Title 42
State Affairs and Government

Chapter 55
Rhode Island Housing and Mortgage Finance Corporation

§ 42-55-6. Powers relative to making loans.

The corporation shall have all of the powers necessary or convenient to carry out and effectuate the purpose and provisions of this chapter, including the following powers in addition to others granted in this chapter:

(1) Make, undertake commitments to make, and participate in the making of mortgage loans, including without limitation federally insured mortgage loans, and to make temporary loans and advances in anticipation of permanent mortgage loans to housing sponsors or healthcare sponsors to finance the construction or rehabilitation of, or installation of energy saving improvements to, residential housing designed and planned for occupancy primarily by persons and families of low and moderate income or healthcare facilities upon the terms and conditions set forth in § 42-55-9;

(2) Make, undertake commitments to make, and participate in the making of mortgage loans to persons of low or moderate income who may purchase residential housing or who own and occupy residential housing used as security for loans where the proceeds may be dispersed at such time or times that the corporation may determine, including without limitation persons and families of low and moderate income who are eligible or potentially eligible for federally insured mortgage loans or federal mortgage loans. These loans shall be made only after a determination by the corporation that mortgage loans are not otherwise available, wholly or in part, from private lenders upon reasonably equivalent terms and conditions;

(3) Make, undertake commitments to make, and participate in the making of loans to persons of low or moderate income for the purpose of making energy saving improvements to residential housing. Any loan made pursuant to this subsection may be secured by a mortgage or otherwise, shall be repaid, shall bear interest and shall be upon any terms and conditions that may be determined by the corporation;

(4) Make and publish rules and regulations respecting the grant of mortgage loans pursuant to this chapter, the regulation of borrowers, the admission of tenants and other occupants to housing developments pursuant to this chapter, and the construction of ancillary commercial facilities;

(5) Enter into agreements and contracts with housing sponsors or healthcare sponsors under the provisions of this chapter;

(6) Institute any action or proceeding against any housing sponsor or healthcare sponsor or persons and families of low and moderate income receiving a loan under the provisions hereof, or owning any housing development hereunder in any court of competent jurisdiction in order to enforce the provisions of this chapter or the terms and provisions of any agreement or contract between the corporation and the recipients of loans under the provisions hereof, or to foreclose its mortgage, or to protect the public interest, the occupants of the housing development, or the stockholders or creditors, if any, of the sponsor. In connection with an action or proceeding it may apply for the appointment of a receiver to take over, manage, operate, and maintain the affairs of the housing sponsor or healthcare sponsor and the corporation, through the agent it shall designate, is hereby authorized to accept the appointment of the receiver of a sponsor when so appointed by a court of competent jurisdiction. In the event of the reorganization of any housing sponsor or healthcare sponsor to the extent possible under the provisions of law, the reorganization shall be subject to the supervision and control of the corporation, and no reorganization shall be had without the prior written consent of the corporation. In the event of a judgment against any housing sponsor or healthcare sponsor in any action not pertaining to the foreclosure of a mortgage, there shall be no sale of any of the real property included in any housing development, housing project, or healthcare facilities hereunder of a sponsor except upon sixty (60) days’ written notice to the corporation. Upon receipt of that notice, the corporation shall take those steps that in its judgment may be necessary to protect the rights of all parties;

(7) Make, undertake commitments to make, and participate in the making of mortgage loans to persons of low or moderate income for the purpose of improving septic systems and wells on their residential property to substantially comply with standards as set by the department of environmental management and/or the department of health. Any loan made pursuant to this subsection may be secured by a mortgage or otherwise shall be repaid, shall bear interest, and shall be upon those terms and conditions that may be determined by the corporation;

(8) Make and participate in the making of grants to assist in the construction, rehabilitation, or operation of residential housing;

(9) Make and publish rules and regulations respecting the making of grants to assist in the construction, rehabilitation, or operation of residential housing;

(10) Provide grants to any existing private nonprofit housing program sponsor for the following use and purpose:

(i) Establish or expand an existing revolving loan fund, if the housing program sponsor matches the funds, those grants not to exceed one hundred thousand dollars ($100,000).

