SECTION 330:10-13-2. Requiremens

(a)   No more than approximately seventy-five percent (75%) of the aggregate principal amount of mortgage loans will represent mortgage loans, the original principal amount of which is greater than 90% of the initial appraised value of the property or the purchase price, whichever is less. In addition, except for VA-guaranteed mortgage loans, the original principal amount of each of the mortgage loans will not exceed 95% of the lesser of the initial appraised value of the property or the purchase price. No more than approximately twenty (20%) of the aggregate principal amount of the mortgage loans will represent mortgage loans on planned unit developments, condominiums and eligible manufactured housing. However,

(1)   no limitation shall apply to de minimis planned unit developments, approved pursuant to FNMA or FHLMC guidelines;

(2)   at least three-fourths of the allowable twenty percent (20%) shall represent planned unit developments or condominium projects that have been approved by FNMA or FHLMC; and

(3)   the remaining five percent (5%) require no prior qualification or approvals. The Agreement permits the origination of FHA-insured and VA-guaranteed mortgage loans, not to exceed twenty (20%) of the aggregate principal amount of mortgage loans.

(b)   The Mortgage Subsidy Bond Tax Act of 1980, which added Section 103A to the Internal Revenue Code of 1954, as amended, and the Tax Equity and Fiscal Responsibility Act of 1982 which amended such Section, together with the temporary and proposed regulations promulgated thereunder (herein referred to as the "Tax Act" or "Section 103A"), impose significant requirements and restrictions upon the Agency with respect to single family mortgage loans that can be originated with the proceeds of obligations the interest on which is excludable from the gross income of the recipient for federal income tax purposes. Under the limitations imposed by the Tax Act, among other things,

(1)   the amount of such obligations that may be issued in Oklahoma in 1984 is limited to $200,000,000,

(2)   the acquisition cost for single family residences financed by the mortgage loans is limited to a ceiling of between $60,720 and $109,080 depending on the geographical area of the State,

(3)   the mortgagor must use the residence financed as his principal residence,

(4)   in non-targeted areas, at all times, at least 90% in aggregate amount of the mortgage loans originated must be to mortgagors who have not had any present ownership interest in a principal residence during the three-year period prior to the execution of the mortgage loan,

(5)   bond proceeds may not be applied to acquire or replace an existing mortgage, except for certain temporary initial financing, and

(6)   a mortgage loan may not be assumed unless the provisions of the Tax Act are met. The Agency, pursuant to the Agreement, must approve any mortgage loan assumptions. In addition to the Tax Act limitations, the Agency is limiting the maximum income of qualified borrowers to between $38,500 and $42,000 depending upon the location of the residence to be financed.

(c)   Section 103A establishes certain requirements which must be met subsequent to the delivery of the bonds in order that interest on the bonds be exempt from federal income taxes under the provisions thereof. The Agency has drafted the Agreement and certain affidavits to meet such requirements and has covenanted in the Indenture to take all actions which are necessary to assure that the interest on the bonds remains exempt from federal income taxation.