Health & Saf. Code, § 52513

The terms of the contract with a qualified mortgage lender for the buy-down mortgage plan shall be established by regulations of the agency adopted by the policy committee. Payments to a qualified mortgage lender under such contract shall not exceed the capitalized cost to the lender of the difference between market interest and the effective interest rate to the borrower under the buy-down program, plus any reasonable and demonstrated administrative costs, and provision shall be made for return by that lender to the agency, for credit against the borrower’s note obtained by the agency pursuant to Section 52514, of any sums used to purchase a buy-down of the effective interest to the borrower on the mortgage loan and which have been unearned by the lender by virtue of prepayment of the mortgage loan for any reason, prior to the termination of the buy-down period. The buy-down program shall not result in an effective interest rate to the borrower which is more than 5 percent below market interest and such effective rate to the borrower, or monthly payment by the borrower, shall be adjusted annually in equal increments until, at the end of the sixth year, it is equal to market interest as determined at the initiation of the loan, and may, as determined by regulations of the agency adopted by the policy committee, exceed market interest in ensuing years in such amount as is necessary to amortize the security interest of the agency as provided in Section 52514, if the agency determines pursuant to Section 52514 that the term of the note and security interest securing the agency’s participation is extended beyond the sixth year.