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| Montana Administrative Register Notice 8-111-151 | No. 8 04/28/2017 | |
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BEFORE THE DEPARTMENT OF COMMERCE OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On May 19, 2017, at 10:00 a.m., the Department of Commerce will hold a public hearing in Room 226 of the Park Avenue Building at 301 South Park Avenue, Helena, Montana, to consider the proposed amendment and repeal of the above-stated rules.
2. The Department of Commerce will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Commerce no later than 5:00 p.m. on May 17, 2017, to advise us of the nature of the accommodation that you need. Please contact Bonnie Martello, Paralegal, Department of Commerce, 301 South Park Avenue, P.O. Box 200501, Helena, Montana, 59620-0501; telephone (406) 841-2596; fax (406) 841-2771; TDD (406) 841-2702; or e-mail [email protected].
3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
8.111.303 FINANCING PROGRAMS (1) through (2)(e) remain the same. (3) No person or family qualifying for a loan under the board's single family program may obtain more than one loan at a time under the board's programs, except that a person or family may qualify for a board down payment assistance loan in addition to a first priority mortgage loan on the same property. (4) through (6) remain the same.
IMP: 90-6-104, 90-6-106, 90-6-108, 90-6-109, 90-6-116, MCA
REASON: The proposed amendments to ARM 8.111.303 are necessary to update the rule consistent with current board programs and practice to permit qualifying persons and families to obtain a down payment assistance loan in addition to a first priority mortgage loan on the same property. Down payment assistance loans are relatively small in amount and such loans are subordinate to the first priority mortgage loan. The lack of sufficient resources to make a down payment presents a significant obstacle for many lower income persons and families in purchasing a home. The board's down payment assistance programs have proven successful in overcoming this hurdle for many such borrowers and are an essential component of the board's single family housing program.
8.111.304 CONDITIONS OF FINANCIAL ASSISTANCE (1) through (4) remain the same. (5) Subject to board oversight, board staff (6) through (9) remain the same.
IMP: 90-6-106, 90-6-108, 90-6-110, MCA
REASON: The proposed amendments to ARM 8.111.304 are necessary to provide for greater administrative flexibility in establishing, maintaining, and making available a current fee schedule for the board's programs. Fees and charges for the board's programs generally are recommended or set by board staff based upon the costs of program operations and the fee and charge amounts necessary to fund program operations. Such fees and charges remain subject at all times to the oversight of the board.
8.111.305 APPROVED LENDERS (1) through (2)(b) remain the same. (c) evidence of errors and omissions insurance and fidelity insurance, each of which must be in an amount not less than (d) through (6) remain the same.
REASON: The proposed amendments to ARM 8.111.305 are necessary to update the board's errors and omissions insurance coverage requirements for participating lenders. The board's minimum coverage requirement is inconsistent with requirements generally used in the mortgage lending industry, as evidenced by the requirements of the Federal National Mortgage Association (Fannie Mae). Required coverage amounts under these programs are not a single amount for all lenders, but vary depending upon the lender's portfolio of loans. This approach better addresses the need for such coverages, by assuring that lenders are appropriately insured for the risks presented by their portfolios rather than either under- or over-insured based upon a one-size-fits-all coverage amount.
8.111.305A APPROVED LOAN SERVICERS (1) through (2)(d) remain the same. (e) evidence of errors and omissions insurance and fidelity insurance, each of which must be in an amount not less than (f) through (8) remain the same.
REASON: The proposed amendments to ARM 8.111.305A are necessary to update the board's errors and omissions insurance coverage requirements for participating loan servicers. The board's minimum coverage requirement is inconsistent with requirements generally used in the mortgage lending industry, as evidenced by the requirements of the Federal National Mortgage Association (Fannie Mae). Required coverage amounts under these programs are not a single amount for all servicers, but vary depending upon the servicer's portfolio of loans. This approach better addresses the need for such coverages, by assuring that servicers are appropriately insured for the risks presented by their portfolios rather than either under- or over-insured based upon a one-size-fits-all coverage amount.
8.111.403 COUNSELING REQUIREMENTS (1) remains the same. (2) Information as to the required counseling is available
AUTH: 90-6-507, MCA IMP: 90-6-502, MCA
REASON: The proposed amendments to ARM 8.111.403 are necessary to revise the rule to update the directions regarding where potential borrowers may obtain information regarding required counseling.
8.111.404 ELIGIBILITY REQUIREMENTS (1) remains the same. (a) successfully complete the required counseling (information about required counseling is available (b) through (i) remain the same.
AUTH: 90-6-507, MCA
REASON: The proposed amendments to ARM 8.111.404 are necessary to revise the rule to update the directions regarding where potential borrowers may obtain information regarding required counseling.
