Trustees and the specific terms shall be determined by the President consistent with the terms determined by the Trustees.

 

R460-3-6. State Low-Income Housing Tax Credit Program.

(1) Application procedures.

(a) UHC shall incorporate in the low-income housing tax credit allocation plan prepared by UHC pursuant to R460-3-4 criteria and allocation procedures that UHC will follow in administering [the] state low-income housing tax credit s[ program for the state].

(b) UHC shall designate the form of application which shall be used to request an allocation of [the] state low-income housing tax credits[ for a proposed residential development].

(2) Reservation of credits.

(a) UHC shall evaluate all applications according to the procedures set forth in the allocation plan, however, the applications will not be scored and ranked for purposes of [allocating] reserving [the] state low-income housing tax credits. A reservation of state low-income housing tax credits allocated to an applicant shall be in an amount determined by UHC and shall be based upon the facts , [and] circumstances , and representations contained in[ of] the application. UHC may reserve state low-income housing tax credits to projects either in conjunction with the reservation of federal low-income housing tax credits or at a later date to a project not yet placed-in-service that previously received a reservation of federal low-income housing tax credits.

(b) UHC may condition a reservation of state low-income housing tax credits to an applicant upon any restrictions and conditions UHC believes are consistent with the purpose and intent of the program, and those which will ensure the completion of the residential housing development.

(c) No reservation of state low-income housing tax credits may be transferred by an applicant unless the specific written approval of UHC is obtained before the proposed transfer. Any transfer shall be made in writing, with copies of all written documents provided to UHC.

(d) Applicants shall provide UHC with any information that may be requested by UHC in performing its duties and responsibilities required under the [state] low-income housing tax credit program and the allocation plan.

(3) Allocation.

(a) UHC shall enter into an agreement for the carry-over allocation of state low-income housing tax credits, or make a final allocation of state low-income housing tax credits, to applicants who have received a reservation of state low-income housing tax credits upon satisfaction to UHC of all of the conditions to the reservation of the state and federal low-income housing tax credits.

(b) As a condition to making any allocation of state low-income housing tax credits, UHC may require an applicant to make a deposit, or provide other guarantees of performance, in an amount and manner as determined by UHC to ensure the completion of the residential housing development. Circumstances under which deposits or performance guarantees will be returned or forfeited, in whole or in part, shall be made known to applicants before the collection of the deposit or performance guarantee.

(c) UHC may reserve or allocate state low-income housing tax credits in amounts that are less than amounts requested by applicants.

 

KEY: housing finance

Date of Enactment or Last Substantive Amendment: [1993]2010

Notice of Continuation: October 15, 2007

Authorizing, and Implemented or Interpreted Law: 9-4-910; 9-4-911