4.04.001_Guidelines for Housing Rehab Program for Owner-Occupied and Rental PropertiesPate of Notice: 7/11/2007
Staff Contact: Cas Ellena, Housing Programs Manager
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LDepartment: Community Development
Copy to:
[File Title -1: 1 City Managers Policy Binder - Housing & Redevelopment 530 4
Fife Title -2: CDC General File (2007)
File Title -3:- -'
LSubtab Title:
Council Agenda Chron
TERRI GRIFFIN, DEPUTY CITY CLERK
for JUDY HAUFF, CITY CLERK
RESOLUTION NO. 2007-17
A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE
CITY OF ROHNERT PARK CALIFORNIA ("CDCRP"), APPROVING
REVISED GUIDELINES FOR THE HOUSING REHABILITATION PROGRAM FOR
OWNER -OCCUPIED AND RENTAL PROPERTIES
WHEREAS, in July of 1999, the CDCRP approved an Owner -Occupied Housing
Rehabilitation Program and Program Design (the "Program"); and
WHEREAS, Since July of 1999, the CDCRP has contracted with the Sonoma County
Community Development Commission ("SCCDC") to administer the Program; and
WHEREAS, in October of 2004, the CDCRP approved minor changes to the Program
Design to be able to assist more very low- and low-income households; and
WHEREAS, On September 13, 2005, the CDCRP approved revisions to the Program to
allow the Program to be more effective and self-sustaining, by providing fully secured loans
rather than grants and allowing for the rehabilitation of low-income multi -family rental units in
addition to single family homes; and
WHEREAS, the SCCDC approved additional revisions to its program on April 10, 2007
to allow the Program to more effectively address California Community Redevelopment Law
requirements, health and safety issues and to further define financial eligibility; and
WHEREAS, the CDCRP wishes to utilize the same Program design as the SCCDC and
to allow for the Program to more effectively address California Community Redevelopment Law
requirements, health and safety issues and to further define financial eligibility.
NOW THEREFORE BE IT RESOLVED, that the Community Development
Commission of the City of Rohnert Park hereby approves and adopts the Housing Rehabilitation
Program Design for Owner -Occupied and Rental Properties, as written and attached as Exhibit
"A" in confonnance with the Program Design adopted by the Sonoma County Community
Development Commission on April 10, 2007.
BE IT FURTHER RESOLVED, that the Community Development Commission of the
City of Rohnert Park hereby authorizes the Executive Director of the Commission, on behalf of
the CDCRP, to execute contracts, agreements, promissory notes, affordability covenants and any
other documents regarding the Housing Rehabilitation Program for Owner -Occupied and Rental
Properties with recipients of the Program in accordance with the approved and adopted revisions
to the Housing Rehabilitation Program Design for Owner -Occupied and Rental Properties.
DULY AND REGULARLY ADOPTED this 10"' day of July, 2007.
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF ROHNERT PARK
Chairperson
Attest:
9n
qty Clerk
BREEZE: AYE MACKENZIE: AYE SMITH: AYE STAFFORD: AYE VIDAK-MARTINEZ: AYE
AYES: (5) NOES: (0) ABSENT: (0) ABSTAIN: (0)
(2)
COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF ROHNERT PARK
HOUSING REHABILITATION PROGRAM DESIGN
OWNER -OCCUPIED AND RENTAL PROPERTIES
INTRODUCTION
A. Purpose & Objectives:
1. The purpose of the Housing Rehabilitation Program is to maintain
residential properties within the City of Rohnert Park ("City") which are
occupied by low-income households.
2. The primary objective of the Program is to provide decent, safe and
sanitary housing for low-income residents of the City through the
correction of actual or potential health and safety problems in existing
structures.
3. The secondary objectives of the Program are: 1) to preserve the City's
affordable housing stock; and 2) to assist in the process of neighborhood
revitalization.
B. Authority:
The five members of the City Council of the City of Rohnert Park, acting in
their capacity as Commissioners, form the governing body for the
Community Development Commission of the City of Rohnert Park
("CDCRP"). This Program Design, containing the policies which form the
framework for the Housing Rehabilitation Program, has been adopted by
the CDCRP Commissioners. No revisions may be made hereto without
the express action of the CDCRP Commissioners.
