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(a) The originator of a loan shall initially retain at least a 10 percent share of the principal amount of the loan and shall not sell, transfer or permit prepayment or other early retirement of any portion of its participation interest without the permission of the authority.
(b) The initial rate of interest on the authority's participation in a real property or tangible personal property loan is set at the time the authority issues a loan commitment at a rate equal to the sum of the "true interest cost rate" and the "authority cost amount". The rate of interest on the originator's portion of a loan is set by the originator, but may not exceed a market rate. If the authority issues bonds in respect of a loan, the authority will set the interim rate of interest, pending sale of the bonds, at the time that the authority issues a loan commitment. The authority will set the final rate of interest after issuance of the bonds. If the authority does not issue bonds in respect of a loan, the authority will set the rate of interest at the time that the authority issues a loan commitment.
(c) The authority will, in its discretion, require prepayment fees on its participation share in a real property or tangible personal property loan in amounts and for a period of time it determines appropriate, except that the authority will not charge a prepayment fee later than five years from the date the authority funds its participation.
(d) In this section
(1) "true interest cost rate" means the true interest cost, as determined by the authority and expressed as an annual rate of interest, that would apply to the authority's tax-exempt bonds if the authority were issuing tax-exempt bonds to provide funding for a loan at the time of funding of the loan;
(2) "authority cost amount" means an amount, determined by the authority and expressed as an annual rate of interest, that is necessary to pay for the allocable expenses of operation, costs of issuance, and loan servicing with respect to loans for which interest rates are determined under this section, if, however, that the annual rate of interest does not exceed the maximum amount above the yield on the tax-exempt bonds described in (1) of this subsection that would be permitted under section 148 of the Internal Revenue Code of 1986, as amended, without causing the bonds to lose their tax-exempt status.
History: In effect before 1988; am 1/11/88, Register 106; am 11/30/90, Register 118; am 7/19/91, Register 119; am 9/25/92, Register 124; am 11/1/99, Register 153; am 8/8/2003, Register 168
Authority: AS 44.88.080
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Last modified 7/05/2006