                                 CODE OF VIRGINIA

TERMS AND CONDITIONS OF MORTGAGE INSURANCE (§ 36-55.36)

1. For mortgage payments to be eligible for insurance under the provisions of
this chapter, the underlying mortgage loan shall: (a) be one which is made to
and held by a mortgagee approved by HDA as responsible and able to service the
mortgage properly; (b) not exceed (i) 100% of the estimated cost of such
proposed housing development if owned or to be owned by a nonprofit mortgagor or
if owned by a person or family of low or moderate income, in the case of a
single-family dwelling or condominium; or, (ii) 95% of the estimated cost of the
proposed housing development if owned or to be owned by any other mortgagor; (c)
have a maturity satisfactory to HDA but in no case longer than 80% of
HDA&#8217;s estimate of the remaining useful life of said housing or 40 years
from the date of the issuance of insurance, whichever is earlier; (d) contain
amortization provisions satisfactory to HDA requiring periodic payments by the
mortgagor not in excess of his reasonable ability to pay as determined by HDA;
(e) 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, prepayment privileges and other matters as HDA may prescribe.

2. All applications for mortgage insurance shall be forwarded, together with an
application fee prescribed by HDA, to the executive director of HDA. HDA shall
cause an investigation of the proposed housing to be made, review the
application and the report of the investigation, and approve or deny the
application. No application shall be approved unless HDA finds that it is
consistent with the purposes of this chapter and further finds that the
financing plan for the proposed housing is sound. HDA shall notify the applicant
and the proposed lender of its decision. Any such approval shall be conditioned
upon payment to HDA, within such reasonable time and after notification of
approval as may be specified by HDA, of the commitment fee prescribed by HDA.

3. HDA shall fix mortgage insurance premiums for the insurance of mortgage
payments under the provisions of this chapter. Such premiums shall be computed
as a percentage of the principal of the mortgage outstanding at the beginning of
each mortgage year, but shall not be more than one-half of one per centum per
year of such principal amount. The amount of premium need not be uniform for all
insured loans. Such premiums shall be payable by mortgagors or mortgagees in
such manner as prescribed by HDA.

4. In the event of default by the mortgagor, the mortgagee shall notify HDA both
of the default and the mortgagee&#8217;s proposed course of action. When it
appears feasible, HDA may for a temporary period upon default or threatened
default by the mortgagor authorize mortgage payments to be made by HDA to the
mortgagee which payments shall be repaid under such conditions as HDA may
prescribe. HDA may also agree to revised terms of financing when such appear
prudent. The mortgagee shall be entitled to receive the benefits of the
insurance provided herein upon: (a) Any sale of the mortgaged property by court
order in foreclosure or a sale with the consent of HDA by the mortgagor or a
subsequent owner of the property or by the mortgagee after foreclosure or
acquisition by deed in lieu of foreclosure, provided all claims of the mortgagee
against the mortgagor or others arising from the mortgage, foreclosure, or any
deficiency judgment shall be assigned to HDA without recourse except such claims
as may have been released with the consent of HDA; or (b) the expiration of six
months after the mortgagee has taken title to the mortgaged property under
judgment of strict foreclosure, foreclosure by sale or other judicial sale, or
under a deed in lieu of foreclosure if during such period the mortgagee has made
a bona fide attempt to sell the property, and thereafter conveys the property to
HDA with an assignment, without recourse, to HDA of all claims of the mortgagee
against the mortgagor or others arising out of the mortgage foreclosure, or
deficiency judgment; or (c) the acceptance by HDA of title to the property or an
assignment of the mortgage, without recourse to HDA, in the event HDA determines
it imprudent to proceed under (a) or (b) above. Upon the occurrence of either
(a), (b) or (c) hereof, the obligation of the mortgagee to pay premium charges
for insurance shall cease, and HDA shall, within thirty days thereafter, pay to
the mortgagee ninety-eight percent of the sum of (i) the then unpaid principal
balance of the insured indebtedness, (ii) the unpaid interest to the date of
conveyance or assignment to HDA, as the case may be, (iii) the amount of all
payments made by the mortgagee for which it has not been reimbursed for taxes,
insurance, assessments and mortgage insurance premiums, and (iv) such other
necessary fees, costs or expenses of the mortgagee as may be approved by HDA.

5. Upon request of the mortgagee, HDA may at any time, under such terms and
conditions as it may prescribe, consent to the release of the mortgagor from his
liability or consent to the release of parts of the property from the lien of
the mortgage, or approve a substitute mortgagor or sale of the property or part
thereof.

6. No claim for the benefit of the insurance provided in this chapter shall be
accepted by HDA except within one year after any sale or acquisition of title of
the mortgaged premises described in subdivision (a) or (b) of subsection (4) of
this section.

HISTORY: 1972, c. 830; 1975, c. 536.