8.111.406 REPAYMENT OF THE LOAN (1) Repayment of the reverse annuity mortgage loan is (2) The borrower may pay the outstanding loan balance in full at any time without penalty. (3) The board may include in the reverse annuity mortgage loan documents such terms, conditions, and requirements as are usual and customary in similar loan transactions and which are designed to protect the value of the property securing the loan or to assure repayment of the loan. (4) The loan becomes due and payable and any remaining advances terminate upon the occurrence of any of the following events: (a) the death of the last surviving borrower; (b) sale or transfer of the property to anyone other than (c) permanent vacation of the secured property by the borrower; or (d) any other act or occurrence which constitutes an event of default under the mortgage instrument securing the loan
AUTH: 90-6-507, MCA IMP: 90-6-506, MCA
REASON: The proposed amendments to ARM 8.111.406 are necessary to conform the provisions of the rule to the provisions of the statute and the board's reverse annuity mortgage (RAM) loan program requirements. Previously, RAM loan documents defined loan maturity as the time at which scheduled advances were completed, although under Montana law the loan was not payable at that time. Previous loan documents also required the borrower to request and receive board approval to defer loan repayment. Montana law at 90-6-506, MCA, however, specifically provides that the borrower may continue to reside in the property without repayment until the death of the borrower or another specified event occurs. Accordingly, the board proposes to remove the requirement that borrowers request and obtain a repayment deferral.
The proposed amendments are also necessary to more accurately and completely describe the conditions under which a RAM loan becomes due and payable. Montana law at 90-6-506, MCA, lists the events under which the loan becomes due and payable. This includes "any other occurrence that materially decreases the value of the property securing the loan or that will have the likely effect of causing the loan to not be repaid." The statute provides that such occurrences must be recited in the mortgage instrument. Current (1)(d) references an "other act or occurrence which in the opinion of the board causes, or is likely to cause, a material decrease in the value of the property."
Such events are described in the mortgage instrument and other loan documents through terms, conditions and requirements that are usual and customary in similar loan transactions or that address specific RAM program requirements, and which are designed to protect the value of the property securing the loan or to assure repayment of the loan. Proposed (3) reflects the board's authority to include such loan terms, conditions and requirements in its documents. Accordingly, consistent with the statute, proposed (4)(d) provides that the loan will become due and payable upon an act or occurrence which constitutes an event of default under the mortgage instrument.
The proposed rule also adds new (2), which corresponds to 90-6-506, MCA and provides that the borrower may pay the outstanding loan balance in full at any time without penalty. Other proposed revisions are necessary to clarify the rule provisions.
8.111.602 DEFINITIONS When used in these rules, unless the context clearly requires a different meaning: (1) and (2) remain the same. (3) "QAP" means the board's "Housing Credit Program (4) remains the same.
AUTH: 90-6-106, MCA IMP: 90-6-104, MCA
REASON: The proposed amendments to ARM 8.111.602 are necessary to update the Qualified Allocation Plan (QAP) definition to reference the 2018 Qualified Allocation Plan for the Montana Housing Credit Program.
Federal low income housing tax credits are allocated by the federal government to the states, according to their population, for allocation to particular buildings. Each state's share of federal low income housing tax credits is allocated to particular buildings under programs administered by the respective state's housing credit agencies. The Montana Board of Housing is Montana's housing credit agency for purposes of administering the tax credit program and allocating tax credits in the state of Montana. In Montana, the program is known as the Montana Housing Credit Program. Federal law requires that tax credits allocated to the state by the federal government must be allocated by the state pursuant to a "qualified allocation plan" or "QAP."
Prior to publication of this notice, the board conducted several public meetings to consider suggestions and comments regarding the provisions of the 2018 QAP. Thereafter, at its February 13, 2017 meeting, the board considered and approved public notice and distribution of the proposed 2018 QAP. After public notice of the proposed 2018 QAP and of the opportunity for public comment was published and distributed, a public hearing on the proposed 2018 QAP was held on February 28, 2017 and written comments were also received. At its March 14, 2017 meeting, after considering all written and oral comments on the proposed 2018 QAP, staff recommendations, additional public comment and various proposed revisions in response to comments, the board approved the 2018 QAP for submission to and approval by the Montana Governor, as required by the federal tax credit statute, 26 U.S.C. § 42. Montana Governor Steve Bullock approved the 2018 QAP by written approval dated March 21, 2017.
A copy of the 2018 QAP is available on the internet at http://housing.mt.gov/MFQAP or by requesting a copy from: Mary Bair, Board of Housing, Department of Commerce, 301 South Park Avenue, P.O. Box 200528, Helena, Montana, 59620-0528; telephone (406) 841-2845; fax (406) 841-2841; or e-mail [email protected].
8.111.603 HOUSING CREDIT ALLOCATION PROCEDURE (1) remains the same. (2) Letters of intent and applications shall be submitted to the board on the dates specified in or otherwise designated according to the QAP. The board may extend or change any of the submission, (3) remains the same. (a) At the board's meeting in the month (b) and (4) remain the same. (5) At the board's award determination meeting (6) and (7) remain the same. (8) At the award determination meeting provided under (7), applicants should be available to the board to answer questions regarding their respective applications and shall be provided (9) remains the same.
