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Housing Loan Fund For Clergy and Congregations Discretionary
- Administration.
The Housing Loan Fund shall be administered by the Trustees
of the Diocese through the Bishop’s Office who will
provide regular reports to the Audit and Finance Committee
of the Trustees.
- Purpose.
Congregations provide either a housing allowance to clergy
or housing for clergy. Some congregations own rectories
or wish to move from church owned housing to assisting
clergy to purchase their own home. The fund is available
to clergy or to congregations as follows:
a. Clergy may have limited cash reserves
to use for the purchase of a home. This fund exists to
supplement the limited cash reserves of clergy. The purpose
of the Fund is to assist clergy who are canonically resident
in the diocese, or who have been called to a position
in the diocese and will be canonically resident, who are
employed in a ministry of the Episcopal Diocese of Rochester
or who are employed in a church-related ministry that
is approved by the Bishop of the Diocese of Rochester
in purchasing homes of their own.
b. The fund is also available to Congregations
to assist them to finance acquisition, improvements, repairs
and code compliance construction of rectories owned by
the church, when it is intended to house clergy of the
congregation, subject to various canonical requirements
including the approval of the Standing Committee.
- Loan Limits.
For Clergy It is expected that in most cases clergy who
avail themselves of this fund will secure a first mortgage
in the amount of 65% to 75% of the appraised or assessed
value (whichever is higher) of the home. The Housing Loan
Fund will provide a loan not to exceed 25% of the appraised
or assessed (whichever is higher) value of the home. In
the case of congregations that own a rectory, a loan,
secured by a note in the amount of up to 25% of the appraised
or assessed value can be approved.
For Congregations The Housing Loan Fund will provide a
loan not to exceed 25% of the appraised or assessed (whichever
is higher) value of the home. In the case of congregations
that own a rectory, a loan, secured by a note in the amount
of up to 25% of the appraised or assessed value can be
approved. Congregations will not be required to obtain
a mortgage for this purpose. Congregations who borrow
from this fund will be subject to all Standing Committee
and other canons and rules regarding the borrowing of
funds and the acquisition of property.
- Interest Rate.
For Clergy. The Trustees will charge an interest rate
equal of 250 basis points below the interest rate on the
first mortgage (in instances when the first mortgage is
a fixed-rate mortgage) or an interest rate equal to 250
basis points below the interest rate the first mortgage
lender is charging for 30-year fixed-rated mortgages (in
instances when the first mortgage is a variable or adjustable
rate mortgage). [100 basis points equals 1%; therefore,
if the 30-year fixed-rate mortgage is 10%, the rate for
the loan from the Housing Loan Fund will be 7.5%]
For Congregations. A rate of at least 5% will be the expected
rate, but the Trustee’s are free to charge a rate
consistent with the need of the congregation.
- Repayment.
Housing Loans shall be repaid with regular monthly payments
of principal and interest over a period not to exceed
the length of the commercial mortgage or 20 years, whichever
is longer. There shall be no penalty for pre-payment of
the loan.
- Early Payment.
The loan shall be due and payable if any of the following
circumstances occur:
a. If to the clergy person, The clergy
person is no longer canonically resident or physically
resident in the Diocese of Rochester.
b. If to the clergy person, The clergy person is no longer
employed in a ministry of the Episcopal Diocese of Rochester
or in a church-related ministry that is approved by the
Bishop of the Diocese of Rochester.
c. The house is sold by clergy or congregation.
Note, selling of property by a congregation will be subject
to canons of the Diocese.
d. If owned by a clergy person, the house
is no longer the primary residence of the clergy person.
e. When owned by the clergy person, the
clergy person dies, except the Diocese will abide by all
laws regarding marital property upon the death of the
clergy person.
f. The Clergy person is the owner and
is divorced or separated and no longer residing in the
home, except as is required by the division of marital
property or other laws.
g. The first mortgage is paid off. The
borrower may request and the committee may consider continuing
the Diocesan Loan under these circumstances, provided
there has been no significant change in the financial
situation of the borrower. The Diocese will secure a first
mortgage.
h. The first mortgage is in default,
the borrower fails to meet the terms of the mortgages
or insurance is not provided to cover both the first and
second mortgage.
- Re-negotiation.
a. If the clergy person renegotiates
the interest rate of the first mortgage, she/he may apply
to the Bishop or his/her designee for a change of the
rate of interest being charged on the Housing Loan Fund
loan.
b. If the clergy person or congregation
has unusual financial problems and re-negotiation of the
loan terms will, in the judgment of the Bishop’s
office, enable the person to remain in the home, or the
congregation to keep the house, the loan may be restructured.
- Application.