2. The Executive Director of the CDCRP is hereby granted the authority to make
exceptions to the policies contained in this Program Design to the extent
necessary to provide assistance required to correct health and safety hazards
that are deemed an imminent threat to the occupants' physical well-being.
3. The CDCRP has contracted with the Sonoma County Community
Development Commission ("SCCDC") to allow the SCCDC to act on behalf of
the CDCRP to provide the administration and implementation of certain
portions of the CDCRP Housing Rehabilitation Program. The Guidelines
contained herein are based upon the Sonoma County CDC Housing
Rehabilitation Guidelines (dated April 2005) to enable more effective program.
administration. Therefore, these Guidelines are written to provide authority to
either the CDCRP, or the SCCDC acting on behalf of the CDCRP.
CDCRP
July 2007
C. Program Funding:
Funding for this program will be from Redevelopment funds as designated from
time to time by the CDCRP.
11. ELIGIBILITY
The CDCRP shall not discriminate in the provision of financial assistance because of
race, color, national origin, religion, sex, familial status or disability.
A. Conflict of Interest: No member of the governing body of the City of Rohnert
Park and no other official or employee or agent of the City, or CDCRP who
exercises any policy decision-making functions or responsibilities in connection
with the planning and implementation of the Rohnert Park Redevelopment
programs shall directly or indirectly be eligible for the housing rehabilitation
program.
B. Ownership & Residency_ The applicant must be the legal owner of the real
property, or the registered owner of the mobile home, to be rehabilitated.
For owner -occupied properties, the property must be occupied by the
owner as his or her principal residence.
2. The name of non -occupant parents, ex -spouses and/or children may be
on the title to the property in addition to the name of the owner-
occupant(s). No other non -occupants may be listed on the title.
3. Applicants who occupy and control a residential property through a
revocable or irrevocable trust, a life -estate or other similar arrangement
through which the applicant and/or one or more non -occupant parents, ex -
spouses and/or children are trustees or hold title to the property, shall be
eligible for a loan if the applicant has the legal right to encumber the
property.
a. If the trustee and/or other non -occupant on title is not the parent,
ex-spouse and/or child of the applicant, the applicant will not be
eligible for financial assistance under this program.
b. If the trust, life estate or other arrangement requires the trustee or
other non -occupant on title to approve any encumbrance on the
property, the trustee or other non -occupant on title will be required
to co-sign the rehabilitation loan documents and shall be equally
liable to repay the loan.
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July 2007
C. Eligible Properties: Subject to funding availability, Redevelopment loans may be
made for improvements to mobile homes, single-family and multifamily
residential properties within the boundaries of the City.
Mobile homes must be legally sited.
2. Properties which have benefited previously through a CDCRP grant or
loan program may be eligible for the program upon the review and
approval of the CDCRP Director or his/her designee and if all prior loans
are fully repaid.
3. Secondary residences (e.g. summer homes, guest cottages not used
as rentals) are not eligible for the program.
4. Condominiums and co -housing units are not eligible.
D. Displacement: Rental property owners shall provide certification of the following:
1. The proposed rehabilitation work will not cause permanent displacement
of any of the tenants currently residing at the project.
2. No tenant has been, nor will be, forced to move from the project so that
the project may qualify for the Housing Rehabilitation Program.
E. Income and Asset Limits: All occupant households must demonstrate income
eligibility.
Eligible properties shall be occupied by low- income households with
incomes not to exceed 80% of median area income adjusted for family
size. At least 51 % of the units in a multifamily complex and one unit in a
duplex must be occupied by income -eligible tenants.
2. Median area income is determined by the U.S. Department of Housing
and Urban Development (HUD) and the California Department of Housing
and Community Development (HCD).
3. Household income is computed as defined in Section Vill.
4. There shall be a cap on the level of assets allowed for program eligibility for
owner -occupied properties.
a. Household assets cannot exceed 200% of median area income for
a household of one person* except as provided for below.
b. Elderly and/or permanently disabled households may have assets
not exceeding 400% of median area income for a household of one
person*.
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July 2007
*As of April 1, 2007, the median area income for a household of one
was $52,600.
111. LOAN TERMS AND CONDITIONS
The CDCRP will offer amortized and deferred -payment loans with below-market interest rates.
Each of these is described in greater detail below.