(ii) Provided, however, that grants shall not be made more frequently than once per year and that the grants be made from funds held in the corporation’s reserve fund.

(iii) In the event that the private nonprofit housing program sponsor should cease its operations, all unexpended funds shall revert back to the corporation;

(11) Guaranty “homeowners notes”.

(i) A “homeowners note” is the promissory note secured by a second mortgage of any eligible home buyer made payable to any person, firm, corporation or other entity loaning money to the eligible home buyer to purchase his or her principal residence. The homeowners note shall be in a form, at an interest rate, in denominations and upon other terms and conditions established in rules and regulations promulgated by the corporation. Homeowners notes may be used solely to assist in the financing of the purchase of a principal residence by eligible home buyers.

(ii) An eligible home buyer is a first-time buyer (defined as one who has not had an ownership interest in his or her principal residence for at least three (3) years) whose current income, as defined by federal regulation, does not exceed the median family income of Rhode Island residents, as determined annually by the U.S. Department of Housing and Urban Development.

(iii) The corporation shall qualify eligible borrowers and issue a commitment to guaranty the homeowners note upon the terms and conditions set forth in the commitment. The commitment of guaranty will be valid for four (4) months after the date of issuance by the corporation.

(iv) The principal face amount of the homeowners note to be guaranteed shall be determined by a formula to be developed and recalculated by the corporation, within thirty (30) days after new figures are determined by the U.S. Department of Housing and Urban Development, as follows:

(A) The maximum principal amount for which eligible home buyers may qualify for a guarantee is twenty percent (20%) of the median home price in the state of Rhode Island, as determined by the U.S. Treasury Department.

(B) The formula shall provide for eligibility by increments of five hundred dollars ($500) with eligibility being rounded up to the next increment.

(C) The formula shall provide that a prospective home buyer’s eligibility shall be for a principal amount determined by multiplying: twenty percent (20%) of the median home price in the state of Rhode Island times (X) thrice the percentage by which the home buyer falls below the Rhode Island median family income, up to the maximum amount for which homeowners are eligible.

(v) The guaranty shall become effective at the time of acquisition of the real estate; provided, that the eligible home buyer has complied with the terms and conditions of the commitment; the eligible home buyer has granted to the payee of the note a mortgage on the residence subject only to a purchase money mortgage and real estate taxes not yet due and payable; and a confirmed copy of the homeowners note and a certified copy of the recorded mortgage securing the note has been delivered to the corporation.

(vi) A homeowners note shall mature at the end of seven (7) years from the date of endorsement or upon the sale or transfer of the title to the real estate securing the note, whichever shall first occur. Interest shall accrue, in arrears, from the date of endorsement and become due and payable at maturity of the homeowners note.

(vii) The corporation may promulgate any rules and regulations as may be necessary to implement the homeowners notes program;

(12) Establish the Environmentally Compromised Home Opportunity (ECHO) loan program.

(i) The corporation may make, undertake commitments to make, and participate in the making of loans to persons owning residential property, the value of which has been significantly reduced by contamination.

(ii) Any loan made pursuant to this subsection (12) may be made on properties which have been certified by the department of environmental management as (A) within the boundaries, or directly abutting a site, known to be impacted by the release of hazardous materials or petroleum, or (B) within the boundaries, or directly abutting a site, listed on the National Priorities List as determined by the federal Comprehensive Environmental Response Compensation and Liability Act (CERCLA, as may from time to time be amended).

(iii) Any loan made pursuant to this subsection (12) may be secured by a mortgage or otherwise, shall be repaid, shall bear interest and shall be upon any terms and conditions that may be determined by the corporation; the principal amount of such loan shall not exceed twenty-five thousand dollars ($25,000), but such loan shall not in any way limit any other loan or grant assistance which may otherwise be available.

(iv) The corporation shall have no liability under any environmental statute or regulation due to any loan made pursuant to this subsection (12).