55:14K-11. Loans to institutional lenders

a. The agency may make loans to institutional lenders in order to furnish funds to institutional lenders to make eligible loans; but an eligible loan for a housing project shall be subject to all the provisions of this act applicable to agency loans to housing sponsors for housing projects.

b. The agency shall adopt rules and regulations governing the making of these loans to institutional lenders and the application of the proceeds thereof, including rules and regulations as to any of the following:

(1) procedures for the submission of requests or the invitation of proposals for loans;

(2) standards and requirements concerning allocations of loans to the institutional lenders or awards of loans and determining the amounts of interest rates thereof;

(3) limitations or restrictions as to the number of family units, location or other qualifications or characteristics of projects or residences to be financed by eligible loans;

(4) restrictions as to the maturities and interest rates on eligible loans or the return realized therefrom by institutional lenders;

(5) requirements as to commitments by institutional lenders with respect to eligible loans;

(6) schedules of any fees and charges necessary to provide for expenses and reserves of the agency; and

(7) any other matters related to the duties and the exercise of the powers of the agency under this section.

These rules and regulations shall be designed to effectuate the general purposes of this act and the following specific objectives: the expansion of the supply of funds in the State available for housing; the provision of the additional housing needed to remedy the shortage of adequate housing in the State and eliminate the existence of a large number of substandard dwellings; the provision of nonhousing facilities which enhance the livability of residential properties or areas being improved through financing by the agency and provide supplies and services primarily to the residents of such residential properties and areas; and the effective participation by institutional lenders in the programs authorized by this act and the restriction of the financial return and benefit thereto from such programs to that necessary and reasonable to induce such participation.

c. Loans to institutional lenders shall be general obligations of the respective institutional lenders owing the same and shall bear such date or dates, shall mature at such time or times, shall be evidenced by such note, bond or other certificate of indebtedness, shall be subject to prepayment, and shall contain such other provisions consistent with this section, all as the agency shall by resolution determine.

d. The agency shall require as a condition of each loan to an institutional lender that the institutional lender thereafter proceed as promptly as practicable to make and disburse from the loan proceeds, eligible loans in an aggregate principal amount equal to the amount of the loan.

e. The agency may require that loans to institutional lenders shall be additionally secured as to payment of both principal and interest by a pledge of and lien upon collateral security in such amounts as the agency shall by resolution determine to be necessary to assure the payment of the loans and the interest thereon as they become due. The agency may require that collateral mortgages be insured by a mortgage guaranty insurance company licensed to do business by the State. The agency may enter into an agreement with an institutional lender containing such provisions as the agency shall deem necessary to adequately identify and maintain such collateral and service the same and shall provide that the institutional lender shall hold the collateral as an agent for the agency and shall be held accountable as the trustee of an express trust for the application and disposition thereof and the income therefrom solely to the uses and purposes in accordance with the provisions of the agreement. A copy of each agreement and any revisions or supplements thereto shall be filed with the Secretary of State and no further filing or other action under Title 12A, Commercial Transactions, of the New Jersey Statutes or any other law of the State shall be required to perfect the security interest of the agency in the collateral or any additions thereto or substitutions therefor, and the lien and trust for the benefit of the agency so created shall be binding from the time made against all parties having claims of any kind in tort, contract, or otherwise against the institutional lender. The agency may also establish additional requirements as it deems necessary with respect to the pledging, assigning, setting aside, or holding of the collateral and the making of substitutions therefor or additions thereto and the disposition of income and receipts therefrom.

f. The agency shall require the submission to it by each institutional lender to which the agency has made a loan of evidence satisfactory to the agency of the making of eligible loans as required by this section and prescribed by rules and regulations of the agency and in connection therewith may inspect the books and records of the institutional lender.

g. The agency may require as a condition of any loans to institutional lenders such representations and warranties as it shall determine to be necessary to secure the loans and carry out the purposes of this act.

h. Compliance by any institutional lender with the terms of this section and its undertaking to the agency with respect to the making of eligible loans may be enforced by decree of the Superior Court. The agency may require as a condition of any loan to any institutional lender the consent of the institutional lender to the jurisdiction of the Superior Court over any such proceeding. The agency may also require agreement by any institutional lender, as a condition of the loan to the institutional lender, to the payment of penalties to the agency for violation by the institutional lender of any provision of this section or its undertaking to the agency with respect to the making of eligible loans, and these penalties shall be recoverable at the suit of the agency.

L.1983, c. 530, s. 11, eff. Jan. 17, 1984.