A. Amortized Loans: Only amortized loans will be offered to rental property owners.
Amortized loans will be offered to eligible, owner -occupant, low-income
households with incomes up to 80% of median area income who are able to
afford the regular monthly payments on the loan. The owner -occupant household
will be considered able to afford monthly payments on an amortized loan if their
total monthly housing costs are less than 30% of their gross monthly income.
Monthly housing costs shall be defined as the sum of all mortgage payments
including the rehabilitation loan payments, property taxes, homeowner's
insurance, homeowner's association dues, and utility costs. Housing costs for
mobile home owners shall also include the monthly park space rent. Utility costs
shall include gas, electricity, other heating fuel, and water, sewer, and garbage
service, and shall be calculated using allowances established by the Sonoma
County Housing Authority.
1. Term: All amortized loans will be for a 20 -year term. Except as allowed
under Section VII B, amortized loans shall be immediately due and
payable in full prior to 20 years should one or more of the following occur:
1) the borrower dies; 2) the property or any interest therein is sold,
conveyed or transferred; 3) the borrower no longer occupies the property
as his or her principal residence for reasons other than medical treatment,
disability, education, family matters or similar situation which the CDCRP
Director or his/her designee approves in writing and which requires a
temporary alternate residence; or 4) the borrower does not make
payments when due.or is in default on any other loan condition.
a. A borrower may prepay the outstanding loan balance, or any
portion thereof, at any time without penalty.
b. All payments on the amortized loan shall be applied first to the
interest due and then to the principal balance of the loan.
2. Interest: The annual interest rate for amortized loans is 3%.
3. Loan Amount: The maximum amount of an amortized loan is $50,000 for
a single-family house or mobile home on owned land and $24,000 for a
mobile home on a rented space. Loans for multifamily units are set at a
maximum of $25,000 per unit. Exceptions may be made in cases where
hazard mitigation is required as a condition for the rehabilitation work.
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CDCRP
July 2007
B. Deferred -Payment Loans: The CDCRP shall offer loans on a deferred -payment
basis to eligible, owner -occupant, low-income households with incomes at or.
below 80% of median area income who cannot afford monthly payments on an
amortized loan at the time of application. The applicant household will be
considered unable to afford monthly payments on an amortized loan if their
monthly housing costs, as defined in Section IIIA, exceed 30% of their gross
monthly income.
Term: The loan term shall be 20 years. No payments shall be required
prior to the twentieth anniversary of the loan, however, except as allowed
under VII B, the deferred -payment loan shall be immediately due and
payable in full, prior to the twentieth anniversary of the loan, should one or
more of the following occur: 1) the borrower dies; 2) the property or any
interest therein is sold, conveyed or transferred; 3) the borrower no longer
occupies the property as his or her principal residence for reasons other
than medical treatment, disability, education, family matters or similar
situations which the CDCRP Director or his/her designee approves in
writing and which require a temporary alternate residence; and 4) the
borrower is in default on any other loan condition.
a. At the beginning of the twenty-first year, the deferred -payment loan
is due and payable in full.
b. A borrower may repay the outstanding balance of the loan, or any
portion thereof, at any time without penalty.
A borrower may choose to make irregular, periodic payments on
the deferred -payment loan. All such prepayments will be credited
first to the interest due and then to the principal balance of the
loan.
2. Interest: Interest will be simple interest. Interest shall accrue on the
unpaid principal balance from the date on which the Promissory Note is
executed. The annual interest rate for deferred payment loans is 3%.
3. Loan Amount: The maximum amount of a deferred -payment loan is
$50,000 for a single-family house or mobile home on owned land and
$24,000 for a mobile home on a rented space. Exceptions may be made
in cases where hazard mitigation is required as a condition for the
rehabilitation work.
C. Relocation Requirements: Owners of rental properties must agree to comply with
all applicable federal and state relocation laws and regulations.
If temporary relocation of tenants is required during rehabilitation, the
borrower shall be responsible for locating comparable temporary housing
which is suitable, decent, safe and sanitary.
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CDCRP
July 2007
2. The rental property owner shall be responsible for paying all reasonable
out-of-pocket expenses incurred by the tenants in connection with the
temporary relocation including the cost of moving to and from the
temporarily occupied housing and any increase in monthly rent and utility
costs at such housing.
3. The rental property owner shall deposit sufficient funds into an approved
escrow account to fully cover the estimated temporary relocation costs of
the project. The CDCRP shall issue payments from the escrow account to
the tenants, or to the rental property owner if payment has already been
made to the tenants, for reimbursement of all reasonable out-of-pocket
relocation expenses incurred.
