AUTHORITY: Authorized by Sections 7.19 and 7.23 of the Illinois Housing Development Act [20 ILCS 3805].

SOURCE: Adopted by emergency rulemaking at 36 Ill. Reg. 1783, effective January 23, 2012, for a maximum of 150 days; amended at 36 Ill. Reg. 9189, effective June 7, 2012; amended at 43 Ill. Reg. 10501, effective September 5, 2019.

SUBPART A: GENERAL RULES

 

Section 300.101  Authority

 

This Part is authorized by and made pursuant to Sections 7.19 and 7.23 of the Illinois Housing Development Act [20 ILCS 3805/7.19 and 7.23] and shall govern the Illinois Housing Development Authority's homeownership mortgage loan program (the "Program") funded by its Bonds and from other sources of funds available to the Authority.

 

Section 300.102  Purposes and Objectives

 

This Part is established to accomplish the general purpose of the Illinois Housing Development Act and in particular the origination, making and purchasing of residential mortgage loans in accordance with the Program to achieve the following objectives:  the provision of funds to finance, at affordable interest rates and/or other terms more favorable than those otherwise available, residential mortgage loans for Low and Moderate Income Persons and families; the provision of housing to alleviate the shortage of adequate housing in the State of Illinois for persons and families that are residents of the State of Illinois; and the effective participation by mortgage lenders in the Program.

 

Section 300.103  Definitions

 

As used in this Part, the following words or terms mean:

 

"Act":  The Illinois Housing Development Act [20 ILCS 3805].

 

"Assistant Director":  The Assistant Executive Director of the Authority.

 

"Authority":  The Illinois Housing Development Authority.

 

"Bonds":  The Bonds issued by the Authority pursuant to the Act from time to time under any resolution of the Authority or indenture pursuant to which Authority Bonds may be issued to finance or refinance Mortgage Loans under the Program, as amended or supplemented.

 

"Code":  The Internal Revenue Code of 1986 (26 USC), as amended and supplemented, and the regulations promulgated by the Treasury Department from time to time under that statute (26 CFR).  References to a section of the Code include all regulations promulgated by the Treasury Department under that section.

 

"Deputy Director":  The Deputy Executive Director of the Authority.

 

"Director":  The Executive Director of the Authority.

 

"Eligible Borrower":  A person:

 

who is or will be a resident of the State within the later of 60 days after the closing of the purchase of a Qualified Dwelling and, in the case of a Qualified Dwelling upon which residential structures are to be substantially renovated or constructed by the Eligible Borrower following its purchase, within 60 days after the substantial completion of renovation or construction, but in any event within 270 days after the closing of the purchase of the Qualified Dwelling, and whose Household Income does not exceed the Maximum Income;

 

who occupies, or intends to occupy, as a single household the Qualified Dwelling financed, or being financed or refinanced, by a Mortgage Loan as his or her permanent residence within 60 days after the later of the closing of the Mortgage Loan and, in the case of a Qualified Dwelling upon which residential structures are to be substantially renovated or constructed by the Eligible Borrower following its purchase, within 60 days after the substantial completion of renovation or construction, but in any event within 270 days after the closing of the Mortgage Loan.

 

The foregoing time periods may be extended in particular instances if the Authority determines that undue hardship to the Eligible Borrower or an unreasonable result will otherwise occur.

 

"FHA":  The Federal Housing Administration.

 

"FHLMC":  The Federal Home Loan Mortgage Corporation.

 

"FNMA":  The Federal National Mortgage Association.

 

"GNMA":  The Government National Mortgage Association.

 

"Household Income":  The total income of any person who is expected to:

 

live in the Qualified Dwelling; and

 

be liable, or secondarily liable, on the Note.

 

For purposes of this definition, a "person" must also be an Eligible Borrower; however, the Authority shall not be required to include the income of each Eligible Borrower. The income of any Eligible Borrower not liable, or secondarily liable, on the Note may be excluded.

 

"Insured":  A Mortgage Loan that is insured by Private Mortgage Insurance, by insurance provided by FHA, VA or USDA, or by insurance under a comparable government insurance program approved by the Members by resolution and acceptable to GNMA, FNMA or FHLMC, as applicable.

