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

SOURCE: Adopted at 18 Ill. Reg. 17229, effective November 16, 1994; amended at 22 Ill. Reg. 3851, effective February 4, 1998; emergency amendment at 31 Ill. Reg. 5883, effective March 30, 2007, for a maximum of 150 days; amended at 31 Ill. Reg. 12852, effective August 22, 2007; emergency amendment at 33 Ill. Reg. 1512, effective January 7, 2009, for a maximum of 150 days; amended at 33 Ill. Reg. 7295, effective May 22, 2009.

SUBPART A: GENERAL RULES

 

Section 260.101  Authority

 

These Rules are 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 single family mortgage purchase program (the "Program") funded by its Homeowner Mortgage Revenue Bonds.

 

Section 260.102  Purposes and Objectives  

 

These Rules are established to accomplish the general purposes of the Illinois Housing Development Act and in particular the purchasing and making of loans in accordance with the Program to achieve the following objectives:  the provision of funds to finance, at interest rates below 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 such persons and families that are residents of the State of Illinois; and the effective participation by mortgage lenders in the Program, while restricting their financial return to what is necessary to induce such participation.

 

Section 260.103  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 Homeowner Mortgage Revenue Bonds issued by the Authority pursuant to the Act from time to time to finance the Program.

 

"Code":  The Internal Revenue Code of 1986 (26 USC), as amended and supplemented, and the regulations promulgated by the Treasury Department (26 CFR).

 

"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 60 days after the closing of his or her purchase of a Qualified Dwelling;

 

whose Household Income does not exceed the Maximum Income;

 

who intends to use the Qualified Dwelling being financed by a Mortgage Loan as his or her permanent residence within 60 days after the closing of the Mortgage Loan;

 

who occupies or intends to occupy as a single household the Qualified Dwelling purchased or being purchased as a permanent residence; and

 

who at no time during the 3-year period ending on the date of closing of the Mortgage Loan had a present ownership interest in his or her principal residence.

 

An Eligible Borrower who purchases a Targeted Area Residence or a Qualified Rehabilitation Residence, or who qualifies under any other provision of the Code, is exempt from the 3-year requirement of this definition.  For purposes of this definition, the Eligible Borrower's interest in the Qualified Dwelling financed under this Program shall not be taken into account.

 

A residence that is used as an investment property or a recreational home, or that is primarily intended to be used in a trade or business (including, without limitation, any residence of which more that 15% of the total area is reasonably expected to be used primarily in a trade or business), does not satisfy the requirements of this paragraph.

 

"FHA":  The Federal Housing Administration.

 

"FHLMC":  The Federal Home Loan Mortgage Corporation.

 

"FmHA":  The Farmer's Home Administration.

 

"FNMA":  The Federal National Mortgage Association.

 

"Household Income":  The total annualized gross income of the Eligible Borrowers, and any other person who is expected to live in the Qualified Dwelling and be secondarily liable on the Note, all persons residing or intending to reside as a single household in a Qualified Dwelling, from whatever source derived and before taxes or withholdings; provided that if a married person takes title to the Qualified Dwelling individually the income of the spouse shall also be included.

 

"Lender":  A State-chartered bank, national banking association, mortgage banking association or institution, credit union, or State or federal savings and loan association:

 

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

 

that is qualified to originate and/or sell mortgages to FNMA, FHLMC, and/or approved by FHA to originate loans (this requirement may be waived by the Director after determination that the assets of the Lender exceed $500,000, that the percentage of mortgage delinquencies in the Lender's single family portfolio do not exceed 2.15 times the Statewide average as determined by the last quarterly pronouncement by the United States Federal Home Loan Bank Board and that the Lender has an asset-to-liability ratio of at least 1.01:1);

 

the deposits of which are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, or which deposits its funds in Illinois financial institutions whose deposits are insured by the Federal Deposit Insurance Corporation; and

whose Lender Application has been accepted by the Director, Deputy Director, Assistant Director or Managing Director based upon the satisfaction of the requirements of the Series Program under which the Lender has submitted the Lender Application and a determination of financial suitability after consideration of the net assets, lending capacity, and experience of the potential Lender over the past 12 months in residential mortgage lending.  The Authority may also be a Lender.

