The local agency may fix fees, charges, and interest rates for financing residential rehabilitation and may from time to time revise such fees, charges, and interest rates to reflect changes in interest rates on the local agency’s bonds, losses due to defaults, changes in loan servicing charges, or other expenses related to administration of the residential rehabilitation financing program. Any change in interest rate shall conform to the provisions of Section 1916.5 of the Civil Code, except that paragraph (3) of subdivision (a) of Section 1916.5 shall not apply and that the “prescribed standard” specified in Section 1916.5 shall be periodically determined by the governing body of the local agency after hearing preceded by public notice to affected parties, and shall reflect changes in interest rates on the local agency’s bonds, losses due to defaults, and bona fide changes in loan servicing charges related to the administration of a program under the provisions of this part.
The local agency may purchase loans made to participating parties by qualified mortgage lenders without premium, if the loan was approved for such purpose prior to consummation of the loan and is of the character and on the terms previously established by the local agency for the residential rehabilitation program. The local agency may fix fees for servicing of such loans by qualified mortgage lenders, or may itself undertake collection, or may contract to pay any person, partnership, association, corporation, or public agency for such collection and disbursal. In determining fees and charges for financing and servicing of loans by qualified mortgage lenders, the local agency shall endeavor to obtain participation of not less than two qualified mortgage lenders, and shall apply the same fees and charges to all participating qualified mortgage lenders.
The local agency may hold deeds of trust or mortgages, including, but not limited to, mortgages insured under Title II of the National Housing Act (12 U.S.C., 1707 et seq.), as security for financing residential rehabilitation and may pledge or assign the same as security for repayment of bonds issued pursuant to this part. The local agency may establish the terms and conditions for the financing of residential rehabilitation undertaken pursuant to this part, and may require that any note evidencing a loan made to a participating party be insured or guaranteed, in whole or in part, by an instrumentality of the United States or of the State of California or by a person licensed to insure mortgages in this state. Notwithstanding any other provision of law, any person licensed to insure mortgages or to write residential mortgage guarantee insurance in the state shall be authorized to insure or guarantee, in whole or in part, any loan made for residential rehabilitation, excluding residential infill construction, pursuant to and in accordance with the provisions of this part, and such insurance shall not exceed 95 percent of the after-rehabilitation value of the property subject to such loan. Such insurance may include insurance of construction advances for purposes of residential rehabilitation and need not require completion of said residential rehabilitation for payment of claims thereunder.
Such notes, deeds of trust, or mortgages may be assigned to, and held on behalf of the local agency by, any bank or trust company appointed to act as trustee or fiscal agent by the local agency in any indenture or resolution providing for issuance of bonds pursuant to this part.
Notwithstanding Section 711 of the Civil Code, the full amount owed on any loan for residential rehabilitation made pursuant to this part shall be due and payable upon sale or other transfer of ownership of the property subject to such rehabilitation, except that assignment of the loan to the buyer or transferee may be permitted where required by the federal or state insurer or in cases of hardship, which shall be defined, and procedures established for the determination of their existence, in the guidelines established pursuant to subdivision (c) of Section 37922.
(Amended by Stats. 1980, Ch. 1330.)