 

"Lender":  A bank, trust company, savings bank, savings and loan association, credit union, national banking association, mortgage banking association, federal savings and loan association or federal credit unit maintaining an office in the State, any insurance company, or any other entity or organization that makes or acquires loans secured by real property:

 

that is located and qualified to do business in the State;

 

that meets the conditions and requirements of the applicable Mortgage Purchase Agreement and that meets the requirements of the applicable insurer, if any, and FNMA, FHLMC or GNMA, as and to the extent applicable, as issuer and/or guarantor of Mortgage-Backed Securities; and

 

that is approved by the Director, Deputy Director or Managing Director in writing, with notice of approval to be provided to the Members within a reasonable period of time. Approval of any Lender may be withdrawn at any time by the Director, Deputy Director or Managing Director in writing, with notice of the withdrawal to be provided to the Members within a reasonable period of time.

 

"Lender Application":  A prospective Lender's application to sell Mortgage Loans to the Authority or participate in the Program pursuant to the terms of a Mortgage Purchase Agreement and other Program documents.

 

"Low and Moderate Income Persons":  Families and persons whose income does not exceed the Maximum Income and who cannot afford to pay, or qualify for a mortgage loan to finance or refinance, the amounts at which private enterprise, without assisted mortgage financing, is providing a substantial supply of decent, safe and sanitary housing.

 

"Managing Director" means the Managing Director or Director, as the case may be, of the Authority's Homeownership Programs Department.

 

"Maximum Income":  Unless otherwise permitted or required by the Code, 120% of the median family income of either the metropolitan statistical area or primary metropolitan statistical area in which the Qualified Dwelling is located or the State, whichever is greater, as determined by the Internal Revenue Service.

 

"Members":  The Members of the Authority.

 

"Mortgage":  The Mortgage, or other instrument in the nature of a Mortgage, creating a first Mortgage lien on a fee interest in real estate, together with all supplements, modifications or amendments to it.

 

"Mortgage Loan":  A loan made by a Lender to an Eligible Borrower for the purchase of a Qualified Dwelling and secured by a Mortgage on the Qualified Dwelling.

 

"Mortgage Purchase Agreement":  The agreement, including any amendments or supplements to the agreement, between the Authority and a Lender pursuant to which the Authority or its designee agrees to purchase Mortgage Loans from the Lender on the terms and conditions set forth in the agreement and that establishes the requirements for Mortgage Loans to be purchased by the Authority or its designee, or otherwise allows participation in the Program.

 

"Mortgage-Backed Security":  A single pool, guaranteed mortgage pass-through security issued and guaranteed by FNMA, a single pool, guaranteed mortgage pass-through certificate issued and guaranteed by FHLMC, or a mortgage pass-through certificate guaranteed by GNMA pursuant to its mortgage-backed securities program under section 306(g) and related provisions of the National Housing Act of 1934 (12 USC 1701), as amended, or any similar successor statutory authority.

 

"Note":  The promissory note evidencing a Mortgage Loan and secured by a Mortgage on a Qualified Dwelling with respect to which assisted Mortgage financing is provided by the Authority under the Program.

 

"Notice of Acceptance":  The Authority's notice to a Lender accepting its Lender Application.

 

"Prepayments":  Any moneys, however derived, that are received or recovered by the Authority from any payment of, or with respect to, principal on any Mortgage Loan or Mortgage-Backed Security prior to scheduled payments of principal required under that Mortgage Loan or Mortgage-Backed Security.

 

"Private Mortgage Insurance":  Insurance coverage paid for by the Eligible Borrower that insures against losses with respect to defaults on a Mortgage Loan according to the terms of the insurance policy.  The insurer and the terms of the insurance policy must be approved by FNMA or FHMLC or by the Director, Deputy Director or Managing Director in writing.

 

"Program":  The Authority's Homeownership Mortgage Loan Program under which the Authority provides assisted Mortgage financing to Low and Moderate Income Persons to finance or refinance their purchase of Qualified Dwellings, funded with proceeds of Bonds or any other source of funds available to the Authority.

 

"Program Funds":  All moneys made available by the Authority for the purchase of Mortgage Loans under the Program, from whatever source derived.

 

"Property Value":  The lesser of the purchase price or the appraised value of the Qualified Dwelling at the time of the origination of the Mortgage Loan secured by that Qualified Dwelling.

