Section 3.99.350. Participation requirements.

	(a)  The originator of a loan shall initially retain at least a 10 percent share of the principal amount of the loan and may not sell, transfer, or permit prepayment or other early retirement of any portion of its participation interest without the permission of the authority. However, the originator of a loan to finance improvements in energy efficiency may request that the authority permit the originator to retain an interest of less than 10 percent of the principal amount of the loan, which request the authority may approve or disapprove depending on its evaluation of the factors stated in 3 AAC 99.360(a).  
	(b)  The initial rate of interest on the authority's participation in a real property or tangible personal property loan will be set at the time the authority issues a loan commitment at a rate equal to the sum of the "true interest cost rate" and the "authority cost amount". The rate of interest on the originator's portion of a loan is set by the originator, but may not exceed a market rate.  
	(c)  The authority will, in its discretion, require prepayment fees on its participation share in a real property or tangible personal property loan in amounts and for a period of time it determines appropriate, except that the authority will not charge a prepayment fee later than five years from the date the authority funds its participation.  
	(d)  The authority will, in its discretion, approve a modification of the interest rate and loan term on the authority's portion of a loan under 3 AAC 99.300 - 3 AAC 99.390 as follows:  
		(1) effective upon the authority's approval of a written request from the borrower and originator for an interest rate modification or extension of loan term, or both, the authority will  
			(A) change the interest rate to either a current variable interest rate published by the authority, or the current fixed interest rate published by the authority for a loan with a term equal to the original term of the authority's portion of the loan, plus extensions of the original term, if any, as allowed in (B) of this paragraph; and  
			(B) extend the loan term up to the maximum term permitted under 3 AAC 99.330(e) and 3 AAC 99.340(e), except that in no case will the total aggregate loan term exceed the maximum term as permitted under 3 AAC 99.330(e) and 3 AAC 99.340(e);  
		(2) the authority will, in its discretion, adjust the scheduled payment on the loan to reflect a change in interest rate or loan term, or both, in order to maintain the proper loan amortization;  
		(3) upon authority approval of a modification described in either (1)(A) or (1)(B) of this subsection, the originator must remit to the authority a one percent fee, calculated on the outstanding principal balance of the authority's portion of the loan;  
		(4) the borrow and originator may request modification of the interest rate and loan term more than once during the term of the loan, subject to the maximum loan term permitted in 3 AAC 99.330(e) and 3 AAC 99.340(e), and remittance to the authority of a one percent fee calculated as described in (3) of this subsection for each such modification.  
	(e)  In this section  
		(1) "true interest cost rate" means  
			(A) if the authority issues bonds to fund a participation in a loan, the rate on the bonds of the authority; or  
			(B) if the authority uses authority assets to fund a participation in a loan, the rate identified on the daily Federal Home Loan Bank of Seattle's Fixed-Rate Advances Index which most closely matches the term of the loan, and whether the type of loan has a fixed or variable interest rate, as determined by the authority, with the following adjustments:  
				(i) for a fixed rate loan, the rate during any fiscal year may not be lower than the five year return on the investment funds of the authority, expressed as an annual interest rate, as determined in the authority's review of its investments at the end of the third quarter of the prior fiscal year and for a variable rate loan, the rate during any fiscal year will not be lower than 475 basis points;  
				(ii) for a variable rate loan, 200 basis points will be added to the rate;  
		(2) "authority cost amount" means an amount, determined by the authority and expressed as an annual rate of interest, that is necessary to pay for the allocable expenses of operation, costs of issuance not subject to a loan participation bond issuance fee under 3 AAC 99.320(c), and loan servicing with respect to loans for which interest rates are determined under this section.  

Authorities

44.88.080;44.88.085;44.88.150;44.88.155;44.88.159

Notes

Authority

AS 44.88.080 AS 44.88.085 AS 44.88.150 AS 44.88.155 AS 44.88.159 Editor's note: Even though 3 AAC 99.350 was amended effective as an emergency regulation on 9/9/2010 and amended effective as a permanent regulation on 12/3/2010, it was not published until Register 197, April 2011. Even though the amendment of 3 AAC 99.350 was effective 4/25/2013, it was not published until Register 207, October 2013.

History

In effect before 1988; am 1/11/88, Register 106; am 11/30/90, Register 118; am 7/19/91, Register 119; am 9/25/92, Register 124; am 2/11/99, Register 150; am 11/1/99, Register 153; am 8/8/2003, Register 168; am 9/9/2010, Register 197 [not printed]; am 12/3/2010, Register 197; am 12/15/2010, Register 197; am 1/13/2011, Register 198; am 1/31/2011, Register 198; am 3/8/2011, Register 198; am 4/25/2013, Register 207

References

3.99.350