Title 15 . Revenue

Chapter 151 . (Repealed)

Section 435. Loan guidelines

15 AAC 151.435. Loan guidelines

(a) The Corporation will not make, participate in the making, purchase, or participate in the purchasing of a loan under 15 AAC 151.400 - 15 AAC 151.440 unless the Corporation determines that the following conditions have been met:

(1) the proposal is financially feasible and meets the housing needs of senior citizens in the area for which it is proposed;

(2) a loan is not otherwise available for the housing from private lenders upon reasonably equivalent terms and conditions;

(3) the loan is to a borrower or borrowers from whom timely repayment of the debt can be expected;

(4) the loan is secured by property acceptable to the Corporation which may include a mortgage which is in a first lien position on real property in fee simple or on an acceptable leasehold estate under (8) of this subsection;

(5) the operational apparatus necessary for the operation of the senior housing is secured by a valid Uniform Commercial Code financing statement, which must name, or be assigned to the Corporation as a secured party and be recorded in all places necessary to perfect a valid lien;

(6) the insurance will be maintained as set out in AS 18.56.740 ;

(7) title insurance is in a form acceptable to the Corporation;

(8) if a land lease secures the loan, the terms are acceptable to the Corporation;

(9) if the senior housing proposed for security is part of a commercial use facility, such as a shopping center, multi-level apartment, or multi-level office complex, no portion of the senior housing loan will be utilized for the commercial use facility that does not directly relate to senior housing;

(10) no portion of the senior housing loan will be utilized for the acquisition, construction, rehabilitation, or improvement of areas attributed to commercial use facilities within the senior project which are not considered incidental to the needs of seniors;

(11) loan proceeds will not be used for labor or services performed by the borrower or borrowers on single-family, duplex, triplex, and four-plex senior housing;

(12) a covenant encumbers the real estate securing the loan which (A) complies with the requirements of 15 AAC 151.435(c) and (B) restricts the use of some or all of the property to senior housing purposes; and

(13) application for a loan under this program is made by directly contracting the Corporation.

(b) Before the Corporation will make, participate in the making, purchase, or participate in the purchasing of a loan under 15 AAC 151.400 - 15 AAC 151.440, the Corporation will, in its discretion, require that:

(1) the application include the following:

(A) a loan summary;

(B) a loan application signed by the applicant;

(C) financial statements of the applicant in a form acceptable to the Corporation;

(D) a current credit report of the applicant in a form acceptable to the Corporation;

(E) resumes of key personnel describing their previous experience in owning, managing, or building properties;

(F) a certified statement from each principal stating whether any sustained default or foreclosure has occurred on any property in which the principal has had an ownership interest in the past 10 years and a certified statement from each principal stating whether the principal or any business in which the principal has had an ownership interest has filed for bankruptcy or had a bankruptcy case filed against the principal or business within the last 10 years;

(G) an appraisal acceptable to the Corporation which, if the Corporation is the direct lender, the Corporation will order unless the Corporation determines otherwise;

(H) preliminary and final plans and specifications for construction of the project and a detailed description of the project and real or tangible property to be acquired for the project;

(I) a detailed estimate of the cost of construction;

(J) resumes of contractors, engineers and architects;

(K) the construction contract;

(L) evidence of the contractor's, engineer's, and architect's business licenses and their good standing to do business in Alaska;

(M) evidence of the contractor's bonding and adequate insurance for the construction project;

(N) income and expense statements and balance sheets for each of the last three years if the project is operational or a pro-forma statement for any recently completed or moderately rehabilitated property;

(O) a phase I Environmental Assessment and, if necessary as determined by the Corporation, any subsequent phase studies;

(P) copies of the earnest money receipt and agreement, option to purchase, contract to purchase, invoice for purchase of land or land and improvements related to the project, or lease of the land or land and improvements under a long-term lease;

(Q) code compliance inspections;

(R) evidence of zoning or land use compliance;