 

"Qualified Dwelling":

 

A fee simple interest in real property:

 

that is located in the State;

 

upon which there is located a structure or structures designed for residential use or, if the real property is unimproved, upon which construction of that structure or structures for residential use has begun or will commence within 60 days after the closing of the Eligible Borrower's purchase of the property and can reasonably be expected to be completed within 270 days after the closing of the Eligible Borrower's purchase of the property;

 

that is a single family residence; a condominium; a one-, two-, three- or four-unit residential structure, one unit of which is occupied by the owner of the structure; or factory-made housing that is permanently fixed to real property;

 

of which not more than 15% of the total area is reasonably expected to be used primarily in a trade or business; and

 

that is, at the time financing or refinancing is provided, the principal residence of the Eligible Borrower or can reasonably be expected to become the principal residence of the Eligible Borrower within a reasonable time after financing or refinancing is provided. For purposes of this definition, a "reasonable time after financing or refinancing is provided" shall be deemed to be a period within 60 days after the later of the closing of the Mortgage Loan and, in the case of a Qualified Dwelling upon which residential structures are to be substantially renovated or constructed by the Eligible Borrower following its purchase, within 60 days after the substantial completion of renovation or construction but in any event within 270 days after the closing of the Mortgage Loan.  The foregoing time periods may be extended by the Authority if the Authority determines that undue hardship to the Eligible Borrower or an unreasonable result will otherwise occur.

 

Not included in this definition is a residence that is:

 

used as an investment property;

 

a recreational home; or

 

primarily intended to be used in a trade or business, including, without limitation, any residence of which more than 15% of the total area is reasonably expected to be used primarily in a trade or business.

 

"Rules":  The rules of the Authority, as amended and supplemented from time to time (generally 47 Ill. Adm. Code Chapter II).

 

"Servicer":  A Lender, acting in the capacity of a Mortgage loan servicer, a financial institution, a Mortgage banking organization, a Mortgage servicing company, or a state agency or local government unit organized under the laws of any state or territory of the United States of America or the District of Columbia, that is qualified to service Insured Mortgage Loans, is acceptable to GNMA, FNMA or FHLMC, as applicable, has been approved by the Director, Deputy Director or Assistant Director as a Servicer, and has executed a Servicing Agreement with the Authority.  The Authority may also be a Servicer.

 

"Servicing Agreement":  The agreement between a Servicer and the Authority (except when the Authority is the Servicer) that sets forth the terms and conditions for the servicing of Mortgage Loans purchased by the Authority or its designee.  The term "Servicing Agreement" includes a master agreement pursuant to which the Servicer services Mortgage Loans originated by more than one Lender.

 

"Staff":  The Director, Deputy Director, Assistant Director, and employees of the Authority.

 

"State":  The State of Illinois.

 

"Tax-exempt":  With respect to Bonds the interest on which the Authority intends to be tax-exempt, the status of interest paid and received on such Bonds as not includible in the gross income of their owners under the Code for federal income tax purposes, with such general exceptions as may be provided from time to time in the Code (for example and without limitation, the alternate minimum tax applicable to individuals or corporations or the "branch profits tax" imposed on certain corporations).

 

"This Part":  47 Ill. Adm. Code 300.

 

"USDA":  The United States Department of Agriculture, Rural Housing Service, or any successor agency under the Section 502 Guaranteed Rural Housing Loan Program or any similar replacement program.

 

"VA":  The United States Department of Veterans Affairs.

 

(Source:  Amended at 43 Ill. Reg. 10501, effective September 5, 2019)

 

Section 300.104  Borrowing by the Authority

 

To the extent allowed by State or federal law and the Act, the Authority may borrow funds with which to purchase Mortgage Loans, Mortgage-Backed Securities or other securities, or to facilitate the origination of Mortgage Loans under the Programs.

 

Section 300.105  Compliance with Federal Law

 

Notwithstanding anything in this Part to the contrary, this Part shall be construed in conformity and compliance with applicable federal law, including, without limit, section 143 of the Code to the extent applicable.

 

Section 300.106  Standards

 

In administering the Program, the Authority and the Staff, in those instances permitting the exercise of discretion, shall consider, in addition to the criteria specifically set forth in this Part,

the following factors:

 

a)         the purpose of the Program;

 

b)         the financial condition and previous lending experience of potential and participating Lenders and Servicers;

 

c)         to the extent the Program is financed through the issuance of Bonds, the Authority's ability to purchase or redeem the Bonds or to retire Bonds at their maturity and to comply with the requirements of any applicable resolution or indenture of the Authority and applicable State and federal law;

 

d)         the financial integrity of the Program;

 

e)         the desirability of achieving a reasonable geographic distribution of Program Funds throughout the State; and

 

f)         the standards of the prudent lender or investor.

