2005 Connecticut Code - Sec. 8-253. Mortgage loans and insurance of mortgage payments.

      Sec. 8-253. Mortgage loans and insurance of mortgage payments. (a) The authority may make mortgage loans or upon application of a proposed mortgagee insure and make advance commitments to insure payments required by a loan for housing upon such terms and conditions as the authority may prescribe. Mortgage loans made or insured by the authority under this chapter may be for construction financing as well as permanent financing, and may provide financing for related facilities to the extent permitted by applicable authority regulations. Mortgage loans made or insured by the authority under this chapter shall be secured by a first or second mortgage. The aggregate principal amount of all mortgages so insured by the authority under this chapter and outstanding at any one time shall not exceed ten times the average annual balance for the preceding calendar year of funds on deposit in the Housing Mortgage Insurance Fund. The aggregate amount of principal obligations of all mortgages so insured shall not constitute indebtedness of the state of Connecticut. Any contract of insurance executed by the authority under this section shall be conclusive evidence of eligibility for such mortgage insurance and the validity of any contract of insurance so executed or of an advance commitment to issue such shall be incontestable in the hands of an approved mortgagee from the date of execution of such contract or commitment, except for fraud or misrepresentation on the part of such approved mortgagee and, as to commitments to insure, noncompliance with the terms of the advance commitment or authority regulations in force at the time of issuance of the advance commitment.

      (b) For mortgage payments to be eligible for insurance under the provisions of this chapter, the underlying mortgage shall be one which is made to and held by a mortgagee approved by the authority as responsible and able to service the mortgage properly. Permanent mortgage loans made or insured by the authority under the provisions of this chapter shall: (1) Not exceed (i) ninety per cent of the estimated cost of such proposed housing if owned or to be owned by a profit-making mortgagor or (ii) one hundred per cent of the estimated cost of such proposed housing if owned or to be owned by a housing authority, a municipal developer, a nonprofit corporation or cooperative or by a resident-owner of a structure containing not more than three dwelling units, or of a condominium; (2) have a maturity satisfactory to the authority but in no case longer than fifty years from the date of the issuance of the loan or insurance; (3) contain amortization provisions satisfactory to the authority requiring periodic payments by the mortgagor not in excess of his reasonable ability to pay as determined by the authority; (4) be in such form and contain such terms and provisions with respect to maturity, property insurance, repairs, alterations, payment of taxes and assessments, default reserves, delinquency charges, default remedies, anticipation of maturity, additional and secondary liens, equitable and legal redemption rights and other matters as the authority may prescribe. If a loan made by the authority under this chapter is insured or if the project or any units therein are assisted by any department, agency or instrumentality of the United States or this state, and the terms of the mortgage insurance commitment or regulatory agreement covering such insurance or other assistance are inconsistent with the terms and conditions required by this section or established by the authority under this chapter, the terms of such mortgage insurance commitment or regulatory agreement shall prevail, to the extent of such inconsistency.

      (c) Construction mortgage loans made by the authority under the provisions of this chapter may be advanced at the discretion of the authority in installments as the work progresses, provided that the authority shall retain not more than ten per cent of the construction contract price until the construction or rehabilitation has been inspected and found by the authority to be more than ninety per cent completed. Thereafter such retention or any part thereof may be either advanced at the discretion of the authority or retained until the authority shall determine that the mortgagor has complied with all of the terms and conditions of subsection (b) of section 8-253 and section 8-253a. The total of all advances made, after any adjustment under subdivision (6) of section 8-253a, shall not exceed (i) ninety per cent of the project cost if owned or to be owned by a profit making mortgagor or (ii) one hundred per cent of the project cost if owned or to be owned by a housing authority, a municipal developer or a nonprofit corporation or cooperative.

      (1969, P.A. 795, S. 13; 1971, P.A. 840, S. 2; 1972, P.A. 208, S. 7; P.A. 74-104, S. 10, 12; P.A. 77-316, S. 7; P.A. 87-436, S. 18, 23.)

      History: 1971 act replaced requirement that aggregate amount of mortgages not exceed "five times that portion of the bonds authorized by the state bond commission which when sold are to be deposited in the housing mortgage insurance fund ..." with requirement that amount not exceed "ten times the average annual balance for the preceding calendar year of funds on deposit" in said fund; 1972 act divided section into subsections, allowed authority to make loans as well as insure them, allowed loans for construction and for related facilities as well as for permanent financing, allowed one hundred per cent financing for housing to be owned by housing authority or by resident-owner of structure with not more than three units rather than by resident-owner of single-family dwelling, changed maturity limit from eighty per cent of remaining useful life of housing or forty years to fifty years, added provision re conflicts between federal and state regulations and authority regulations and added Subsec. (c) re advances of construction mortgage loans; P.A. 74-104 amended Subsec. (a) to allow securing of loans by second mortgage as well as first mortgage; P.A. 77-316 substituted "mortgagor" for "corporation" in Subsec. (b)(1)(i) and amended Subsec. (c) clarifying procedure for advances on construction mortgage loans; P.A. 87-436 added references to municipal developers in Subsecs. (b) and (c).