D. Affordabilitv Restrictions:
1. For any substantial [need to define "substantial"] rehabilitation
assisted with Redevelopment funds, a covenant will be recorded
restricting continued occupancy of the property to low- or very -low income
households for forty-five (45) years for owner -occupied property and fifty-
five (55) years for rental property as required by California Community
Redevelopment Law. Substantial rehabilitation is defined as
rehabilitation, the value of which constitutes 25% or more of the after
rehabilitation value of the dwelling, inclusive of land value. Said covenant
shall run with the land.
2. For non -substantial [need to define "non -substantial"] rehabilitation
of owner -occupied single-family properties assisted with Redevelopment
funds, a purchase option will be recorded in favor of the Commission for
fifteen (15) years. Single-family property is defined as having only one
unit. For mobile homes, the purchase option period shall be for five (5)
years. The Commission will exercise the option if (a) the owner decides to
sell the property during the term of the option, (b) the Commission
identifies a qualified buyer, and (c) the Commission has adequate funding
to support, if needed, said buyer's acquisition of the property at market
price. If the Commission does not exercise the option, the seller can sell
the property on the open market. The specific terms of the purchase
option shall be detailed in an Option Agreement, available in template
form for prospective borrowers to review.
3. For non -substantial rehabilitation of rental properties assisted with
Redevelopment and/or CDBG funds, a covenant will be recorded
restricting continued occupancy of the units to low- and very low-income
households for twenty (20) years. Said covenant shall run with the land.
IV. ELIGIBLE IMPROVEMENTS
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CDCRP
July 2007
A. Eligible Improvements: Improvements must be of a permanently fixed nature.
Repairs and improvements should be completed in the following priority order.
Improvements to correct health and safety hazards, including lead hazard
removal, and to maintain the structural integrity of the building.
2. Repairs to correct cited code violations.
3. Repairs to correct other code items.
4. Repairs to correct incipient code items.
B. Ineligible Improvements:
1. Items which exceed the CDCRP's established moderate quality standards
for fixtures, windows, floor coverings, finishes, and other items.
2. Improvements of a recreational nature are not eligible.
3. Luxury improvements.
C. In no event shall the CDCRP approve loans for work unless all identified items
described in IV.A:1 and 2 are corrected as a result of the work carried out in
conjunction with the CDCRP 's loan.
D. The CDCRP shall not approve loans for work required to repair a condition for
which the applicant has received, or will receive, an insurance settlement or
funds from another source (such as FEMA or SBA) to pay for the repair except
to augment the insurance or other funds in cases where such funds are
insufficient to make the required repairs in compliance with all applicable codes
or ordinances.
E. All work funded in whole or in part by the CDCRP is subject to the permit
processes of the State, County and/or city in which the property is located.
All work must be done according to standards acceptable to the Sonoma
County Permit and Resource Management Department, the State of
California Department of Housing and Community Development, and/or
the building inspection department of the city in which the property is
located.
2. The proper permit(s) shall be obtained for all work which requires such
permit(s). The cost of permits may be part of the loan.
F. "Self -Help" work by the owner -occupant may not be a part of the contract or
loan. No "volunteer" assistance is allowed primarily for liability reasons.
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V. LOAN PROCEDURES
A. Application Process:
1. All loan applications will be processed and evaluated on a first-come, first-
served basis. Applications will be considered for assistance based upon
the order of receipt of completed applications by the SCCDC. An
application will be considered to be complete when all required
information has been supplied by the property owner(s) and tenant
households. If the property is located in a Redevelopment Area, available
Redevelopment funds will be used before using CDBG funds.
2. All applicants will complete a pre -application and furnish rehabilitation
staff with all required verifications. The information in the pre -application
will be used to determine the applicant's initial eligibility for assistance.
3. After initial eligibility has been established, a thorough inspection of the
property will be carried out by SCCDC staff. If necessary, additional tests
and/or inspections by third parties will be conducted. A rough scope of
work and cost estimate will be developed based on the inspection(s), tests
and consultation with the property owner.
4. After review and acceptance of the rough scope of work by the
homeowner, SCCDC staff will prepare a formal loan application.
B. Loan Approval: SCCDC staff shall exercise sound underwriting practices in all loan
transactions.