 

Section 300.107  Forms for the Program

 

The Staff may prepare, use, supplement and amend forms, agreements and other documentation as may be necessary to implement the Program, as may be prescribed by the Director, Deputy Director or Assistant Director.

 

Section 300.108  Fees and Charges of the Authority

 

The Authority may establish charges, premiums and penalties as it may deem necessary to administer the Program after consideration of such factors as, but not limited to, financing requirements of the Program, preferences of bond rating agencies, earnings and arbitrage limitations established by federal or State law, to the extent applicable, and other financial factors relevant to the Program.

 

Section 300.109  Amendment

 

This Part may be amended or repealed by the Members from time to time in accordance with the Illinois Administrative Procedure Act and in a manner as they may determine consistent with the Act, the purposes of the Program and other applicable provisions of State and federal law.  This Part shall not constitute or create any contractual rights.

 

Section 300.110  Severability

 

If any clause, sentence, subsection, Section or Subpart of this Part shall be adjudged by any court of competent jurisdiction to be invalid, that judgment shall not affect, impair or invalidate the remainder of this Part, but shall be confined in its operation to the clause, sentence, subsection, Section, and Subpart of this Part to which the judgment is rendered.

 

Section 300.111  Gender and Number

 

All terms expressed in any one gender or number shall be construed to include any other gender or number as the context may require.

 

Section 300.112  Titles and Captions

 

Titles and captions of Subparts, Sections, and subsections are used for convenience of reference and are not a part of the text.

 

Section 300.113  Calendar Days

 

Days shall mean calendar days.  Due dates falling on a Saturday, Sunday or legal State or federal holiday shall be deemed to fall on the next calendar day that is not Saturday, Sunday, or a legal State or federal holiday.

SUBPART B: LENDER APPLICATION PROCESS

 

Section 300.201  Invitations to Participate in the Programs

 

From time to time the Authority may send application materials to potential Lenders inviting them to submit to the Authority Lender Applications to participate in the Program.  Lenders wishing to participate in the Program shall execute and return to the Authority:  the Lender Application and the Mortgage Purchase Agreement (if not already executed).  The Lender Application shall contain, but not be limited to, the following:

 

a)         The unconditional agreement of the prospective Lender, effective upon acceptance of the Lender Application by the Authority, to sell to the Authority or its designee Mortgage Loans that comply with the terms of the Lender Application, the Mortgage Purchase Agreement, the Notice of Acceptance and the requirements of the Program;

 

b)         Provision for the prospective Lender to furnish financial and other information as the Authority may reasonably require; and

 

c)         A pro forma copy of any 1etter of credit or pledge of deposits or assets the Authority may require as security for the Lender's performance of its obligations under the Program.

 

Section 300.202  Notice of Acceptance

 

By Notice of Acceptance, the Authority or its designee may commit itself, subject to the conditions set forth in the Lender Application and the Mortgage Purchase Agreement, to purchase Mortgage Loans, as offered by a potential Lender, or to allow the Lender's participation in the Authority's Program.  Immediately after the Authority has issued its Notice of Acceptance to the Lender, the Authority shall execute a Mortgage Purchase Agreement (if not previously executed) with the Lender.  Upon receipt of the Notice of Acceptance, the Lender shall be obligated to originate Mortgage Loans in accordance with the terms of the Lender Application, the Notice of Acceptance and the Mortgage Purchase Agreement.

 

Section 300.203  Commitments for Mortgage Loans

 

Upon receipt of the Notice of Acceptance, the Lender shall issue commitments to Eligible Borrowers to make Mortgage Loans.  The Lender may continue to issue firm commitments for the period set forth in the Notice of Acceptance.  Any Mortgage Loans to be purchased by the Authority or its designee shall be purchased by the Authority or its designee by the date indicated in the Notice of Acceptance.

SUBPART C: PURCHASE OF MORTGAGE LOANS

 

Section 300.301  Mortgage Loans

 

Each Mortgage Loan to be purchased under the Program shall comply with the terms of the Lender Application, the Notice of Acceptance and the Mortgage Purchase Agreement, and shall specifically comply with the following requirements, among others:

 

a)         The original principal amount of each Mortgage Loan shall not exceed the maximum loan amount set by the Authority from time to time. The loan-to-Property Value ratio for each Mortgage Loan shall not exceed the maximum loan-to-Property Value ratio set by the Authority from time to time.

