Each eligible financial institution that is participating in the program may make loans to an eligible borrower, provided:
(1) The eligible borrower demonstrates to the satisfaction of the financial institution that the eligible borrower has a participation agreement with the captive insurance company.
(2) The loan shall (A) be secured by a mortgage deed on the eligible borrower's residential building, (B) be made in accordance with the eligible financial institution's underwriting policy and standards, (C) be in an amount not to exceed seventy-five thousand dollars, and (D) bear an interest rate that does not exceed the applicable rate of the Federal Home Loan Bank of Boston for Amortizing Advances through the New England Fund program. For the purposes of this subdivision, “applicable rate” means the New England Fund rate that (i) is published on the Internet web site of the Federal Home Loan Bank of Boston as of the date the interest rate is locked-in by the eligible borrower and financial institution, and (ii) has an advance term and amortization schedule that most closely corresponds to the term and amortization schedule of the loan being made by the participating eligible financial institution.
(3) The eligible financial institution may recover up to eight hundred dollars from the eligible borrower for expenses paid by the eligible financial institution to third parties for services related to processing the application and closing the loan, including obtaining a credit report, flood certification, title search, appraisal or other valuation, and any recording fees. Such expenses may be financed as part of the loan subject to the seventy-five-thousand-dollar limit described in subparagraph (C) of subdivision (2) of this subsection or paid separately by the eligible borrower.
(4) The loan agreement shall require the eligible borrower to repay the loan in full not later than twenty years after the date the loan is issued.
(5) The loan proceeds shall be used by the borrower only for eligible repair expenses. For the purposes of this subdivision, “eligible repair expenses” means repair or replacement expenses that are (A) necessary to complete the repair or replacement of the foundation, or (B) otherwise necessary to restore the functionality and appearance of the property to the extent that the functionality and appearance of the property were compromised by the deterioration of the foundation or the demolition and construction process, including, but not limited to, the repair or replacement of wall framing, drywall, paint and other wall finishes, porches or decks, gutters, landscaping, outbuildings or sheds and swimming pools. “Eligible repair expenses” do not include any costs associated with significant upgrades to the property that are not otherwise included in subparagraphs (A) and (B) of this subdivision. A participating eligible financial institution may decline an application for a loan under the program that includes a request to fund expenses associated with upgrades to the property that may not qualify as eligible repair expenses, but the failure to do so shall not affect the ability of the eligible financial institution to include the loan in the loan guarantee program for the full amount of principal extended to the eligible borrower.
(P.A. 19-192, S. 9.)
History: P.A. 19-192 effective July 8, 2019.