80-002 Code Vt. R. 80-120-002-X

Current through August, 2024

Section 80 120 002 - RULES FOR GUARANTEES OF ENERGY CONSERVATION LOANS

Section I DEFINITIONS

1.1 "Dwelling Property" means the primary legal residence of borrower which is occupied by the borrower and which contains not more than 4 (four) living units.

1.2 "Energy Conservation Loan" means a loan not to exceed the amount authorized by 10 V.S.A. § 399(a) as the same may be amended from time to time, of which at least 60% must be used for dwelling improvements that are directly related to energy conservation, and all of which must be used for improvements to the dwelling property and the reasonable expense of obtaining the loan including the payment of the guarantee fee.

1.3 Terms not otherwise defined shall have the meaning ascribed to them by VHMGB "Rules for Guarantees of Mortgage Loans".

Section II GENERAL PROVISIONS

2.1 No lender shall be eligible to make application to the Board for any Guarantee until it has signed and executed a contract with the Board establishing the rights and duties of the parties with respect to guarantees issued by the Board. Such contract may incorporate the Board's operating policy manual.

2.2 The Board may prescribe standard forms for "Loan Application", "Credit Report", "Income and Employment Verification", "Loan Guarantee Certificate", "Delinquency Report", "Claim Loss", "Note", and any other forms necessary to effect the proper operation of the program.

2.3 All applications for energy conservation loans must be accompanied by an itemized description of the work to be done with the proceeds of the loan showing estimates or actual costs of each major item.

2.4 In determining the acceptability of loans to be guaranteed by the Board, the lender shall employ prudent and commonly accepted loan underwriting standards as they relate to the credit worthiness of the borrower and the borrower's ability to repay the loan based on a determination of the borrower's stable income. As a guideline, the borrower's total Monthly Debt should not exceed 38% (thirty-eight percent) of Gross Monthly Income. The following items must be included in calculating Total Monthly Debt:

1) Principal and interest on the Energy Conservation Loan,

2) Principal and interest on all loans secured by a mortgage on the subject property,

3) Hazard insurance premium,

4) Real estate taxes,

5) Monthly Installment Obligations with more than six remaining payments,

6) Mortgage insurance premiums,

7) Leasehold payments, and

8) Homeowners Association dues or condominium maintenance fee (excluding unit utility charges). The Board may allow alimony and child support payments actually paid by a borrower to be treated as a deduction from Gross Monthly Income instead of as an addition to Monthly Debt Obligations.

2.5 The Board's guarantee fee for energy conservation loans shall be the amount authorized by 10 V.S.A. § 387, as the same may be amended from time to time, or such lesser amount as the Board may determine by Resolution. The guarantee for such loans may extend to the full amount of the loan, or such lesser amount as the Board may determine by Resolution.

2.6 All loans guaranteed hereunder shall be fixed-rate, fixed-term loans payable in equal monthly installments of principal and interest throughout the term which may not exceed 120 months.

2.7 The Board's guarantee will be issued after submission of the application documents required by the Board including the appropriate guarantee fee and upon determination by the Board that the loan is eligible for a guarantee.

Section III SERVICING AND REPORTING

3.1 Lenders shall keep complete and accurate records of all loans guaranteed by the Board. All records shall be available for inspection by the Board at the office of the lender during normal business hours.

3.2 Within 10 (ten) days after the borrower is 3 (three) months in default, notice thereof shall be given to the Board by the lender. Monthly Reports thereafter shall be given to the Board by the lender until the default is brought up-to-date or Claim for Loss is filed. A Claim for Loss may be filed at any time after the Note is 4 (four) months in default, but in no event later than 6 (six) months after the first incurred default unless and extension of the claim period is granted by the Board. In the event, and at the time of the claim, the lender's interest in the defaulted Note shall be assigned to the Board.

3.3 Upon failure by the lender to file either a Notice of Delinquency or a request for Extension of Claim Period as provided for in Section 3.2 above, the Loan Guarantee, may at the option of the Board, be terminated and void and the Board shall be released from any obligations which it may have had. Notwithstanding the foregoing, unless the Board can show that it has been materially predjudiced [prejudiced] from the lender's failure to file said written reports, no loan guarantees shall be terminated or voided by reason of such failure except after 30 days written notice to the lender and an opportunity to cure the reporting deficiency within that time.

3.4 Lenders shall aggressively pursue all delinquent accounts and take appropriate actions to bring them current. If a delinquency persists beyond 90 (ninety) days, a written payment arrangement must be entered into by the borrower. At a minimum, the arrangement must require the borrower to make monthly payments beginning on the 120th (one hundred twentieth) day of delinquency in an amount sufficient to bring the account current within 6 (six) months thereafter. If the borrower is unwilling to enter into such an arrangement, or the borrower fails to make the payments as required and the lender has determined that the account is uncollectible, then a Claim for Loss may be filed with the Board without further collection action by the lender.

Section IV PAYMENT AND LIMIT OF LOSS

4.1 The sum due to the lender on account of a Loss shall be payable within 30 (thirty) days after filing a claim for such loss on a form to be furnished by the Board.

4.2 After all steps required in Section 3.4 above have been taken, and after receipt of a bonafide Claim for Loss, the Board shall be obligated to pay claims equal to that percentage of the outstanding principal due on the loan that is covered under the guarantee plus uncollected earned interest to the date of filing by the lender of a bonafide Claim for Loss. Should the lender pursue collections of the delinquency beyond the steps indicated in Section 3.4, in addition to the items of the loss indicated above, the Board will pay 25% (twenty-five percent) of the amount collected by an attorney or other third party on the defaulted note provided the insured does not waive its claim against the borrower for such fees.

4.3 Sums payable by the Board pursuant to Section 4.2 above shall in no event exceed in the aggregate 100% (one hundred precent [percent]) of the original principal amount of the loan.

80-002 Code Vt. R. 80-120-002-X

Effective Date: October 1981 (Secretary of State Rule Log #81-59)