Title 15 . Revenue

Chapter 151 . (Repealed)

Section 540. Loan guidelines

15 AAC 151.540. Loan guidelines

(a) The Corporation will not make, participate in the making, purchase, or participate in the purchase of a loan under 15 AAC 151.500, unless it determines that the following conditions have been met:

(1) a loan is not otherwise available from other sources upon reasonably equivalent terms and conditions;

(2) the loan is secured by property which is acceptable to the Corporation which may include a mortgage which is in a first or subordinate lien position on real property in fee simple or an acceptable leasehold estate under (5) of this subsection;

(3) diligence has been exercised in minimizing administrative and regulatory-related expenses of the housing to allow for the maximizing of the availability of the housing for its intended occupants;

(4) the operational apparatus necessary for the operation of the 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;

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

(6) the applicant will obtain and maintain fire, extended coverage, vandalism, and optional perils insurance in an amount acceptable to the Corporation;

(7) the applicant will obtain title insurance in a form acceptable to the Corporation, unless waived by the Corporation.

(b) Before it makes, participates in the making, purchases, or participates in the purchase of a loan under 15 AAC 151.500, the Corporation will, in its discretion, require:

(1) that the application include:

(A) a loan summary;

(B) a signed loan application;

(C) a current report of the credit history of the applicant and the guarantor, if any;

(D) financial statements, which may be audited, including a profit and loss statement, for the current and three preceding years, with the financial statement and profit and loss statement for the current year dated four months or less from date of application;

(E) resumes of key personnel;

(F) 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 housing or lease of the land or land and improvements under a long-term lease;

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

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

(I) an appraisal report ordered by the Corporation;

(J) an environmental assessment acceptable to the Corporation; and

(K) any other information considered necessary 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 to the related financing.

(2) an escrow for taxes, assessments, and other charges that may, if not paid on a timely basis, become liens on the housing securing the loan;

(3) the establishment of housing replacement reserves for fixtures, equipment, appliances, and personal property and the manner in which the replacement reserves are to be maintained;

(4) the establishment of repair and maintenance reserves and the manner in which the repair and maintenance reserves are to be maintained;

(5) in the case of subordinate financing:

(A) a subordinate deed of trust as security;

(B) that the term of the subordinate loan not exceed 30 years;

(C) that the maximum loan amount be an acceptable risk to the Corporation;

(D) that the loan bear interest at a rate as established by the Corporation;

(E) that the repayment, as determined by the Corporation, of the interest and the principal of the loan, be based on the excess cash flow above that required for allowances for administrative and operating expenses; reserves for repair, maintenance, and replacements; real estate taxes; other expenses as approved by the Corporation; and debt service on all encumbrances on the housing superior to the subordinate loan, as determined by the Corporation;

(F) that the combined sum of all encumbrances including the subordinate loan on the housing be an acceptable risk to the Corporation; and

(G) that the combined sum of all encumbrances, including the subordinate loans on the housing, in relation to the housing's value present an acceptable risk to the Corporation, taking into consideration and placing emphasis on the analysis of the housing's current and forecasted cash flows in relationship to covering the housing's expenses, reserves, and debt service on all encumbrances including the subordinate loans over their life.

(6) where there has been construction, rehabilitation, or improvement, a statement from an appraiser stating that the housing was substantially completed according to the plans and specifications relied on by the appraiser making the appraisal;

(7) where there has been construction, rehabilitation, or improvement, a statement from an architect certifying that the housing was substantially completed according to the plans and specifications and any approved changes;

(8) a statement from an authorized official 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 that the housing offered as security for the loan is structurally sound and that the buildings or structures conform to applicable building standards;

(9) for recently completed, newly constructed housing, a soils test acceptable to the Corporation;

(10) the imposition of restrictions and requirements which it considers necessary to comply with the lending conditions of any potential loan purchaser, insurer, or guarantor;

(11) insurance or a guaranty by another entity such as the Federal Housing Administration, an approved private mortgage insurance company, or an insurance entity of the Corporation;

(12) annual audited financial statements of the borrower or borrowers;

(13) any other terms or conditions that are considered prudent by the corporation;

(14) a regulatory agreement or loan agreement designed to assure compliance with any provisions of these regulations or of the program guide with such remedies for non-compliance as it considers necessary or desirable including, without limitation, acceleration of the principal of the loan or increase in the rate of interest; and

(15) natural hazard insurance, including coverage for flood, earthquake, and mudslide, as well as rent loss insurance.

History: Eff. 5/7/93, Register 130; am 9/22/94, Register 132

Authority: AS 18.56.088

AS 18.56.090

AS 18.56.099