A lender must comply with the following procedures to obtain
approval of an application for participation in the program.
(1) A lender must be an eligible lending institution,
as defined by the Act, to participate in the program.
(2) A lender that is not an approved depository may
obtain the appropriate designation by filing a state depository application
with the comptroller.
(3) A lender may obtain the application and information
about the program from the Authority.
(4) A lender shall determine the applicant's creditworthiness
according to the lender's underwriting criteria.
(5) A loan, while under the program, shall be set at
a rate of interest established according to the prescribed linked
deposit formula under the Act. The linked deposit rate will be recalculated
at the end of the fiscal biennium. The eligible borrower's loan rate
shall not exceed the linked deposit rate plus 4.0%.
(6) A lender shall forward the original completed and
approved application to the Authority pursuant to instructions in
the solicitation document.
(7) A lender shall estimate the proposed rate of interest
to be charged the eligible borrower. The lender must certify via telephone
communication with the comptroller at the time the loan is priced
the actual rate of interest before issuance of the linked deposit.
A copy of the certification of the eligible borrower's loan rate shall
be sent to the Authority or the administrator, as part of the compliance
report. In no event shall the actual rate of interest exceed the maximum
rate of interest allowable under the Act.
(8) In no instance will the linked deposit be wired
to the lender until the loan proceeds have been paid to the eligible
borrower. In most cases the entire approved linked deposit amount
will be placed as a linked deposit with the applicable lender, except
for linked deposits greater than $100,000 which are subject to incremental
funding commensurate with principal drawdown.
(9) A lender shall submit the compliance report to
the Authority seven days after the loan is funded.
(10) A lender shall notify the Authority in writing
immediately upon a default and/or in the case of a prepayment or a
principal reduction greater than $5,000 in any one calendar quarter
of a loan under the program.
(11) A lender shall comply with all terms and agreements
set forth in the state depository handbook, state depository application,
the linked deposit application, and any other agreements and representations
made to the Authority and the comptroller, and all other terms and
conditions of the loan, these rules, and the Act.
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