1. (a) The loan-to-value ratio of a deferred payment loan shall not exceed 90 percent of the value of the borrower's property calculated as follows:

   1. (1) The loan-to-value ratio shall be calculated using: (a) the County Tax Assessor's current valuation of the property and (b) all indebtedness which will be senior to the deferred payment loan after the rehabilitation, plus the proposed deferred payment loan (hereinafter referred to as the “total indebtedness”). If the loan-to-value ratio exceeds 90 percent, then the loan-to-value ratio shall be calculated as set forth in (2) below.
   2. (2) The loan-to-value ratio shall be calculated using: (a) the current estimated value of the property as determined by qualified local entity staff who have been given prior approval by the department to conduct property value analyses and (b) the total indebtedness. If the loan-to-value ratio exceeds 90 percent, then the loan-to-value ratio shall be calculated as set forth in (3) below. Any such staff analyses shall be accompanied by data showing current comparable sales in the market area.

   3. (3) The loan-to-value ratio shall be calculated using; (a) a fee appraisal of the after rehabilitation value of the property and (b) only those liens which will be senior to the deferred payment loan, excluding senior citizen property tax deferral liens, plus the deferred payment loan. This loan-to-value ratio shall not exceed 90 percent of the after-rehabilitation value of the borrower's property. The appraisal shall be undertaken at the borrower's expense. The appraisal may be included as an eligible cost in the borrower's deferred payment loan. The appraisal shall take into consideration the estimated value of the rehabilitation to be completed on the property and shall:

      1. (A) be prepared by an independent appraiser who:

         (1.) has the knowledge and experience necessary to appraise residential property competently;

         (2.) is aware of, understands, and correctly employs those recognized methods and techniques that are necessary to produce a credible appraisal; and

         (3.) in reporting the results of the appraisal, communicates such analysis, opinion, and conclusion in a manner that is not misleading as to the true value and condition of the property.

      2. (B) utilize all of the following methods to determine value:

         (1.) sales of comparable properties; and

      3. (C) include the pre-rehabilitation value.
2. (b) The department shall not accept any appraisal that does not conform to the provisions of subdivision (a)(3).

3. (c) Upon request by a local entity, the department may allow a loan-to-value ratio greater than 90 percent, but less than 100 percent as calculated pursuant to subdivision (a)(3), if the local entity provides evidence acceptable to the department that the following exist:

   1. (1) rehabilitation which requires a deferred payment loan amount which would cause the loan-to-value ratio as calculated pursuant to subdivision(a)(3) to exceed 90 percent and
   2. (2) the borrower has the ability to afford all payment obligations.
4. (d) If the local entity is lending additional funds for t he rehabilitation, regardless of the source, the local entity loans shall be recorded in a subordinate position to the deferred payment loan.

Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Section 50662, Health and Safety Code.

History

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), (b), (c) and (d) transmitted to OAL 11-30-90 and filed 12-31-90 (Register 91, No. 7).