 

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

 

"Managing Director": A Managing Director of the Authority.

 

"Maximum Income":  Unless otherwise permitted by the Code, 115% 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.  No Mortgage Loan shall be a replacement or refinancing of an existing mortgage loan except in the case of a Qualified Rehabilitation Loan or other temporary loans, as permitted by section 143 of the Code.

 

"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 Authority's Programs.

 

"Net Proceeds":  With respect to the proceeds of each series of Bonds, all moneys made available by the Authority for the purchase of Mortgage Loans.

 

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

 

"This Part":  This Part 260 (47 Ill. Adm. Code 260).

 

"Prepayment":  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 prior to scheduled payments of principal required under that Mortgage Loan.

 

"Private Mortgage Insurance":  Insurance coverage paid for by the Eligible Borrower that insures the Authority against losses with respect to defaults on a Mortgage Loan according to the terms of the insurance policy. The Authority may provide Private Mortgage Insurance or its equivalent.

 

"Programs":  The Authority's single family mortgage purchase programs that are funded with proceeds of Bonds issued after the date of the adoption of the Resolution, or any other source of funds available to the Authority.

 

"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;

 

that is a single family residence;  a condominium unit meeting the requirements of the Mortgage Purchase Agreement; a one-, two-, three- or four-unit structure meeting the requirements of the Code; 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 can reasonably be expected to become the principal residence of the Eligible Borrower within a reasonable time after financing is provided.  For purposes of this paragraph, a "reasonable time after financing is provided" shall be deemed to be a period within 60 days after closing of the Mortgage Loan.  This period may be extended if the Authority determines that undue hardship to the Eligible Borrower or Lender or an unreasonable result will otherwise occur.

 

"Qualified Rehabilitation Loan":  A Mortgage Loan for the purchase of a Qualified Rehabilitation Residence.  An Eligible Borrower for a Qualified Rehabilitation Loan must be the first resident of the Qualified Rehabilitation Residence after the completion of the rehabilitation.

 

"Qualified Rehabilitation Residence":  A qualified Dwelling for which there has been a qualified rehabilitation, as defined in section 143 of the Code.

 

"Resolution":  The Authority's Homeowner Mortgage Revenue Bonds General Resolution setting forth the general terms and conditions under which the Authority may issue, deliver and sell Bonds.

 

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

 

"Series Program":  A mortgage purchase program authorized by a Series Resolution to become a part of the Program.

 

"Series Resolution":  A resolution issued pursuant to the Resolution authorizing the Authority to conduct a Series Program and to issue Bonds to provide financing of Mortgage Loans under the Series Program.

 

"Servicer":  A Lender, or its designated Servicer, that has been approved by the Director, Deputy Director or Assistant Director as a Servicer and that has executed a Servicing Agreement with the Authority.  The Authority may also be a Servicer.  A designated Servicer other than the Authority must:

 

be a State-chartered bank, national banking association, mortgage banking association or institution, credit union, State or federal savings and loan association or mortgage servicing company;

 

be qualified to do business in the State;

 

be qualified to service mortgages sold to the Authority or its designee, FNMA and/or FHLMC, or insured by FHA, unless this requirement is waived by the Director based upon a determination of financial suitability made by the Director after consideration of the net assets, servicing capacity, and experience of the potential Servicer over the past 12 months in residential mortgage servicing; and

 

have deposits insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, or deposit its funds in Illinois financial institutions whose deposits are insured by the Federal Deposit Insurance Corporation.

 

"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.

 

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

 

"State":  The State of Illinois.

 

"Supplemental Mortgage Coverage":  The coverage, if required by a Series Resolution, whether in the form of insurance, a letter of credit, a guarantee, pledged funds or other forms of coverage, of losses incurred from Mortgage Loan defaults under that Series Program.  Supplemental Mortgage Coverage may supplement other mortgage insurance and may include any insurance or reserve fund funded by the Authority.

