NAC319.499. Requirements for loans to eligible borrowers; terms and conditions; limitation on fees.

     1. A qualified organization that receives a grant may make a secured loan of not more than $20,000 from the proceeds of the grant to an eligible borrower for down-payment and closing-cost assistance in the purchase of affordable housing.

     2. A qualified organization that makes such a loan shall:

     (a) Verify the eligibility of the borrower;

     (b) Ensure timely and accurate disbursement of the loan money to the borrower;

     (c) Administer the loan for as long as the loan has principal outstanding;

     (d) Annually verify, through a current policy of homeowners’ insurance or property tax bill, that the borrower uses the home as his or her primary residence;

     (e) Confirm that the borrower is a member of a participating employee group;

     (f) Not lend to a borrower for a home which is outside this State or which is not located in a county in this State in which his or her employer has an established place of business;

     (g) Provide documentation that informs the borrower of the possibility of federal tax liability if any portion of the principal of the loan is forgiven; and

     (h) Verify that the borrower has completed a homebuyer education class approved by the Division before funding the loan.

     3. A loan made by a qualified organization pursuant to this section must not be funded unless:

     (a) The participating employer by whom the borrower is employed contributes matching money equal to the amount of the loan; and

     (b) The borrower contributes at least 1 percent of the total purchase price of the home toward the purchase of the home.

     4. All terms of the loan, including, without limitation, terms of repayment, interest rates, fees and underwriting criteria, must be specified in a memorandum of understanding approved by the qualified organization and an authorized representative of the participating employee group of which the borrower is a member.

     5. A loan may have an interest rate of zero percent.

     6. A loan becomes due and payable:

     (a) Upon the sale, transfer or refinancing of the home;

     (b) Upon the death of the borrower and the settlement of his or her estate;

     (c) If the borrower operates a business from the home; or

     (d) If the borrower ceases to reside in the home as his or her primary residence.

     7. A loan must be secured, but may be subordinated to the rights of not more than two other lenders to allow the borrower to take advantage of other forms of down-payment assistance so long as the total of all forms of secured debt is not more than 99 percent of the verified sale price of the home.

     8. If a qualified organization imposes administrative fees on borrowers to whom it makes loans, the total amount of such fees imposed on all borrowers must not exceed 10 percent of the amount of the grant received by the qualified organization.

     (Added to NAC by Housing Div. by R192-08, eff. 12-17-2008)