Virginia Law

Prior to initial closing, the principal amount of the mortgage loan and/or the maximum sales prices may be increased, if such an increase is justified by an increase in the estimated costs of the proposed development, is necessary or desirable to effect the successful construction and sale of the proposed development, can be funded (in the case of a mortgage loan increase) from available moneys of the authority or proceeds of the authority's notes or bonds, and is not inconsistent with the provisions of the Act or these rules and regulations. Any such increase shall be subject to such terms and conditions as the authority shall require.

Subsequent to initial closing, the authority will consider and, where appropriate, approve an increase in the principal amount of the mortgage loan and/or the maximum sales prices in the following instances:

1. Where cost increases are incurred as the direct result of (i) changes in work required or requested by the authority of (ii) betterments to the development approved by the authority which will improve the quality or value of the development;

2. Where cost increases are incurred as a direct result of a failure by the authority during processing of the development to properly perform an act for which the authority is solely responsible;

3. Where an increase in the mortgage loan or maximum sales price is determined by the authority, in its sole and absolute discretion, to be in the best interests of the authority in protecting its security for the mortgage loan; or

4. Where the authority has entered into an agreement with the mortgagor prior to initial closing to provide an increase in the mortgage loan or maximum sales price if certain cost overruns occur in agreed line items, but only to the extent set forth in such agreement.

Any such increase in the mortgage loan or maximum sales price subsequent to initial closing may be subject to such terms and conditions as the authority shall require, including (but not limited to) one or more of the following:

1. The ability of the authority to sell notes or bonds to finance the mortgage loan increase in amounts, at rates and under terms and conditions satisfactory to the authority (applicable only to a mortgage loan increase to be financed from the proceeds of the authority's notes or bonds).

2. A determination by the authority that the mortgage loan increase in the principal amount of the mortgage loan and/or in the maximum sales price will have no material adverse effect on the marketability of the development.

3. A determination by the authority that the mortgage loan, as increased, does not exceed such percentage of the total development cost as is established in the resolution authorizing the mortgage loan in accordance with 13VAC10-30-30 hereof.

4. Such terms and conditions as the authority shall require in order to protect the security of its interest in the mortgage loan, to comply with covenants and agreements with the holders of any notes or bonds issued to finance the mortgage loan, to comply with the Act and these rules and regulations, and to carry out its public purpose.

The executive director may, at any time and without further action by the board, increase (i) the principal amount of the mortgage loan by an amount or amounts not to exceed 2.0% of the maximum principal amount of the mortgage loan set forth in the commitment and/or (ii) the maximum sales prices for the units in the developments to the highest maximum sales prices then established by the authority for newly constructed units in the area in which the development is located; provided that any such increase in the mortgage loan or maximum sales price is consistent with the Act and these rules and regulations and the provisions hereof. Any increase in excess of the foregoing amounts shall require the approval of the board.

Nothing contained in this section (13VAC10-30-80) shall impose any duty or obligation on the authority to increase any mortgage loan or maximum sales price, as the decision as to whether to grant such increase shall be within the sole and absolute discretion of the authority.