 

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

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.104  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 or securities, or to facilitate the origination of Mortgage Loans under the Programs.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.105  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.

 

Section 260.106  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)         the Authority's ability to purchase or redeem the Bonds and to comply with the requirements of the Resolution and applicable Series Resolutions;

 

d)         the financial integrity of the Program;

 

e)         the desirability of achieving a reasonable geographic distribution of Net Proceeds throughout the State; and

 

f)         the standards of the prudent lender or investor.

 

Section 260.107  Forms for the Program

 

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

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.108  Fees and Charges of the Authority

 

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

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.109  Waiver (Repealed)

 

(Source:  Repealed at 22 Ill. Reg. 3851, effective February 4, 1998)

 

Section 260.110  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 Programs and other applicable provisions of law. This Part shall not constitute or create any contractual rights.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section  260.111  Severability

 

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

 

Section 260.112  Gender and Number

 

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

 

Section 260.113  Titles and Captions

 

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

 

Section 260.114  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 260.201  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 Authority's Programs. Lenders wishing to participate in such Programs shall execute and return to the Authority the following documents: the Lender Application, the  Mortgage Purchase Agreement (if not already executed),  and the Servicing Agreement (if applicable and 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 Programs;

           

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

 

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

             

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.202  Security for Allocation of Net Proceeds (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.203  Allocation of Net Proceeds for Purchase of Mortgage Loans (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.204  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 Programs.  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.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.205  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.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

SUBPART C: HOMEBUILDER APPLICATION PROCESS

 

Section  260.301  HomeBuilder Invitations (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section  260.302  Reservation of Funds for Construction of Qualified Dwellings (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.303  Notice of Reservation of Funds (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.304  Real Estate Purchase Contracts (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.305  Transfer of Reserved Funds (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

SUBPART D: PURCHASE OF MORTGAGE LOANS

 

Section 260.401  Mortgage Loans

 

Each Mortgage Loan to be purchased under the Programs 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 fall below the maximum price limits as set by the Authority from time to time.  Each Mortgage Loan that has a loan-to-Property Value ratio in excess of 80% at the time of origination shall:

 

1)         be insured by a private mortgage insurer licensed to do business in the State and qualified to insure single family mortgages purchased by the FHLMC, FNMA or successor federal agencies to the extent, if any, required, so that the uninsured portion of the Mortgage Loan shall not exceed 67% of the Property Value; or

 

2)         be subject to insurance or guaranty by the FHA or the VA or any other agency or instrumentality of the United States of America having similar powers to insure or guarantee mortgage loans.

 

b)         Each Mortgage Loan, if required by the Authority, shall be subject to Supplemental Mortgage Coverage.

 

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 shall:

 

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

 

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

 

3)         be consistent with Illinois law; and

 

4)         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 purchase price of each Qualified Dwelling that is the subject of a Mortgage Loan to be purchased by the Authority or its designee under the Programs shall fall below the maximum price limits set by the Authority from time to time.

 

g)         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.

 

h)         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 in its name upon foreclosure and to subsequently convey title to the property to any purchaser of the property.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.402  Yield on Mortgage Loans

 

In no event shall the yield on Mortgage Loans sold to the Authority or its designee exceed the maximum permitted by application of the provisions of section 143 of the Code.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.403  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 warrantees shall include, but are not limited to, the following:

 

1)         The mortgagor is an Eligible Borrower;

 

2)         The purchase price of the Qualified Dwelling subject to the Mortgage Loan does not exceed any maximum purchase price limitations established by the Authority;

 

3)         The Mortgage Loan is evidenced by a properly executed promissory 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, being 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 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 as follows:

 

A)        as to each FHA-insured Mortgage Loan, with the National Housing Act (12 USC 1701 et seq.) as amended and supplemented, all rules and regulations issued under the National Housing Act and all administrative publications.  The FHA insurance shall be in full force and effect and, upon purchase by the Authority or its designee of the Mortgage Loan, shall inure to the benefit of the Authority or its designee;

 

