Section 987.71 Of Article 3.1. Veterans’ Farm And Home Purchase Act Of 1974 From California Military And Veterans Code >> Division 4. >> Chapter 6. >> Article 3.1.
987.71
. (a) The purchaser shall make an initial payment of at least
2 percent of the selling price of the property or a higher amount
that shall be determined based upon the creditworthiness of the
purchaser, and with consideration of his or her military record,
employment record, financial condition, and other similar factors as
determined by the department. The department may waive the initial
payment in any case where the value of the property as determined by
the department from an appraisal equals the amount to be paid by the
department plus at least 5 percent. In the case of a purchase
requiring a loan guaranty by the United States Department of Veterans
Affairs, the department may waive the initial payment and the
purchaser shall pay the loan guaranty fee, which may be added to the
loan amount. The department may require the purchaser to pay a loan
origination fee, not to exceed 1 percent of the loan amount, which
may be added to the loan amount.
(b) The balance of the loan amount may be amortized over a period
fixed by the department, not exceeding 40 years for farms or homes,
not including cooperative housing stock related to mobilehomes, and
not exceeding 30 years for mobilehomes, including cooperative housing
stock related to mobilehomes, located in mobilehome parks, as
defined in Section 18214 of the Health and Safety Code, together with
interest thereon at the rate determined by the department pursuant
to Section 987.87 for these amortization purposes.
(c) The department may, in order to allow the veteran to purchase
the home selected without incurring excessive monthly payments, at
the time of initial purchase, postpone the commencement of payment of
the principal balance for a period not to exceed five years if the
veteran's current income meets the standards for purchase on these
terms and if the department determines, in accordance with previously
established criteria for these determinations, that the veteran's
income can reasonably be expected to increase sufficiently within the
five-year period to make the transition to fully amortized principal
and interest payments, so long as the total term of the contract of
purchase does not exceed 40 years, or 30 years where the contract
relates to a mobilehome located in a mobilehome park, as defined in
Section 18214 of the Health and Safety Code.
(d) The purchaser on any installment date may pay any or all
installments still remaining unpaid.
(e) In any individual case, the department may for good cause
postpone, from time to time, upon terms the department determines to
be proper, the payment of the whole or any part of any installment of
the purchase price or interest thereon.
(f) Each installment shall include an amount sufficient to pay the
principal and interest on the participation contract to which the
interest of the department is subject, and any amount as may be
required by a covenant or provision contained in any resolution of
issuance.
(g) When a purchaser makes an initial payment of less than 20
percent of the selling price of the property, the department shall do
all of the following:
(1) Take prudent measures to minimize losses from loan defaults
and loan delinquencies.
(2) (A) Ensure the continued financial solvency of the loan
program by charging fees to cover the costs, as determined by the
department, of any loan guaranty, primary mortgage insurance, or
other similar arrangement.
(B) Fees charged under this paragraph may be included in the
amount of the loan, collected in advance, or collected as part of the
monthly payment.
(h) (1) Subject to paragraph (2), the department may provide
initial payment assistance to lower income first-time purchasers by
providing a deferred-payment second loan, upon which simple interest
shall be charged at a rate established by the department.
(2) A deferred-payment second loan described in paragraph (1) is
subject to all of the following conditions:
(A) The loan may not exceed 3 percent of the selling price of the
farm or home.
(B) The loan shall be secured by a deed of trust or, if authorized
by the department, another form of security.
(C) The loan shall be due and payable upon the payment in full of
the contract or upon the sale or transfer of the farm or home.