 

b)         Each Mortgage Loan shall be Insured, unless, and only to the extent that, FNMA, FHLMC or GNMA, as issuer and/or guarantor of Mortgage-Backed Securities, do not require that particular Mortgage Loans be insured to be included in pools of Mortgage Loans underlying Mortgage-Backed Securities issued and/or guaranteed by FNMA, FHLMC or GNMA.

 

c)         Each Mortgage Loan to be purchased by the Authority or its designee shall be secured by a Mortgage on a Qualified Dwelling and shall also meet the applicable terms and conditions set forth in this Part, the Lender Application, the Notice of Acceptance and the Mortgage Purchase Agreement.  Lenders shall sell to the Authority or its designee, and the Authority or its designee shall purchase, only Mortgage Loans made to Eligible Borrowers.

 

d)         Each Mortgage securing a Mortgage Loan to be purchased by the Authority or its designee shall:

 

1)         be executed on a form approved by the Authority or its designee;

 

2)         be a valid first Mortgage lien on a Qualified Dwelling;

 

3)         have a term not exceeding 40 years;

 

4)         be consistent with Illinois law; and

 

5)         conform with the requirements prescribed by the Authority and any applicable insurer.

 

e)         Each Mortgage Loan to be purchased by the Authority or its designee shall be assumable and assignable, unless otherwise required by Section 103 of the Code, any other applicable sections of the Code or any other applicable State or federal law as may be enacted from time to time, and shall contain a provision giving the Authority or its designee the right to accelerate the maturity of the Mortgage Loan upon sale or lease of the Qualified Dwelling, unless otherwise allowed or required by applicable State or federal law.

 

f)         The Authority or its designee shall not be required to purchase any Mortgage Loan if, on the date of purchase, the obligor of the Mortgage Loan is delinquent in the payment of any installment of principal, interest or other amounts due under the terms of the Mortgage Loan.

 

g)         The Authority or its designee may foreclose Mortgages held as security for Mortgage Loans purchased under this Part that are in default according to their terms, or reassign the Mortgages to the Lender in accordance with the terms of the Mortgage Purchase Agreement.  The Authority or its designee may take title to the property in its name upon foreclosure and to subsequently convey title to the property to any purchaser of the property.

 

Section 300.302  Yield on Certain Mortgage Loans

 

In no event shall the yield on Mortgage Loans financed or refinanced from the proceeds of Bonds that are Tax-Exempt and sold to the Authority or its designee exceed the maximum permitted by application of the provisions of section 143 of the Code.

 

Section 300.303  Terms and Conditions of the Purchase of Mortgage Loans

 

a)         The Authority or its designee shall purchase Mortgage Loans on the terms and conditions and in the manner prescribed in the Mortgage Purchase Agreement.  The Mortgage Purchase Agreement shall contain such warranties of the Lender in connection with the Mortgage Loans to be sold under the Mortgage Purchase Agreement as the Authority or its designee shall require.  These warranties shall include, but are not limited to, the following:

 

1)         The mortgagor is an Eligible Borrower;

 

2)         The original principal amount of the Mortgage Loan does not exceed any maximum loan amount established by the Authority;

 

3)         The Mortgage Loan is evidenced by a properly executed Note made payable or assigned to the order of the Lender, endorsed by the Lender to the Authority or its designee and secured by a Mortgage on the Qualified Dwelling; both the Note and the Mortgage are the legal, valid and binding obligations of the makers and mortgagors and are enforceable in accordance with their terms, unless enforcement is limited by laws affecting the enforcement of creditors' rights generally, if all parties to each Mortgage Loan had full legal capacity to execute all Mortgage Loan documents at the time of execution;

 

4)         The Mortgage, the Uniform Commercial Code Form 1 and Form 2 financing statements, if any, and any other document required to be filed in a public office to perfect the mortgage lien against third parties have been duly and timely filed, registered or recorded by the Lender in the proper public office in order to give constructive notice of them to all subsequent purchasers or encumbrancers;

 

5)         The Lender is the sole owner and holder of the Mortgage Loan, has full right to sell and assign the Mortgage Loan to the Authority or its designee, and that assignment conveys a good and marketable mortgagee's title to the Authority or its designee free and clear of all liens and encumbrances and subject only to real property taxes and assessments not yet due and encumbrances customarily accepted in accordance with applicable title standards and disclosed to the Authority or its designee prior to purchase of the Mortgage Loan;

