In consideration for the agency’s contract, and performance of contract, to purchase a buy-down of the effective interest to the borrower on the mortgage loan, the agency shall obtain a note and deed of trust from the borrower under terms prescribed by regulations of the agency adopted by the policy committee. Such note and deed of trust shall be subordinate to the mortgage loan by a qualified mortgage lender executed pursuant to this part. The subordinate mortgage or deed of trust obtained by the agency under this section may, at the option of the agency exercised upon the initiation of such note and mortgage, provide that all amounts due and payable shall be paid at the end of the sixth year or shall be repaid on an amortized basis commencing with the seventh year and extending through the 30th year, or some term selected by the agency and provided in the initiating loan documents between the end of the sixth year and the end of the 30th year. The amount of the subordinate note and mortgage shall be equal to the contract amount advanced by the agency to the qualified mortgage lender to effect the buy-down, plus interest on those amounts at a rate calculated to cover the cost of funds to the agency for this program and administrative costs, less any amounts returned to the agency by the lender for the credit of the borrower pursuant to Section 52513, and shall be specified in the note and mortgage upon the initiation of that note and mortgage.
The agency may make and execute contracts with the qualified mortgage lender for the initiation or servicing of the subordinate mortgage loan. The agency may pay the reasonable value of services rendered to the agency pursuant to such contracts.
The notes and mortgages may be held or sold by the agency, or the agency may create pools of such loans, obligations, and participations held by the agency and may sell securities backed by such pools.
(Added by Stats. 1982, Ch. 320, Sec. 12. Effective June 29, 1982.)