OAR 274-020-0344: Fixed Interest Rate

(1) Subject to the provisions of this rule, effective June 1, 1989, borrowers with ODVA loans being charged 7.2 percent variable interest may convert the loan to a fixed interest rate. (2) Subject to the provisions of this rule, effective February 1, 1990, borrowers with ODVA loans being charged 7.7 percent variable interest may convert the loan to a fixed interest rate. (3) The following loans do not qualify for the interest rate conversion: (a) Accounts with 12 or less monthly payments, or one annual payment remaining before the loan will be paid in full; (b) Accounts of borrowers in bankruptcy; (c) Accounts in foreclosure; (d) Accounts two or more months delinquent; (e) Accounts coded as questionable loans (propriety of loan being investigated); (f) Loans, any portion of which is being charged an interest rate other than 7.2 percent or 7.7 percent (composite interest rate). (4) Accounts on semi-annual or annual payment schedules can convert to a fixed interest rate. If the holder of a loan with semi-annual or annual payments would like a fixed interest rate loan, all provisions of this rule will apply, except sections (7) and (8) of this rule. Matters covered by sections (7) and (8) of this rule will be negotiated with the borrower. (5) The remaining term on loans converted to a fixed interest rate will be shortened. The shorter term will be arrived at by using the current retirement date, or the remaining term on loans paying off earlier than the retirement date (larger than required payments were made), and deducting ten percent: (a) The maximum term on loans converting to a fixed interest rate shall be 40 years; (b) The fixed interest rate available will be based upon the remaining term of the loan (after shortening the term as provided above) and shall be as follows: Remaining Term On Loans Being Charged 7.2% Interest — Fixed Interest Rate: (A) 5 years or less — 7.3%; (B) 5 years 1 month to 9 years 11 months — 7.4%; (C) 10 years to 14 years 11 months — 7.5%; (D) 15 years to 19 years 11 months — 7.6%; (E) 20 years to 24 years 11 months — 7.7%; (F) 25 years or more — 7.8%. (c) Loans Being Charged 7.7% Interest — Fixed Interest Rate: All Loans — 7.8%. (6) In order to convert a 7.2 or a 7.7 percent variable interest rate loan to a fixed interest rate loan, the borrower must agree to the following: (a) Each year ODVA may adjust the payment on principal and interest to an amount that will cause the loan to pay in full by its retirement date. The payments on principal and interest will not be reduced to an amount lower than the amount established at the time of conversion to a fixed interest rate; (b) If ownership of the property securing the ODVA loan is transferred, or ownership of any portion of the property securing the loan is transferred, the interest rate on the loan will be as provided by ORS 407.275(2), the due date on the loan will be the due date on the latest Note and Mortgage, Trust Deed, or Security Agreement, and the agreement allowing ODVA to annually adjust the payment on the loan to assure proper amortization will terminate. (7) The procedure for implementing the interest rate conversion on loans being charged 7.2 percent variable interest rate shall be as follows: (a) Whether the account qualifies for interest rate conversion will be determined by the status of the account on June 1, 1989, if payments are due on the first day of the month or June 15, 1989, if payments are due on the 15th day of the month; (b) Borrowers desiring to make the interest rate conversion must notify ODVA in writing, by either mailing a post card furnished by ODVA, or by other written notification: (A) By June 30, 1989, if payments are due on the 1st day of the month; (B) By July 14, 1989, if payments are due on the 15th day of the month. (c) Interest owing on June 1, 1989, or June 15, 1989 (as applicable) shall be added to the balance of the loan on August 1, 1989, or August 15, 1989 (as applicable); (d) Any “paid ahead” or “delinquency” existing on the loan on June 1, 1989, or June 15, 1989, (as applicable), will be eliminated; (e) The new terms of the loan shall be effective August 1, 1989, or August 15, 1989, (as applicable) and the new payments will begin September 1, 1989, or September 15, 1989 (as applicable). (8) The procedure for implementing the interest rate conversion on loans being charged 7.7 percent variable interest shall be as follows: (a) Whether the account qualifies for interest rate conversion will be determined by the status of the account on February 1, 1990, if payments are due on the 1st day of the month or March 15, 1990, if payments are due on the 15th day of the month; (b) Borrowers desiring to make the interest rate conversion must notify ODVA in writing, by either mailing a postcard furnished by ODVA, or by other written notification: (A) By February 23, 1990, if payments are due on the 1st day of the month; (B) By April 9, 1990, if payments are due on the 15th day of the month. (c) Any “paid ahead” or “delinquency” existing on the loan on February 1, 1990, or March 15, 1990 (as applicable), will be eliminated; (d) The new terms of the loan shall be effective April 1, 1990, or May 15, 1990 (as applicable) and the new payments will begin May 1, 1990, or June 15, 1990 (as applicable). (9) This rule does not apply to contracts for the purchase of State-owned property.