Section 0775-01-.09 - ELIGIBILITY REQUIREMENTS(1) MORTGAGES: Mortgages and mortgage loans must conform to the following requirements to be considered eligible for THRC mortgage insurance: (a) Application for THRC mortgage insurance must be submitted to the Corporation by an approved mortgagee holding or proposing to hold, an "insurable mortgage" on the housing accommodation;(b) The mortgage loan and deed of trust must constitute a first lien on improvements and real property in this State held in fee simple or on a leasehold under a lease having a remaining term, at the time the THRC mortgage insurance is issued of at least twenty (20%) percent greater duration than the remaining mortgage term. Said lease shall have a minimum remaining term of five (5) years and shall otherwise conform to the provisions of T.C.A. 64-701;(c) Mortgage loan proceeds shall be limited to the "cost of rehabilitation" as provided in Rule .02(7) hereof;(d) Mortgage loans are eligible only if the housing accommodation securing the insurable mortgage is occupied or used by the "mortgagor" as his or her permanent residence or home as of the date the insurance certificate is issued:(e) The mortgage has a remaining term of not more than thirty (30) years from the date the THRC mortgage insurance certificate is issued;(f) The mortgage bears interest, exclusive of premium charges fixed by the Corporation, at a rate not in excess of the legal rate for such mortgages in the State and agreed upon by the mortgagor, the mortgagee, and the Corporation;(g) The mortgage must contain provisions for the complete amortization of the loan in monthly installments satisfactory to the Corporation. Generally, the principal and interest payment shall be substantially the same from month to month and not in excess of the mortgagor's reasonable ability to pay as approved by the Corporation.(h) The mortgage is in such form and contains such terms and provisions with respect to maturity, hazard and title insurance, repairs, alterations, maintenance, payment of taxes and assessments, default remedies, anticipation of maturity, additional and secondary liens, prepayment, late charges, waiver of equitable and legal redemption rights and other matters as the Corporation may prescribe;(i) Mortgage loans submitted to the Corporation for consideration must conform to the exhibits, documentation. and eligibility criteria as required by these Rules and Regulations and the Rules of Practice for the THRC mortgage insurance program for which approval is being requested; and(j) Mortgage loans may be for any amount up to and including one-hundred percent (100%) of the "cost of rehabilitation" of the housing accommodation. but subject to limitations as specified by the Rules of Practice of the Corporation on the loan-to-value ratio, maximum loan amount, mortgagor's minimum investment, and the cost of the improvements, alterations, or repairs as a percent of the property value or cost prior to such improvements, alterations, or repairs.(2) MORTGAGEES: (a) Financial institutions or mortgage lenders eligible to apply for approval as mortgagees are: 1. Financial institutions or mortgage lenders which have accounts insured by an agency of the United States;2. Financial institutions or mortgage lenders who are approved mortgagees by any existing Federal mortgage insurance agencies;3. Any financial institution or mortgage lender which is a Federal National Mortgage Association or Federal Home Loan Mortgage Corporation approved institutional seller; and4. Other financial institutions or mortgage lenders, including agencies of the State of Tennessee and its political subdivisions, which have as a primary or substantial function or operation the making of long term residential mortgage loans. Said mortgagees, to be eligible, must present evidence of responsibility, permanency, financial adequacy, and administrative capabilities as required by the Corporation in its Rules of Practice.(b) An eligible mortgagee must seek qualification as an approved mortgagee by submitting such application and supporting documentation as the Corporation shall require. Upon approval, the Corporation shall forward to the approved mortgagee a "Master Policy" effecting such approval. The Corporation shall remain liable under this policy with respect to such Commitments or Certificates issued to the Insured, provided there is full compliance with the applicable terms and conditions. However, the Corporation reserves the right to terminate this policy at any time, upon ten (10) days written notice, subject to its remaining liable on such Commitments and Certificates already issued hereunder to the Insured.