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§ 107.302. Wrap-Around Loans.

10 CA ADC § 107.302Barclays Official California Code of Regulations

Barclays California Code of Regulations
Title 10. Investment
Chapter 2. Savings and Loan Commissioner (Refs & Annos)
Subchapter 7. Operations--Loans
Article 3. Wrap-Around Loans
10 CCR § 107.302
§ 107.302. Wrap-Around Loans.
Currentness
For the purpose of Section 7102 of the law, a wrap-around loan made by an association to a borrower on the security of a trust deed or mortgage on real property shall, notwithstanding the fact that such real property is subject to a preexisting loan, be deemed to be a loan secured by a first mortgage or first trust deed upon real property, if each of the following conditions is met:
(a) There is no more than one preexisting loan on the real property;
(b) The total amount of the obligation of the borrower to the association under the wrap-around loan is not less than the sum of (1) the amount disbursed by the association on account of the wrap-around loan and (2) the outstanding balance of the obligation secured by the preexisting loan;
(c) The total amount of the obligation of the borrower to the association under the wrap-around loan does not exceed applicable limitations of the law;
(d) The instrument evidencing the wrap-around loan is recorded, and the borrower is insured under a policy of title insurance in an amount not less than the total amount of the obligation of the borrower to the association under the wrap-around loan;
(e) The association either:
(1) Pursuant to Civil Code Section 2924b, files for record in the office of the recorder of the county in which the real property is located a duly acknowledged request for a copy of any notice of default or of sale under the preexisting loan, or
(2) Otherwise arranges with the recorder of any county in which the real property is located to be advised in case of the filing for record of any notice of default or of sale with respect to any obligations secured by the preexisting loan;
(f) The association (1) holds in reserve funds pledged by or on behalf of the borrower in an amount sufficient to cover at all times the unpaid balance of the preexisting loan and (2) may at any time use such funds to pay all or any part of the unpaid balance of the preexisting loan. The term “unpaid balance of the preexisting loan” as used in this subsection means the unpaid balance of the preexisting loan as of the first day of the current calendar year, after adjustment for advances and payments on principal during the preceding calendar year;
(g) The association enters into such agreements and covenants with the borrower and/or the preexisting lender as are necessary to establish adequate safeguards and controls with respect to its position and security under the wrap-around loan including, among other things, but not limited to, the following:
(1) Default under the preexisting loan will constitute a default under the wrap-around loan;
(2) The preexisting lender will be directed to send copies of all notices and correspondence to the association;
(3) The wrap-around lender, in the event of default of the preexisting loan, will be authorized to make any payments and to perform any acts under the preexisting loan which the borrower is required or permitted to do;
(4) The association, borrower and preexisting lender make such other and further covenants and agreements as the commissioner deems necessary and proper to protect and safeguard the wrap-around loan.

Credits

Note: Authority cited: Section 5255, Financial Code. Reference: Sections 7102, 8707 and 8708, Financial Code.
History
1. Change without regulatory effect renumbering former Section 176.2 to Section 107.302 (Register 87, No. 14). For prior history, see Register 76, No. 31.
This database is current through 6/7/24 Register 2024, No. 23.
Cal. Admin. Code tit. 10, § 107.302, 10 CA ADC § 107.302
End of Document