In all instances, the SCCDC's underwriting standards will be employed in
a consistent, equitable manner. The SCCDC will at all times utilize sound
judgment in making loans to ensure that the public funds are adequately
protected. The SCCDC's underwriting standards will normally follow
private lending practices but may in some cases be more lenient.
2. Loan applications shall be subject to normal commercial underwriting
criteria by the SCCDC. Such criteria may include, but are not limited to:
credit reports, appraisals, title.reports, cash-flow analyses, etc.
3. The following services may be provided to all applicants. There will be no
charge for these services if the CDCRP does not approve the loan. If the
applicant makes a voluntary decision not to proceed with the loan after
approval, and if there is no other reason why the project cannot proceed,
the owner may be requested to reimburse the SCCDC for all direct costs
incurred. Charges for the following may be included in any loan made:
a. Appraisal of the market value of property.
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CDCRP
July 2007
b. Credit report on each owner of the property or, if ownership of the
property is held in trust, a credit report on each trustor and trustee.
C. HCD title search for mobile homes and/or preliminary title report
and title insurance for real estate.
d. Structural pest control and other inspections or tests necessary to
determine property condition.
e. Lead and asbestos risk assessment(s).
4. The following underwriting criteria will be used to evaluate each
application:
a. Loan applicants must be the legal owner of the real property, or the
registered owner of the mobile home, and must have the authority
to encumber the property.
b. A preliminary title report shall be obtained for all real estate loans
(all loans except mobile homes on rented land).
C. A formal title search will be conducted by the California Dept. of
Housing and Community Development for all mobile home loans.
d. Owner -occupants receiving deferred payment loans are exempt
from the credit history requirements of this section. A consumer
credit report will be obtained for all other owners, trustors or
trustees of the property. Key factors to be considered in reviewing
the credit history are the borrower's ability to manage financial
affairs and budget for debt and necessities.
e. At the discretion of the CDCRP, a loan may be approved despite
isolated instances of slow payments or even more significant past
problems, based upon careful analysis of the contributing causes
and circumstances. The owner's demonstrated ability to
reestablish a good credit standing, to maintain a good repayment
pattern on housing -related debts, and to build equity in the property
are all factors to be considered.
Unreported income, outstanding judgments, unreported property
liens and poor credit ratings indicate that an applicant is a poor risk
for the loan program. Unreported income is fraudulent and will
result in denial of a loan.
g. Property taxes and mobile home registration fees must be current
in order for an applicant to be considered for a loan and must be
paid when due during the life of the loan.
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CDCRP
July 2007
h. Property insurance, including fire (and flood if applicable), will be
required during the life of the loan. If an applicant does not have
sufficient insurance to cover the amount of the CDCRP 's loan and
all senior liens or the value of the improvements, whichever is less,
or if the policy has lapsed, deficiencies must be corrected as a
condition of loan approval. The CDCRP shall be named on the
policy as mortgagee/loss payee for the full term of the loan.
For single-family, and multifamily dwellings, loans may be made
that result in a loan -to -value ratio of up to 100%. Property value
may be established using the current tax assessment, at a base
value of $200,000, or through an appraisal prepared' by a State
licensed or certified real estate appraiser, which ever is greater.
j. For mobile homes, loans may be made that result in a loan -to value
ratio of up to 100%. The value of the mobile home will be
established through a property appraisal prepared by a State
licensed or certified real estate appraiser.
k. For properties assisted with Redevelopment funds, the after -
rehabilitation value of the property shall be presumed to equal the
property value as determined above, plus the total cost of the
rehabilitation work to be completed under this program.
Senior liens on any property will be allowed only if:
The loan is not negatively amortized.
ii. The loan terms do not contain provisions for any balloon
payment which would come due during the term of the
CDCRP loan; and
iii. Open lines of credit are calculated as the maximum credit
available to the borrower for purposes of determining loan -
to -value ratio.
6. Each application will be summarized and a recommendation for loan
approval or disapproval will be made to the CDCRP. The
recommendation will include the maximum recommended loan amount
and repayment terms.
7. The CDCRP will make the final decision on each application.
8. Discretion of CDCRP Staff: It shall be within the purview of the CDCRP, to
disapprove any loan application at any stage of processing through any
formal or informal action which is consistent with sound underwriting practices
and fair housing lending procedures.