 

6)         The Mortgage creates a valid and existing first Mortgage lien on the Qualified Dwelling to secure the Mortgage Loan, unless otherwise authorized by the Authority or its designee; the term "first Mortgage lien" means classes of first liens commonly given to secure loans on real estate under the laws of the State;

 

7)         The Lender has not modified in any respect and has not satisfied, canceled, subordinated or compromised in whole or in part the Mortgage Loan indebtedness, and has not released the mortgaged property in whole or in part from the lien of the indebtedness evidenced by the Note and secured by the Mortgage; and the terms, covenants and conditions of the Note evidencing the Mortgage Loan and the Mortgage securing the Mortgage Loan shall not have been waived, altered or modified in any respect that would materially affect the validity or enforceability of the Note or the Mortgage Loan or the security of the lien of the Mortgage;

 

8)         The real property securing the Mortgage Loan is a Qualified Dwelling;

 

9)         The Qualified Dwelling is covered by a valid and existing policy of homeowner's property and casualty insurance meeting the requirements of the Authority or its designee;

 

10)         The Lender has complied with the rules and requirements of the applicable insurance program, so that the Mortgage Loans to be purchased are Insured and the insurance is in full force and effect and inures to the benefit of the Authority or its designee;

 

11)         The Mortgage Loan is covered by a fully paid mortgagee's title insurance policy in such form as the Authority or its designee may require and under which the Authority or its designee is a loss payee; and

 

12)         To the best of Lender's information, knowledge and belief, no condition exists that would prohibit the purchase of the Mortgage Loan by the Authority or its designee under all applicable rules, regulations and contractual provisions.

 

b)         The Mortgage Purchase Agreement shall provide that the Authority shall have the right to require the Lender to repurchase Mortgage Loans sold to the Authority or its designee by the Lender if the Director, Deputy Director or Assistant Director determines that the Lender has failed to comply with the requirements of either this Part or its contracts and agreements with the Authority under the Program.

 

c)         The Authority may provide assistance with closing costs or a down payment to the Eligible Borrower under any such Mortgage Loan. Assistance with closing costs and assistance with a down payment shall be in such maximum amounts and under such terms as have been approved by the Members from time to time by resolution.

 

Section 300.304  Prepayments

 

The Authority shall apply any Prepayments it receives with respect to Mortgage Loans as follows:

 

a)         to the purchase of additional Mortgage Loans in accordance with the requirements of the Program;

 

b)         in the case of Prepayments with respect to any Mortgage Loan financed in whole or in part from the proceeds of Bonds, to the extent the Prepayments are allocable to proceeds of Bonds, to the purchase or redemption of Bonds, subject in each case to the requirements of the applicable resolution or indenture of the Authority pursuant to which the funds were provided to purchase the Mortgage Loan with respect to which the Prepayment was received; or

 

c)         for other corporate purposes of the Authority, to the extent permitted by the applicable resolution or indenture of the Authority pursuant to which the funds were provided to purchase the Mortgage Loan with respect to which the Prepayment was received.

 

Section 300.305  Targeted Area Residences

 

To the extent that Mortgages or Mortgage-Backed Securities are purchased from proceeds of Bonds that are Tax-Exempt, the Authority or its designee shall comply with the requirements of section 143 of the Code in connection with the purchase of Mortgage Loans on targeted area residences or the financing of such Mortgage Loans through the purchase of Mortgage-Backed Securities.

SUBPART D: PURCHASE AND SALE OF MORTGAGE-BACKED SECURITIES

 

Section 300.401  Purchase of Mortgage-Backed Securities

 

The Authority may purchase Mortgage-Backed Securities from time to time from proceeds of Bonds, as an investment of funds in the Authority's Administrative Fund or other Authority Funds and accounts, as a temporary investment of funds held by a trustee under any resolution or indenture of the Authority pursuant to which Bonds have been issued, or from other funds of the Authority legally available for the purpose, in all cases to the extent permitted by applicable State and federal law and, if applicable, the terms of any applicable resolution or indenture of the Authority, for the purpose of providing assisted mortgage financing or refinancing for Low and Moderate Income Persons under the Program. Mortgage Loans pooled in connection with the issuance and purchase by the Authority of any Mortgage-Backed Security shall meet the criteria for Mortgage Loans in Sections 300.301 and 300.303. The Authority may provide assistance with closing costs or a down payment to the Eligible Borrower under any such Mortgage Loan as provided in Section 300.303(c).

