Section 648-110-3 - UNDERWRITING STANDARDS1. Requirements. The following are underwriting requirements for any PACE Loan:A. A PACE Loan must be secured by a PACE Mortgage on Qualifying Property;B. The Qualifying Property securing a PACE Loan must be owned by the Borrower. Proof of ownership shall be obtained in the form of municipal tax records;C. The maximum amount of any PACE Loan shall be fifteen thousand dollars ($15,000) and shall be based on total costs including Energy Audit and other costs under the contract for Energy Savings Improvements, less any rebate or other financial incentive provided by the Trust to the Borrower;D. The Borrower must demonstrate a Debt to Income Ratio of the maximum Total Fixed Payment to Effective Income ratio established by Section 4155.1.4. F.2.c. of the U.S Housing and Urban Development's Handbook 4155.1 "Mortgage Credit Analysis for Mortgage Insurance" as amended, restated or replaced from time-to-time (the "HUD Handbook") up to a maximum of 50%. (1) All Monthly Gross Expenses and related debt shall be verified using a credit report (including a joint report in the case of joint applicants as the Borrower) from a nationally recognized credit reporting agency (the "Credit Report")- In addition, information concerning Monthly Gross Expenses obtained in writing from the Borrower must be considered.(2) Based on the type and source of the Borrower's income, the following documents, none of which may be more than sixty (60) days old as of the date received, except for tax returns and quarterly profit and loss statements, shall be provided to verify Monthly Gross Income:(a)Tax Return: A signed copy of the most recent federal income tax return, including all schedules and forms, if available.(b)Employment Income: Copies of the two most recent pay stubs indicating year-to-date earnings.(c)Self-Employment Income: The most recent quarterly or year-to-date profit and loss statement or a recent series of bank statements to demonstrate income for each self-employed Borrower, where such a profit and loss statement is not available.(d)Other Income: (e.g., bonus, commission, fee, housing allowance, tips, overtime). A letter from the employer or other reliable third party documentation describing the nature of the income and indicating that the income will in all probability continue.(e)Benefit Income: (e.g., Social Security, disability, death benefits, pension, public assistance, unemployment, adoption assistance). Evidence of the amount, frequency and duration of the benefits usually obtained through a monetary or award determination letter, disability policy or benefits statement from the provider. Also, evidence of receipt of payment, such as copies of the Borrower's two most recent bank statements showing the deposit amounts. The Trust must determine that the income will continue for at least six (6) months in order to include it as part of Borrower's income.(f)Rental Income: Rental income should be documented through the Schedule E - Supplemental Income & Loss of the federal income tax return. If the Borrower is using income from the rental of a portion of the Borrower's principal residence, the income should be calculated at 75% of the gross monthly rental income, with the remaining 25% considered vacancy loss and maintenance expenses. If the Borrower is using rental income from properties other than the Borrower's principal residence the income should be 75% of the monthly gross rental income reduced by the monthly debt service on the property (i.e., principal, interest, taxes, insurance, mortgage insurance and association fees), if applicable.(g)Alimony, Separation Maintenance & Child Support: The Borrower is not required to use alimony, separation maintenance or child support income to qualify for a PACE Loan. If the Borrower chooses to use this income, it should be documented with copies of the divorce decree, separation agreement or other legal agreement filed with a court, or a court decree that provides for the payment of alimony, separation maintenance or child support and states the amount of the award and the period of time over which it will be received. Evidence of receipt of payment can be documented with copies of the Borrower's two most recent bank statements showing the deposits.E. The term of the PACE Loan shall not exceed the average Estimated Useful Life of the financed Energy Savings Improvements;F. All Energy Savings Improvements financed through the PACE Loan shall meet the Cost-Effectiveness test to the Borrower as prescribed for PACE loans by the Trust from time-to-time;G. All Qualifying Property securing a PACE Loan must be:(1) Owned by the Borrower;(2) Current with respect to property taxes and sewer charges;(3) Free of outstanding and unsatisfied tax or sewer liens;(4) Not be subject to a Reverse Mortgage Transaction (as defined in 9-A M.R.S.A. § 8-103-1 A(Y)); and(5) Not be subject to a mortgage or other lien for which there is a default, foreclosure or delinquency that has not been cured, nor any unsatisfied judgment, mechanics, materialmen or architect lien; H. The value of the Qualifying Property shall be no less than 100% of the total amount of all mortgages and liens thereon, and the proposed PACE Loan. Such value will be supported by an appraisal not more than 24 months old or by the tax-assessed valuation of the Municipality adjusted by the Municipality's assessment ratio for the current year.I. The Borrower must certify that there are no overdue payments on mortgages or other liens secured by such property and provide either a certificate from each existing mortgage holder or a recent account statement to demonstrate current balances;J. In cases where PACE Assessments will be billed annually or biannually, monthly escrows will be required to be paid by Borrower to the Master Servicer.K. Such additional requirements including a minimum credit score, and consideration of bankruptcy, foreclosure and charge off history of the Borrower may be adopted by the Trust from time-to-time in accordance with prudent lending standards.95- 648 C.M.R. ch. 110, § 3