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Loans: Residential
RESIDENTIAL
MORTGAGES
Purpose
The primary
purpose of the GERS Residential mortgage program is to
promote home ownership by members of the system as well as
to provide financial assistance towards improvement of
existing homes.
Types
of Mortgages
Purchase – For
acquisition of a single-family residence not to exceed 90%
of the sale price or market value, whichever is less.
Construction – Where the purpose of the loan is for the
construction of a home the member shall submit with the
application a deed evidencing the member’s ownership of
the land upon which the home is to be constructed. The total
Loan-to-Value shall not exceed 90% of the market value, as
shown in the appraisal report. Additional guidelines are
outlined in the GERS Construction Policy hereto attached as Exhibit 3.
Home Improvement/Second Mortgages – Each loan shall not exceed the
ceiling of $55,000.
Land Loans - Each loan
shall not extend for a number of years greater than 15 years
with a ceiling of $50,000.00.
Refinance – A
member of the System may refinance the existing balance on
his/her primary residence for a lower interest rate or to
reduce the term on the existing mortgage.
Subordination
of Mortgage – A member may request in writing that
GERS subordinate its interest in the property to accommodate
a first priority mortgage from another institution.
GERS underwriting guidelines will be applicable.
Occupancy - The System shall finance any
residential 1-4 family dwelling. Second homes or investment
properties are eligible for financing by the System.
Interest Rates - The System shall review loan
interest rates on a monthly basis and changes shall be made
as are appropriate to reflect the average margins of the
local lending market, in conjunction with but shall not be
lower than the minimum rate allowed for a favorable return
on investment as determined by the most recent actuarial
studies.
Maximum Loan Amount - Each loan shall not exceed
$250,000.00.
Repayment Term - Each loan shall not extend for a
number of years greater than 30 years. All wooden structures
shall not extend for a number of years greater than 15
years.
Application - The Uniform Residential Loan
Application (URLA) is used to record pertinent information
about a member and the security. A URLA shall only be
accepted if the following requirements are met:
1. Must be a member of the System for 5 or more
years.
2. Must be pre-qualified prior to submitting an
application/
3. All payments must be salary assigned.
4. Payment of fees for credit report, appraisal and
application.
A member shall only be issued a URLA if he/she has
successfully met GERS' qualifying guidelines. The checklist
of items shall be attached to the URLA. The application
shall be deemed incomplete if all of the documents are not
received at the same time.
Loan Fees - Each loan application should be
submitted with a check in an amount to cover the cost of
obtaining an appraisal report, credit report and an
application fee. A current as built survey, title insurance,
homeowners insurance and a tax clearance letter will be
requested at the member's expense. Additionally, an
origination fee of 1.5% of the loan amount, recording
charges and attorney's fees will be charged at closing.
Credit Life Insurance -The member(s) are required
to purchase credit life insurance which shall affect a
payoff of the unpaid balance in the event of death. The
payment of the premium shall be factored in with the regular
principal and interest payment throughout the term of the
loan.
Loan to Value (LTV) - The LTV is the ratio of the
mortgage amount to the appraised value or sales price of
real property, whichever is less. The maximum LTV ratio (or
combined loan-to-value ratios) for purchase money
transactions shall not exceed 90%.
Escrows - The member shall be required to insure
his/her residence against loss during construction with
builder's risk policy, and on completion with fire,
hurricane and earthquake insurance until the loan has been
paid in full; such policies shall contain loss payable
clauses in favor of the System. The member, upon signing of
the mortgage documents, shall be obligated to make 1/26th
payments through Bi-weekly (or Semi-monthly for retirees)
payroll deductions for homeowner's insurance and real
property taxes.
Insurance - All insurers and re-insurers must be
licensed, or otherwise authorized by law, to conduct
business in the U.S. Virgin Islands. The insurer must
provide notification to the mortgagee at least 15 days
before any reduction in coverage or cancellation of the
policy.
An insurer must:
1. The insurer has a rating of B+ or better in Best's
Insurance Reports 2. Under Severe market Conditions/Surplus
Lines Carriers will be accepted
Insurance must be at least equal the lesser of 80 percent
of the insurable value of the improvements. The insurance
may not be less, however, than the minimum amount required
under the terms of coverage to fully compensate for any
damage or loss on a replacement cost basis.
If the member does not provide adequate insurance
as prescribed above GERS shall have no option but to place
the property under the System's forced placed insurance.
Deductibles may not exceed 3%-5% for Catastrophe or
$500.00 - $1,000 for non-Catastrophe of the applicable
amount of coverage.
Condominiums owners' association must maintain blanket
"all risk" coverage for the following: · General
and limited common elements within the condominium ·
Fixtures, machinery, equipment, and supplies maintained for
the service of the condominium
Coverage must be for 80 percent of the insurable value of
the common elements or property described above and provides
for loss or damage settlement on a replacement cost basis.
Flood Insurance is required for all properties located in
a flood zone, as determined by FEMA, and financed by the
System.
Late Fee - The System shall, at its discretion,
implement a late fee on all loan payments that are no longer
salary assigned
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