All applications for loans shall be made in writing to
the Bishop’s office, addressed to the Canon for
Finance, Resources and Community Development, and shall
include:
a. A full description of the property,
including any improvements on it, which the Applicant
proposed to purchase or renovate (if a congregation);
b. A copy of the purchase contract, if
this is a purchase.
c. An appraisal by a licensed residential
real estate appraiser, which shall show an appraised value
and contents of not less than 100% of the total of the
sum of the first mortgage and the loan from the Clergy
Housing Loan Fund. Whenever possible, the applicant or
the Loan Committee will try to obtain the appraisal performed
by the first mortgage lender. If there is any cost for
obtaining the appraisal, the purchaser will pay this cost.
In some circumstances, the assessed value of the taxing
authority may be used, at the discretion of the Bishop’s
office.
d. If a clergy person, a commitment,
by a recognized and responsible institutional mortgage
lender, to approve a mortgage loan (the “Principal
Mortgage” or “First Mortgage”) The loan
from the Housing Loan Fund not be more than 25% of the
appraised or assessed value of the home.
e. If a clergy person, a current statement
of the assets and liabilities and the total family income
of the applicant.
f. If a congregation, the most recent
year’s audit. Congregations must be in good standing
with the Diocese and shall obtain all approvals to purchase
property and or renovate property and to borrow funds
required by the canons and standing committee of the Diocese.
- Approval.
The Bishop or his/her designee, shall notify the applicant
of action taken on the loan request. If approved, the
loan proceeds shall be payable in full at the time of
the closing and funding of the First Mortgage if there
is such funding; the Loan from the Trustees shall be “closed”
at the same time and as soon as funds are available and
all approvals required have been obtained. The loan will
be reported to the Audit and Finance Committee of the
Trustees at their next regularly scheduled meeting. It
shall become part of the regularly scheduled reports to
the Trustees.
- Loan Security.
If a clergy person, as security for repayment of the loan,
the borrower, shall deliver to the lender (1) an indenture
of second mortgage, in form satisfactory to the lender,
on the property being acquired and (2) proof that the
appraised or assessed value is sufficient to cover both
the first and second mortgages. (3) In the event that
(2) cannot be provided or there is question as to its
adequate value, a policy of life insurance underwritten
by an established insurer, payable to the lender, covering
whatever amount of principal, if any, may be due to the
lender on account of the loan at the time of the borrower’s
death.
If a congregation is the borrower, a note authorized by
the vestry shall be executed and notarized by the authorized
representative and kept on file in the Diocesan office.
No mortgage on the property will be required in this event.
- Default.
On the occurrence of any event of default (as defined
below), the full then unpaid principal amount of the loan,
plus any accrued interest, shall become due and payable
in full.
Any of the following shall be an event of default:
In the case the borrower is the clergy person:
a. Failure by the borrower to pay any
installment of interest or principal on the loan or on
the first mortgage continuing for more than thirty (30)
days after its due date and more than thirty (30) days
after written notice of intent to invoke such failure
as an event of default shall have been mailed to the borrower.
b. Filing by the borrower for bankruptcy
under any Federal or State bankruptcy law.
c. Failure
by the borrower, after receipt of the initial proceeds
of the loan, to close title within a period of four months
thereafter without the approval of the Bishop.
d. Failure by the borrower to pay any
real estate taxes, or governmental fees due on the premises
when and as due.
e. Failure by the borrower to provide
to the lender evidence of current insurance on the property
equal in value to an amount not less than the aggregate
value of all mortgage liens (including but not limited
to the lender’s mortgage lien) against the property,
payable to the lender and other prior lienors as their
interest shall appear.
f. Failure by the borrower to keep current
and in force the policy of life insurance referred to
in Paragraph 10 above, if required.
g. Sale or further encumbrance of the
premises by the borrower without the permission of the
lender.
h. Failure by the borrower to occupy
the house, to keep the property in compliance with codes
or to maintain the appraised value of the residence.
i. Death, Divorce or separation of the
borrower, except as otherwise stated in this policy and/or
required by law.
If the Borrower is a congregation:
a. Failure by the congregation to pay
any installment of interest or principal on the loan for
more than thirty (30) days after its due date and more
than thirty (30) days after written notice of intent to
invoke such failure as an event of default shall have
been mailed to the congregation.
b. Failure by the congregation, after receipt of the initial
proceeds of the loan, to close title within a period of
four months thereafter without the approval of the Bishop.
c. Failure by the congregation to pay
any real estate taxes, or governmental fees due on the
premises when and as due.
d. Sale or further encumbrance of the
premises by the borrower without the permission of the
Diocese (including the Bishop’s Office and the Standing
Committee).
e. Failure by the borrower to have the
house occupied by the clergy person unless approved to
do so by the Diocese, to keep the property in compliance
with codes or to maintain the appraised value of the residence.
f. Failure on the part of the congregation
to meet with the Bishop’s office in case of any
of the proceeding (a-e) to discuss the default and to
work out a payment and/or occupancy plan.
Contact: Canon
Karen Noble Hanson
knhanson@rochesterepiscopaldiocese.com
Monday,
February 04, 2002 |
