Cal. Code Regs. Tit. 25, § 8056 - Legal Documents

(a) The department shall enter into a Standard Agreement with the local entity. This contract shall require the parties to comply with the regulations and provisions described in this subchapter. The Standard Agreement shall encumber monies from the account in an amount sufficient to fund the approved local program. The agreement shall also stipulate performance goals required for continued local program compliance and funding. The Standard Agreement shall contain, but not be limited to, provisions related to the following:

(1) the granting and cancellation of commitments of state funds to the local entity;

(2) local entity responsibilities for local program operation, including program timeframes, performance goals, marketing, loan processing, loan funding, construction monitoring, construction disbursement, report submissions, and loan file documentation;

(3) eligible uses of deferred payment loan funds for rehabilitation costs and grant funds for local program administration expenses;

(4) standards and processes for certification and decertification of the local entity's ability to approve borrower deferred payment loans;

(5) reporting requirements, including quarterly reports, pursuant to section 8060;

(6) local entity responsibility for the use of escrow companies and interest-bearing escrow accounts for the disbursement of loan funds and the use of other consultants providing third-party services necessary for local program administration;

(7) the criteria to be used in evaluating Prospective borrower eligibility for a deferred payment loan, including income, ownership, credit history, loan security, rehabilitation cost, and monthly housing expense;

(8) the loan approval process requiring that the local entity evaluate and document applications for deferred payment loans pursuant to section 8057;

(9) deferred payment loan terms and conditions;

(10) fund disbursement requirements, including provisions for receipt, use, and accounting of department funds pursuant to section8058;

(11) rehabilitation work requirements such as drawings, construction schedules, rehabilitation specifications and standards, work write-ups, cost breakdowns, bid procedures, construction contracts, inspections, licenses, insurance, lien releases, cost accounting and documentation, and owner-performed work;

(12) requirements that the local entity not discriminate or permit discrimination on account of race, color, religion, ancestry, sex, age, national origin, marital status, and mental or physical handicap, in accordance with all local, State, and Federal laws governing and restricting such discrimination or requiring affirmative action. To further ensure that deferred payment loans are made in a nondiscriminatory manner, the local entity shall agree to abide by the restrictions placed upon financial institutions under the Holden Act (Health and Safety Code division 24, part 6, "Financial Discrimination" commencing with section 35800);

(13) remedies available to the department in the event of a violation, breach, or default of the Standard Agreement to ensure compliance with program requirements for the full term of the agreement, including repayment of all costs of enforcement;

(14) requirements for the execution and, where appropriate, the recordation of the agreements and documents required under the program;

(15) requirement that the local entity assign the borrower loan agreement to the department;

(16) any terms and conditions as required by local, State, or Federal law; and

(17) other provisions necessary to ensure compliance with the requirements of this program.

(b) A borrower shall enter into a loan agreement with the local entity governing the rehabilitation and loan terms. The loan agreement shall contain the following terms and conditions:

(1) the deferred payment loan amount, term, and rate of interest, including specific terms of repayment of interest and principal pursuant to sections 8047, 8048, and 8049;

(2) a timeframe for the work to be performed;

(3) the approved cost of the work to be performed;

(4) method of contractor selection, including terms and conditions of nondiscrimination as required by law;

(5) the method and schedule for disbursement of funds to borrowers and/or contractors;

(6) compliance with local, State, or Federal laws, ordinances, and regulations applicable to rehabilitation of the property, including zoning ordinances, building codes, planning, historical preservation, and environmental regulations;

(7) requirements regarding contractor performance, construction agreements, and borrower-performed rehabilitation activities;

(8) provisions allowing the local entity or department, or its designees or employees, after reasonable notice to the borrower, to enter upon and inspect the property at any time during or after rehabilitation; or to inspect the books and records of the borrower related to the deferred payment loan funds at any time during or after rehabilitation of the property which is assisted by the deferred payment loan;

(9) provisions relating to deferred payment loan extensions, refinancing, and subordination;

(10) provisions relating to sales, transfers, and encumbrances pursuant to section 8051;

(11) terms and conditions relating to defaults in repayment or breach of the loan agreement and remedies available to the parties thereto, pursuant to section 8052;

(12) property insurance requirements pursuant to section8057(e)(2)(b);

(13) provisions that indemnify the State for all claims and losses in performance of this agreement;

(14) a provision for the loan agreement to be assignable to the department; and

(15) any other provisions necessary to ensure compliance with the requirements of this program.

(c) A borrower shall execute the following deferred payment loan documents prior to transfer of any funds to the local entity:

(1) a promissory note naming the department as payee;

(2) a deed of trust naming the department as beneficiary and sufficient to secure the obligations of the promissory note;

(3) a truth-in-lending disclosure statement;

(4) a notice of right to cancel; and

(5) any other documents as required by the department to protect the interests of the State.

Notes

Cal. Code Regs. Tit. 25, § 8056

Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Sections 35800, 50661, 50664, 50668 and 50668.5(a), Health and Safety Code; and Section 12990, Government Code.

1. New section filed 11-30-89 as an emergency; operative 11-30-89 (Register 89, No. 49). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 3-30-90.
2. New section refiled 3-26-90 as an emergency; operative 3-30-90 (Register 90, No. 16). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 7-30-90.
3. New section filed 7-26-90 as an emergency; operative 7-26-90 (Register 90, No. 38). A Certificate of Compliance must be transmitted to OAL by 11-23-90 or emergency language will be repealed by operation of law on the following day.
4. Amendment of subsection (a) filed 8-27-90 as an emergency; operative 8-27-90 (Register 90, No. 42). A Certificate of Compliance must be transmitted to OAL by 12-26-90 or emergency language will be repealed by operation of law on the following day.
5. New section refiled 11-16-90 as an emergency; operative 11-16-90 (Register 90, No. 51). A Certificate of Compliance must be transmitted to OAL by 3-18-91 or emergency language will be repealed by operation of law on the following day.
6. Readoption of 8-27-90 order filed 12-21-90 as an emergency; operative 12-21-90 (Register 91, No. 7). A Certificate of Compliance must be transmitted to OAL by 4-22-91 or emergency language will be repealed by operation of law on the following day.
7. Certificate of Compliance as to 11-30-89 order, readopted and operative on 3-30-90, 7-26-90 and 11-16-90, including amendment of subsections (a) and (b) transmitted to OAL 11-30-90 and filed 12-31-90 (Register 91, No. 7).