(a) The agency shall be empowered to purchase mortgages from lenders or enter into advance commitments to lenders for the purchase of mortgages during periods when the financial assistance programs of this chapter become effective under § 13-23-114.
Terms Used In Tennessee Code 13-23-118
Agency: means the Tennessee housing development agency created by this part. See Tennessee Code 13-23-103
Contract: A legal written agreement that becomes binding when signed.
Counterclaim: A claim that a defendant makes against a plaintiff.
Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
Escrow: Money given to a third party to be held for payment until certain conditions are met.
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Fee simple: Absolute title to property with no limitations or restrictions regarding the person who may inherit it.
Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
Lien: A claim against real or personal property in satisfaction of a debt.
Mortgage: includes deeds of trust, mortgages, building and loan contracts or other instruments conveying real or personal property as security for bonds and conferring a right to foreclose and cause a sale thereof. See Tennessee Code 13-23-103
Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.
Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
Obligations: means any bonds or notes authorized to be issued by the agency under this part. See Tennessee Code 13-23-103
Persons and families of lower and moderate income: means persons and families irrespective of race, creed, national origin, age or sex deemed by the agency to require such assistance as is made available by this chapter on account of insufficient personal or family income based upon the income limits established by the board of directors. See Tennessee Code 13-23-103
Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
real property: include lands, tenements and hereditaments, and all rights thereto and interests therein, equitable as well as legal. See Tennessee Code 1-3-105
Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in a perceivable form. See Tennessee Code 1-3-105
written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(b)(1) “Mortgage,” as used in this section, means an insured loan owed to a lender secured by a first lien on a fee simple or leasehold estate in real property located in the state and improved by a residential structure.(2) “Real property,” as used in this subsection (b), includes air rights.(c) The agency may purchase or enter into advance commitments to purchase insured mortgages from lenders at such prices and upon such terms and conditions as it shall determine; provided, that the total purchase price for all mortgages which the agency commits to purchase from a lender at any one (1) time shall in no event be more than the total of the unpaid principal balances thereof.(d) The agency shall require as a condition of purchase of mortgages from lenders other than mortgages purchased by the agency pursuant to advanced commitment agreements that such lenders shall, within such reasonable period of time as may be approved by the agency not in excess of one hundred eighty (180) days of receipt of the purchase price, enter into written commitments to loan and shall, within such period as may be approved by the agency, loan an amount equal to the entire purchase price of such mortgages on new residential mortgages for persons and families of lower and moderate income within the state having such terms as the agency may prescribe. The agency may refuse to approve any commitment to lend on a multiple dwelling mortgage if so required by the terms of any bonding resolution.(e) Such new mortgages shall bear interest at a rate which does not exceed the maximum interest rate, if any, set by the agency for such mortgages. The agency may set such a maximum interest rate chargeable on such new loans at the rate that the mortgages purchased by the agency were discounted to yield plus an interest differential, not in excess of one percent (1%) per annum, which the agency from time to time shall determine to be adequate consideration to induce such lenders to sell existing mortgages to the agency and to loan an amount equal to the proceeds on new mortgages in furtherance of the purposes of and subject to the conditions of this chapter.(f) The agency shall require the submission to it by each lender from which the agency has purchased mortgages, evidence satisfactory to the agency of the making of new mortgage loans and in connection therewith may, through its employees or agents, inspect the books and records of any such lender.(g) Compliance by any lender with the terms of its agreement with or undertaking to the agency with respect to the making of any mortgage loans may be enforced by decree of any circuit or chancery court of this state. The agency may require as a condition of purchase of mortgages from any lender, which is a national banking association, the consent of such lender to the jurisdiction of the circuit or chancery court over any such proceeding. The agency may also require agreement by any lender, as a condition of the agency’s purchase of mortgages from such lender, to the payment of penalties to the agency for violation by the lender of its undertakings to the agency, and such penalties shall be recoverable at the suit of the agency.(h) The agency shall require as a condition of purchase of any mortgage from a lender that the lender represent and warrant to the agency that:
(1) The unpaid principal balance of the mortgage and the interest rate thereon have been accurately stated to the agency;(2) The amount of the unpaid principal balance is justly due and owing;(3) The lender has no notice of the existence of any counterclaim, offset or defense asserted by the mortgagor or the mortgagor’s successor in interest;(4) The mortgage is evidenced by a bond or promissory note and a mortgage document which has been properly recorded with the appropriate public official;(5) The mortgage constitutes a valid first lien on the real property described to the agency subject only to real property taxes not yet due, installments of assessments not yet due, and easements and restrictions of record which do not adversely affect, to a material degree, the use or value of the real property or improvements thereon;(6) The mortgage loan when made was lawful under state law and/or federal law, whichever governs the affairs of the lender, and would be lawful on the date of purchase by the agency if made by the lender on that date in the amount of the then unpaid principal balance;(7) The mortgagor is not now in default in the payment of any installment of principal or interest, escrow funds, real property taxes or otherwise in the performance of the mortgagor’s obligations under the mortgage documents and has not to the knowledge of the lender been in default in the performance of any such obligation for a period of longer than sixty (60) days during the life of the mortgage; and(8) The improvements to the mortgaged real property are covered by a valid and subsisting policy of insurance issued by a company authorized to issue such policies in this state and providing fire and extended coverage to an amount not less than ninety percent (90%) of the insurable value of the improvements to the mortgaged real property.(i) Each lender shall be liable to the agency for any damages suffered by the agency by reason of the untruth of any representation or the breach of any warranty and, in the event that any representation shall prove to be untrue when made or in the event of any breach of warranty, the lender shall, at the option of the agency, repurchase the mortgage for the original purchase price adjusted for amounts subsequently paid thereon, as the agency may determine.(j) The agency need not require the recording of an assignment of any mortgage purchased by it from a lender pursuant to this section and shall not be required to notify the mortgagor of its purchase of the mortgage. The agency shall not be required to inspect or take possession of the mortgage documents if the lender from which the mortgage is purchased by the agency shall enter a contract to service such mortgage and account to the agency therefor.