B)        as to each Mortgage Loan guaranteed by the VA or FmHA, with the Servicemen's Readjustment Act (38 USC 1803 et seq.), the Consolidated Farm and Rural Development Act (7 USC 1921 et seq.), Title V of the Housing Act of 1949 (42 USC 1471-1482) or other applicable federal law, as amended and supplemented, all rules and regulations issued under those laws and all  administrative publications.  Any such guaranty shall be in full force and effect and, upon purchase by the Authority or its designee of the Mortgage Loan, shall inure to the benefit of the Authority or its designee; and

 

C)        as to each Mortgage Loan insured by a private mortgage insurance company, with all rules and  requirements of that company.  Any such insurance shall be in full force and effect and, upon purchase by the Authority or its designee of the  Mortgage Loan, shall inure 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, Assistant Director or Managing 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.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.404  Prepayment

 

The Authority shall apply any Prepayment it receives as follows:

 

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

 

b)         to the purchase or redemption of Bonds, subject in each case to the requirements of the Series Resolutions relating to the issuance of its Bonds; or

 

c)         for other corporate purposes of the Authority, to the extent permitted by the Resolution.

 

Section 260.405  Targeted Area Residences

 

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.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.406  Supplemental Mortgage Coverage

 

If required by the applicable Series Resolution, the Authority shall obtain Supplemental Mortgage Coverage for a Series Program in an amount not less than that percentage of the original aggregate principal amount of the Mortgage Loans authorized by such Series Resolution.  Such Supplemental Mortgage Coverage shall insure the Authority against losses arising from an event of default under any Mortgage Loan covered by the policy in an amount equal to the unpaid principal balance of, and accrued interest on, the Mortgage Loan and customary fees and expenses paid by the Authority to preserve and protect the mortgaged premises and to foreclose or otherwise dispose of such premises, such as real estate taxes, hazard and private insurance premiums and foreclosure expenses, less the amount received by the Authority under any other insurance policy on the Mortgage Loan or from disposition of such premises or substantially similar benefits.

 

 

Section 260.407  Special Hazard Insurance (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

SUBPART E: ADMINISTRATIVE RULES

 

Section 260.501  Restrictions on Return Realized by Lenders

 

The Authority shall establish the maximum income 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 income 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 ensure compliance with arbitrage and income limitations of section 143 of the Code.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.502  Servicing of Mortgage Loans

 

The Authority shall cause all Mortgage Loans purchased by the Authority to be serviced by a Servicer pursuant to the Servicing Agreement.  The Servicer may be the Authority, the Lender from which the Mortgage Loans are purchased, or any other party approved by the Authority.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.503  Purchase of Authority Bonds (Repealed)

 

(Source:  Repealed at 33 Ill. Reg. 7295, effective May 22, 2009)

 

Section 260.504  Equal Opportunity Lending

 

In making Mortgage Loans, the Lender shall not deny such Mortgage Loans to any person or persons or discriminate against such person or persons in fixing the amount, interest rate, duration, or other terms and conditions of such loans on account of race, color, religion, age, sex, marital status, family status, handicap, ancestry, national origin or unfavorable military discharge; and shall otherwise 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 U.S.C. Section 2000 et seq.), Title VIII of the U.S. Civil Rights Act of 1968 (42 U.S.C. Section 3604 et seq.), as amended by the Housing and Community Development Act of 1974 (42 U.S.C. Section 5301 et seq.), the Equal Credit Opportunity Act (15 U.S.C. Sections 1691-1691F), the Fair Credit Reporting Act (15 U.S.C. Sections 1681-1681t), the Fair Housing Act (42 U.S.C. 3601-20), the Illinois Human Rights Act [775 ILCS 5] and Section 13 of the Act.

 

 

Section 260.505  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 such Lender relating to the Program.

 

Section 260.506  Termination

 

The Authority or designee shall retain the right to terminate its obligation to purchase Mortgage Loans associated with any particular issue of Bonds under the Programs,  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 and a Servicing Agreement.

 

(Source:  Amended at 33 Ill. Reg. 7295, effective May 22, 2009)