Illinois Compiled Statutes 20 ILCS 3805/8.1 – With respect to mortgage loans for developments financed by the …
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With respect to mortgage loans for developments financed by the issuance of the Authority’s bonds and notes and not covered under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. § 4101 et seq.) created by Title VI of the Cranston-Gonzalez National Affordable Housing Act, the owner may not make, and the Authority may not accept, a prepayment of the mortgage loan except in accordance with the provisions of this Section.
(a) For those developments covered under this Section, the owner may make, and the Authority may accept, a prepayment of the mortgage loan if the owner enters into an agreement with the Authority to extend to the full term of the mortgage loan the affordability restrictions on those units affordable to low income persons and families or create a comparable number of new units of housing affordable for low income persons and families. As used in this Section, “affordability restrictions” means limits imposed by a federal or Authority regulation, regulatory agreement or rent subsidy contract on tenant rents, rent contributions, or income eligibility for the development so as to require that the units be affordable to low income persons and families.
(b) If the owner does not enter into the agreement described in subsection (a), prior to the owner making and the Authority accepting prepayment of the mortgage loan on those developments covered by this Section the owner shall provide notice to the tenants of the development of the owner’s intent to prepay the mortgage loan and the tenants’ rights under this Section. The notice shall be in a form approved by the Authority and shall be delivered at least 9 months prior to the date the owner intends to prepay the mortgage loan.
(c) If the owner does not enter into the agreement described in subsection (a) and intends to cause the prepayment of the mortgage loan, the tenants shall have the first right to purchase the development as follows:
(1) The tenants shall, within 60 days after the date
(a) For those developments covered under this Section, the owner may make, and the Authority may accept, a prepayment of the mortgage loan if the owner enters into an agreement with the Authority to extend to the full term of the mortgage loan the affordability restrictions on those units affordable to low income persons and families or create a comparable number of new units of housing affordable for low income persons and families. As used in this Section, “affordability restrictions” means limits imposed by a federal or Authority regulation, regulatory agreement or rent subsidy contract on tenant rents, rent contributions, or income eligibility for the development so as to require that the units be affordable to low income persons and families.
Terms Used In Illinois Compiled Statutes 20 ILCS 3805/8.1
- Amortization: Paying off a loan by regular installments.
- Appraisal: A determination of property value.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Devise: To gift property by will.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
- 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
- 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
- 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.
- State: when applied to different parts of the United States, may be construed to include the District of Columbia and the several territories, and the words "United States" may be construed to include the said district and territories. See Illinois Compiled Statutes 5 ILCS 70/1.14
(b) If the owner does not enter into the agreement described in subsection (a), prior to the owner making and the Authority accepting prepayment of the mortgage loan on those developments covered by this Section the owner shall provide notice to the tenants of the development of the owner’s intent to prepay the mortgage loan and the tenants’ rights under this Section. The notice shall be in a form approved by the Authority and shall be delivered at least 9 months prior to the date the owner intends to prepay the mortgage loan.
(c) If the owner does not enter into the agreement described in subsection (a) and intends to cause the prepayment of the mortgage loan, the tenants shall have the first right to purchase the development as follows:
(1) The tenants shall, within 60 days after the date
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of the owner’s notice under subsection (b), notify the owner in writing that the tenants have formed a tenant association and shall designate the name of its representative. As used in this Section, “tenant association” means an association, corporation or other organization that represents at least a majority of the tenants in the development.
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(2) After receiving notice from the tenants under
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paragraph (1) of this subsection (c), the owners shall provide a bona fide offer for sale of the development to the tenant association which contains the essential terms of the sale, including, at a minimum, the following: the sale price; the terms of seller financing, if any, including the amount, the interest rate, and amortization rate; the terms of assumable financing, if any, including the amount, the interest rate, and the amortization rate; and the proposed improvements, if any, to the property to be made by the owner in connection with the sale. The bona fide offer for sale shall also state that within 30 days after its receipt, the tenant association shall notify the owner, in writing, of its intent to purchase the development, which notice shall not create any legal obligation other than under this Section. By this notice the tenant association may designate a not-for-profit corporation to act on its behalf to purchase the development.
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(3) The tenant association or its designee shall,
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within 90 days after delivery of the notice of intent to purchase under paragraph (2) of this subsection (c), deliver to the owner and the owner shall execute a purchase contract reflecting a sale price and terms agreed to by the parties or the sale price and terms determined as follows: If the owner and the tenant association or its designee are unable to agree to a sale price within the first 60 days of the 90 day period specified above, the sale price of the development shall be based upon its fair market value at its highest and best use minus any rehabilitation costs or other costs required to convert the development to that use, as determined by 2 independent appraisers qualified to perform multi-family housing appraisals. One appraiser shall be selected and paid by the owner and the other shall be selected and paid by the tenant association or its designee. If the appraisers fail to agree upon a fair market value, the owner and the tenant association or its designee shall either jointly select and pay a third appraiser whose appraisal shall be binding, or agree to take an average of the 2 appraisals. All appraisers shall be MAI certified. The determination of the sale price shall be completed within the 90 day period specified above.
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(4) The tenant association or its designee shall
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close on the sale of the development within 90 days after the date the parties sign the contract to purchase.
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(d) The provisions of this Section shall not apply to any of the following: a government taking by eminent domain or negotiated purchase; a forced sale pursuant to a foreclosure; or a transfer by gift, devise or operation of law.
(e) If the Authority determines, in its sole discretion, that the tenants of the development failed to form a tenant association as defined in this Section, or that the tenant association or its designee failed to provide notice to the owner of the formation of a tenant association under paragraph (1) of subsection (c), failed to provide notice to the owner of its intent to purchase under paragraph (2) of subsection (c), failed to provide a bona fide offer to purchase under paragraph (3) of subsection (c), or failed to close on the development under paragraph (4) of subsection (c), the owner may prepay the mortgage loan and the Authority may accept the prepayment of the mortgage loan.
(f) The owner and the tenant association or its designee shall timely forward a copy of all notices required under this Section to the Authority.
(e) If the Authority determines, in its sole discretion, that the tenants of the development failed to form a tenant association as defined in this Section, or that the tenant association or its designee failed to provide notice to the owner of the formation of a tenant association under paragraph (1) of subsection (c), failed to provide notice to the owner of its intent to purchase under paragraph (2) of subsection (c), failed to provide a bona fide offer to purchase under paragraph (3) of subsection (c), or failed to close on the development under paragraph (4) of subsection (c), the owner may prepay the mortgage loan and the Authority may accept the prepayment of the mortgage loan.
(f) The owner and the tenant association or its designee shall timely forward a copy of all notices required under this Section to the Authority.