(S) verification of employment, verification of deposit and other financial information, and other verifications as required by the Corporation;

(T) signed copies of the applicant's federal income tax returns for the preceding three years;

(U) a Uniform Residential Appraisal Report; and

(V) any other information requested by the Corporation to evaluate the application or to comply with conditions of underwriters, rating agencies, credit enhancers, loan guarantors or insurers, or any party related to the financing;

(2) the establishment of maximum payment and debt ratio restrictions for loans secured by single-family, duplex, triplex, and four-plex senior housing, and the prescribing of the sources of qualifying income, as well as the method in which debt must be underwritten; loans secured by single-family, duplex, triplex, and four-plex senior housing will be underwritten in accordance with the sellers' guide;

(3) prepayment of the loan may not be prohibited;

(4) the borrower make monthly deposits of funds necessary to pay real estate taxes, ground rents, insurance premiums, and special assessments;

(5) the borrower establish and agree to maintain repair, maintenance, replacement and other reserves;

(6) subordinate financing be permitted subject to terms and conditions acceptable to the Corporation;

(7) late payment penalties acceptable to the Corporation be established;

(8) the borrower provide and agree to maintain minimum levels of insurance coverage, including, but not limited to hazard, liability, rent loss, steam boiler, earthquake, and flood insurance;

(9) where construction, rehabilitation or improvement has been involved, an appraiser certify that construction, rehabilitation, or improvement was substantially completed according to the plans and specifications relied on by the appraiser making the appraisal;

(10) where construction, rehabilitation or improvement has been involved, an architect or engineer certify that construction was substantially completed according to the plans and specifications and any approved changes;

(11) an authorized official state in writing that the buildings and structures may be occupied and that the occupancy, buildings, and structures conform to all requirements of federal, state, and municipal law; or, if there is no authorized official or if requested by the Corporation, a registered architect, professional engineer, or other person acceptable to the Corporation state that the housing offered as security for the loan is structurally sound and that the buildings or structures conform to applicable building standards;

(12) for a recently completed newly constructed property, the borrower provide a soils test acceptable to the Corporation;

(13) restrictions and requirements be imposed in the loan document which the Corporation considers necessary to comply with the lending conditions of any potential loan purchaser, insurer, or guarantor;

(14) the loan be insured or guaranteed by the Federal Housing Administration, an approved private mortgage insurance company, an insurance entity of the Corporation, or other insurer or guarantor;

(15) the borrower agree to annually submit financial data, including audited financial statements; and

(16) the loan documents include additional terms, conditions, procedures, and provisions which are reasonable and customary in multi-family, cooperative, or senior housing mortgage lending.

(c) A covenant described in 15 AAC 151.435(a) (12) must satisfy the following requirements:

(1) for a senior housing project, the covenant must remain in effect, at a minimum, for 30 years or for the term of the senior housing loan, whichever is greater; and

(2) unless the covenant is waived by the Corporation, for single-family, duplex, triplex, or four-plex senior housing, the covenant must remain in effect for the term of the senior housing loan.

(d) If the borrower is under economic hardship that is tied directly to the borrower's inability to repay the loan, the borrower may request that the Corporation agree to modify the covenant described in 15 AAC 151.435(c) . In consideration of the information provided, the Corporation will make a decision that is in the best interest of the Corporation. A request under this subsection must:

(1) be in writing and specifically describe the economic hardship requiring the modification;

(2) be accompanied by specific financial and market information supporting the borrower's request;

(3) provide any other information and reasons in support of the request; and

(4) provide proposed solutions to alleviate the economic hardship of the borrower.

(e) The Corporation will, in its discretion, modify the requirements set forth in 15 AAC 151.435(b) for any specific loan if it determines additional credit enhancements have been added which more than offset any potential increased risk to the Corporation.

History: Eff. 5/7/93, Register 130

Authority: AS 18.56.088

AS 18.56.090

AS 18.56.099

AS 18.56.730