Regulations of Connecticut State Agencies
(a) The sales price of an eligible dwelling as established in an arm's length transaction shall not exceed the applicable sales price limit established by CHFA and in effect at the time of the application. The sales price of an eligible dwelling shall include all amounts paid, either in cash or in kind, by the buyer (or by another party acting on behalf of the buyer) to the seller (or to another party for the benefit of the seller). The buyer's closing costs to be paid by the seller are to be subtracted from the selling price shown on the real estate sales contract.
(b) The following items shall be included in the computation of the sales price of an eligible dwelling:
(1) the reasonable costs of completing the eligible dwelling, whether or not such costs are to be financed with the proceeds of the mortgage loan, if the eligible dwelling is incomplete at the time of closing and the builder does not normally sell similar incomplete homes;
(2) the capitalized value of the ground rent, for an eligible dwelling subject to a ground rent, which value shall be calculated using a discount rate equal to the yield on the CHFA bonds from which the loan proceeds were derived; and
(3) the cost of the land on which the eligible dwelling is located, if such land had been owned by the borrower prior to the construction of the eligible dwelling.
(c) Participating lenders shall obtain appraisals of all properties for which CHFA loans are requested. Said appraisals shall be on forms required by the mortgage insurer or guarantor, shall be made by appraisers acceptable to CHFA, and, except for those on condominium units, shall be accompanied by the CHFA Supplement to Appraisal. Appraisal reports shall be submitted to CHFA together with other loan documents.
(d) The value of property as reported in an appraisal shall be that which the property would bring in a bona fide, arm's-length transaction between well-informed/advised parties acting in their own best interests, assuming reasonable market exposure for the property and payment in cash or by means of typical financing terms. If an appraisal indicates that a property is in need of repairs, a recertification by the appraiser will be required prior to the closing of the loan. Such recertification shall state that either the necessary repairs have been made or that an escrow has been set up.
(e) As part of the Borrower Affidavit submitted to CHFA, the participating lender shall include an Acquisition Cost Worksheet completed by the borrower. Such worksheet, on a form supplied by CHFA, shall set forth in detail the sales (acquisition) price of the eligible dwelling, as computed in accordance with these regulations. A Seller Affidavit, required from all sellers, shall contain the seller's certification as to the sales (acquisition) price of an eligible dwelling.
(f) At the closing of each loan, the participating lender shall certify to CHFA that the sales (acquisition) price of the property is not in excess of the applicable sales price limit. Such certification shall be based on the lender's review of the Acquisition Cost Worksheet, Seller Affidavit and other relevant documentation, and shall be made as part of the Participating Lender Mortgage Loan Closing Certificate.
(g) CHFA may at its option reject an application for a CHFA mortgage loan to finance the purchase of an eligible dwelling where the appraised value exceeds the applicable sales price limit by more than five (5) percent.
(h) Notwithstanding any of the above, CHFA reserves the right to require an independent appraisal if, in its sole discretion, it determines that doing so is necessary to ascertain whether the property in question qualifies as an eligible dwelling.
(i) Surveys are not needed unless required by mortgage insurers/guarantors or CHFA. A partipating lender shall promptly notify CHFA upon discovery of any state of facts which, from the standpoint of a prudent lender, may indicate the need for a survey of the property in question.
(Effective January 27, 1986)