AUTH: 90-6-106, MCA IMP: 90-6-104, MCA
REASON: The proposed amendments to ARM 8.111.603 are necessary to revise the rule to correspond to changes in the 2018 QAP, as approved by the Governor and proposed to be incorporated by reference in ARM 8.111.602, for purposes of allocating low-income housing tax credits. These revisions make minor changes in the procedures for board consideration of the housing credit letters of intent and applications for purposes of awarding housing credits, including the timing of board meetings at which various steps of the process are conducted, whether staff or applicants present information to the board and the scope of responses allowed by applicants to the information presented. These provisions were developed through collaborative discussions and public hearings.
8.111.705 LENDER AND SERVICER REQUIREMENTS AND LIMITS (1) through (2)(b) remain the same. (c) the sections of the guide pertaining to requirements of the Internal Revenue Service and the bond indentures, as more specifically identified in the guide, (3) and (4) remain the same. (5) Veteran's loans will be serviced by the board or its designee. Servicing fees shall be (6) remains the same.
REASON: The proposed amendments to ARM 8.111.705 are necessary to provide the board with flexibility to revise its purchasing and servicing guide and to adjust servicing fees promptly in response to market changes. Removing the specific citations to inapplicable guide sections allows greater flexibility in revising the guide without the need to amend the rule. Similarly, with the servicing fee amount specified in rule, the fee cannot be adjusted without undertaking a rule amendment process, preventing the board from making timely adjustments in the fee amount.
8.111.707 LOAN TERMS AND CONDITIONS (1) The (2) remains the same. (3) The lender may charge and collect lender fees not exceeding the amount allowable under the board's regular bond program. No points may be charged. Except as permitted by law, all (4) through (9) remain the same.
REASON: The proposed amendments to ARM 8.111.707 are necessary to revise the rule to comply with the Montana Veteran's Home Loan Mortgage Program Act. Current (1) provides that the agreed purchase price for the property may not exceed the specified amount. This incorrectly implements the provisions of the statute, which provides that the amount of the loan may not exceed the standard. The proposed amendment corrects this error. The proposed amendments are also necessary to allow the board flexibility, where allowed by law, to permit borrowers to use their minimum cash contribution to pay closing costs and to borrow the maximum loan amount allowed by the mortgage insurer for the loan. This loan authority is currently under consideration by the Legislature in Senate Bill 303, which if enacted will be effective on passage and approval. This would be permitted only if SB 303 becomes law.
4. The board proposes to repeal the following rule:
8.111.203 CONFIDENTIALITY AND DISCLOSURE OF INFORMATION
IMP: 2-6-102, MCA
REASON: The rule proposed for repeal establishes procedures to address confidentiality and disclosure of information submitted to the board. This rule is separate from and in addition to the procedures established and followed generally by the Department of Commerce. The board is administratively attached to the department, and the confidentiality of information and handling of public information requests are subject to department rules and handled by and through the department. This separate rule is therefore redundant and unnecessary.
Further, the rule is outdated because the 2015 Montana Legislature substantially revised Montana's statutory scheme governing public information and public information requests. See Ch. 348, L. 2015. This revision included repeal of former section 2-6-102, MCA, the statute that authorized adoption of the rule.
Accordingly, the board proposes to repeal the rule and instead rely upon the department's policies and procedures. The board will maintain on its website a general policy advising the public that information submitted to the board is subject to Montana's Constitutional and statutory provisions requiring disclosure of information, subject to the narrow exceptions provided by law, and that requests for such information will be handled in accordance with the applicable provisions of Montana law and the department's policies and procedures.
5. Concerned persons may submit their data, views, or arguments either orally or in writing, at the hearing. Written data, views, or arguments may also be submitted to: Mary Bair, Board of Housing, Department of Commerce, 301 South Park Avenue, P.O. Box 200528, Helena, Montana, 59620-0528; telephone (406) 841-2845; fax (406) 841-2841; or e-mail [email protected], and must be received no later than 5:00 p.m., May 26, 2017.
6. Mary Bair, Department of Commerce, has been designated to preside over and conduct this hearing.
7. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in paragraph 5 above or may be made by completing a request form at any rules hearing held by the department.
8. An electronic copy of this proposal notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.
9. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.
10. With regard to the requirements of 2-4-111, MCA, the department has determined that the amendment and repeal of the above-referenced rules will not significantly and directly impact small businesses.
/s/ G. Martin Tuttle /s/ Pam Haxby-Cote G. Martin Tuttle Pam Haxby-Cote Rule Reviewer Director Department of Commerce
Certified to the Secretary of State April 17, 2017.
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A directory of state agencies is available online at http://www.mt.gov/govt/agencylisting.asp.
For questions about the organization of the ARM or this web site, contact [email protected].