(3) MORTGAGORS: Mortgagors must meet the following eligibility requirements as of the date the insurance certificate is issued:(a) Be legally able to enter into such contractual obligations under the laws of the State;(b) Will use or occupy the housing accommodation securing the mortgage as his or her permanent residence or home;(c) Have no previous residential mortgage in effect at the time of application except a mortgage outstanding on the mortgagor's present housing accommodation, where applicable. At closing, the mortgagor must not be obligated as the primary obligor on any other mortgage secured by a housing accommodation except as approved in writing by the Corporation;(d) Has been unsuccessful in obtaining the mortgage loan upon reasonable and affordable terms and conditions without such mortgage insurance;(e) Can demonstrate to the satisfaction of the Corporation reasonable ability to provide the financial resources required to meet the ordinary and necessary expenses of homeownership for the subject property, as they become due, including the principal, interest and escrow payments of the mortgage loan for which application is being made;(f) Has maintained an acceptable general credit standing and history of personal financial management satisfactory to the Corporation; and(g) Where the mortgagor contemplates performing part or all of the rehabilitation work, can demonstrate to the satisfaction of the Corporation, the availability of adequate skills, time, and other resources necessary to complete the proposed rehabilitation.(4) PROPERTIES:(a) Properties which are the subject of THRC mortgage insurance applications must, as of the date of application, meet the following requirements: 1. Be located in the State;2. The application for THRC mortgage insurance must include a plan, satisfactory to the Corporation, to render the property in conformance with Rule 0775-1-.09(4) (b) hereof. If the application is approved, a "Commitment to insure" will be issued with the plan attached. Said plan must be completed in accordance with the commitment to insure prior to the issuance of the insurance certificate;3. If a part of a subdivision development, including townhouse or condominium project, be subject to approval by the Corporation of the overall development plan and the owners' association or condominium documents; and4. For the purposes of compliance with Rules 0775-1-09(1)(j) and 0775-1-.12(l) hereof, have appraised value established prior to and after any alterations, improvements, and repairs in accordance with appraisal methods and practices approved by the Corporation.(b) Properties which are the subject of THRC mortgage insurance applications must, as of the date the insurance certificate is issued, meet the following requirements:1. The remaining useful life of said housing accommodation is no less than one hundred-twenty percent (120%) of the term of the mortgage to be insured, as determined by the Corporation;2. The housing accommodation contains no substantial violation of any applicable building or housing codes, fire ordinances, or health regulations, and is not otherwise considered substandard or in a deteriorating or dilapidated condition as determined by the appropriate enforcing jurisdiction or by the Corporation where such codes, ordinances, or other regulations have not been adopted or are not being enforced;3. Mortgagee must certify to the Corporation that all "costs of rehabilitation" which could result in a lien against the mortgagor, mortgagee, or the subject property have been paid in full or will be so paid from the mortgage loan proceeds upon the Date of Mortgage Loan Consummation;4. Be accessible over public rights-of-way or recorded easements;5. Prior to mortgage loan consummation evidence of title satisfactory to the Corporation shall have been received by the Corporation. A Mortgage Title Insurance Policy shall be on the ALTA Standard Form Policy and paid-up in an amount at least equal to the outstanding principal balance of the mortgage loan. On single family mortgages, if title insurance coverage is not commonly required by private institutional mortgage investors in the area in which the mortgage premises is located, the Corporation will accept an Attorney's opinion letter, or such other evidence of title commonly required by such private institutional mortgage investors; provided, the Attorney carries malpractice insurance in an amount and with coverage satisfactory to the Corporation; and further provided that said evidence of title, or opinion is not subject to exceptions other than those exceptions acceptable to the Corporation.(c) Properties which are the subject of THRC mortgage insurance applications shall be located in areas which meet the following requirements:1. Are free from effects or encroachment of adverse uses, activities, or conditions, as determined by the Corporation;2. Are likely to benefit from such property rehabilitation; and3. Provide adequate and customary supporting community services.Tenn. Comp. R. & Regs. 0775-01-.09
. Rule filed October 10, 1975; effective November 10, 1975. Amended: filed April 30,1976, effective July 14, 1976.Authority: T.C.A. Section 13-2204(4).