 

Section 300.402  Sale of Mortgage-Backed Securities

 

In order to provide assisted mortgage financing or refinancing or Mortgage Loans for Low and Moderate Income Persons under the Program, the Authority may sell Mortgage-Backed Securities held by the Authority or may direct a trustee under a resolution or indenture of the Authority pursuant to which Bonds have been issued that is holding Mortgage-Backed Securities as a temporary investment of funds held by the trustee under the resolution or ordinance, subject to applicable limitations under State or federal law or the applicable resolution or indenture of the Authority.  Proceeds of sale of Mortgage-Backed Securities originally purchased from Authority funds shall be used for lawful Authority purposes, including, without limitation, providing further assisted mortgage financing or refinancing of Mortgage Loans for Low and Moderate Income Persons under the Program and originally purchased as a temporary investment of funds held by a trustee under a resolution or indenture of the Authority pursuant to which Bonds have been issued shall be applied as provided in the resolution or indenture.  In connection with the sale, the Authority may enter into documentation necessary to effect the sale.

 

Section 300.403  Yield on Certain Mortgage-Backed Securities

 

In no event shall the yield on Mortgage-Backed Securities purchased from the proceeds of Bonds that are Tax-Exempt exceed the maximum permitted by application of section 143 of the Code.

 

Section 300.404  Prepayments

 

The Authority shall apply any Prepayments it receives with respect to a Mortgage-Backed Security as follows:

 

a)         to the extent the Mortgage-Backed Security was originally purchased from Authority funds for any lawful Authority purposes, including, without limitation, providing further assisted mortgage financing or refinancing of Mortgage Loans for Low and Moderate Income Persons under the Program; and

 

b)         to the extent the Mortgage-Backed Security was originally purchased as a temporary investment of funds held by a trustee under a resolution or indenture of the Authority pursuant to which Bonds have been issued, as provided in the resolution or indenture.

SUBPART E: ADMINISTRATIVE RULES

 

Section 300.501  Restrictions on Compensation of Lenders

 

The Authority shall, by resolution of the Members adopted from time to time, establish the maximum compensation that may be realized by any Lender and by any agent of any Lender from Mortgage Loans, including any fees, premiums, bonuses and points charged by the Lender or the Lender's agent in connection with the making of Mortgage Loans.  The maximum compensation shall be set at such amounts as the Authority finds reasonably necessary to induce participation in the Programs by Lenders in order to accomplish the purposes of the Act or, to the extent applicable, to ensure compliance with arbitrage and income limitations of section 143 of the Code.

 

Section 300.502  Servicing of Mortgage Loans

 

The Authority shall cause all Mortgage Loans purchased by the Authority or its designee to be serviced by a Servicer pursuant to the Servicing Agreement.

 

Section 300.503  Equal Opportunity Lending

 

In making Mortgage Loans, the Lender shall not deny a Mortgage Loan to any person or persons or discriminate against the person or persons in fixing the amount, interest rate, duration, or other terms and conditions of the loans on account of race, color, religion, age, sex, marital status, family status, handicap, ancestry, national origin or unfavorable military discharge.  The Lender shall be subject to all State and federal requirements with respect to non-discrimination in lending including, without limitation, Title VI of the U.S. Civil Rights Act of 1964 (42 USC 2000 et seq.), Title VIII of the U.S. Civil Rights Act of 1968 (42 USC 3604 et seq.), as amended by the Housing and Community Development Act of 1974 (42 USC 5301 et seq.), the Equal Credit Opportunity Act (15 USC 1691-1691F), the Fair Credit Reporting Act (15 USC 1681-1681t), the Fair Housing Act (42 USC 3601-20), the Illinois Human Rights Act [775 ILCS 5] and Section 13 of the Act.

 

Section 300.504  Inspection of Books and Records

 

Upon prior written notice, the Authority may inspect, examine and copy the books and records of each Lender for the purpose of determining compliance with the Act and all contracts and agreements between the Authority and the Lender relating to the Program.

 

Section 300.505  Termination

 

The Authority or designee shall retain the right to terminate its obligation to purchase Mortgage Loans under the Program, subject to applicable State law and to its existing contractual obligations, including contractual obligations arising under a Lender Application, a Notice of Reservation of Funds, a Notice of Acceptance, a Mortgage Purchase Agreement, or a Servicing Agreement.