HRS §206E-117
Buying existing loans from mortgage lenders
This section lets the housing authority buy existing home loans from mortgage lenders, even if those loans would not normally qualify. The authority can add contract terms to protect its bonds, like requiring lenders to buy loans back, pay into a reserve fund, or guarantee against defaults. Each purchase must come with a promise that the lender will make new eligible loans of about the same total amount.
courtsmortgage lenders
The statute, as written — Purchase of existing loans program
(a) The authority may contract with a mortgage lender to purchase, in whole or in part, existing loans, whether or not eligible loans. The contract may contain provisions as determined by the authority to be necessary or appropriate to provide security for its revenue bonds, including but not limited to provisions requiring the: (1) Repurchase of the loans, in whole or in part, by mortgage lenders at the option of the authority; (2) Payments of premiums, fees, charges, or other amounts by mortgage lenders to provide a reserve or escrow fund for the purposes of protecting against loan defaults; and (3) Guarantee by, or for recourse against, mortgage lenders, with respect to defaults on these loans of the authority. (b) The authority shall require as a condition of each purchase of existing loans from a mortgage lender that the mortgage lender proceed to make and disburse eligible loans in an aggregate principal amount substantially equal to the amount of the proceeds from the purchase by the authority of loans therefrom.
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