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CDCRP
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C. Loan Documents: After selection of the contractor by the property owner,
SCCDC staff will prepare loan documents including the Fair Lending Notice,
Promissory Note, Deed of Trust and/or Mobile Home Security Agreement, Truth -
in -Lending Disclosure, Notice of Right of Rescission and Request(s) for Notice of
Default and Sale.
All legal owners of the real property, and all registered owners of the
mobile home, shall execute all loan documents.
2. Non -occupant parents, ex -spouses and/or children who are listed on title
to the property will be required to co-sign the rehabilitation loan
documents and shall be equally liable to repay the loan. Spouses and
registered domestic partners shall sign the loan documents unless title is
clearly held as the owner's sole and separate property.
3. Any owner contributions necessary for completion of the rehabilitation
project shall be placed in the SCCDC's rehabilitation escrow account for
disbursement to the contractor, or in payment of other loan costs, on
behalf of the property.
VI. CONSTRUCTION
A. Competitive Bidding: After a loan is approved, SCCDC staff will coordinate the
competitive bidding process to obtain fixed-price bids from qualified, licensed
contractors.
1. The SCCDC shall determine whether a contractor is qualified through a
pre-screening process. All contractors must submit a contractor
application on the required forms to the SCCDC at, or prior to, the time of
submitting their first bid.
2. The property owner may select any responsible contractor whose bid
does not exceed 110% of the SCCDC staff's in-house cost estimate.
B. Construction Contract: The SCCDC staff will coordinate contracting for all
work funded through the rehabilitation loan or with owner contributions to the
project, manage the contracts, inspect the work and approve and disburse
payments.
1. The contract for the rehabilitation will be executed by the owner and the
contractor. The SCCDC staff will provide the contract form.
2. The SCCDC staff shall assist the owner in the control, supervision and
direction of the work to be performed under the contract.
3. Changes to the services to be provided under the contract and amounts to
be paid pursuant to the contract may be made only by written change
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CDCRP
July 2007
order by and between the owner and the contractor and only upon written
approval of the SCCDC's Executive Director or his/her designee.
4. During the period of performance of the contract, the owner shall not enter
into any additional agreements with the contractor, whether written or
verbal, without the written approval of the SCCDC's Executive Director or
his/her designee.
5. SCCDC staff will inspect each project during construction to assure that
work is progressing in a timely manner and that it is being carried out in
accordance with the Scope of Work.
a. Phase inspections will be made by SCCDC staff prior to the
disbursement of payments to the contractor. Any work requiring a
building or other permit must also have written approval by the
State, County and/or city building inspector.
b. The owner must accept all work before payment may be
authorized, except payment awarded by arbitration or legal
judgment.
6. Upon satisfactory completion of all work called out in the contract, the
property owner shall sign the Notice of Completion (except in the case of
mobile homes) which shall be recorded in the Sonoma County Recorder's
Office.
VII. LOAN ADMINISTRATION and COLLECTIONS - (Administered by the CDCRP)
A. Subordination: The CDCRP will subordinate the loan to a new loan only in the
case where the owner wants to refinance the first mortgage and the owner will
not take any cash out of the property nor will the CDCRP's financial position in
the property be negatively impacted in any way.
B. Transfer and Assumption: Owner -occupied rehabilitation loans provided through
this program cannot be transferred to, or assumed by, future owners of the
property except in the case of transfer to an occupant spouse, registered
domestic partner, or child. Such occupant spouse/domestic partner/child must
provide certification of occupancy. Redevelopment loans for rental properties
may be assumed by subsequent purchasers of the property at the discretion of
the CDCRP's Executive Director or his/her designee.
C. Amortized Loan Collections: The borrower shall make regular monthly payments
directly to the loan servicing agent as specified by the CDCRP. The CDCRP Director
shall have the authority to select an outside loan servicing agent or to collect loan
payments in-house. A loan servicing fee will be collected with each monthly payment.
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CDCRP
July 2007
D. Deferred -Payment Loan Collections: The borrower shall make full repayment of
the loan when due directly to the CDCRP.
Recipients of deferred -payment loans will be allowed to make periodic
prepayments directly to the CDCRP in order to reduce the amount of their
indebtedness.
2. Elderly and Disabled Borrowers: At the beginning of the twenty-first year,
the loan due date may be extended for households which qualify as
elderly (over 62 years of age) and/or permanently disabled provided that:
1) the borrower is still the owner -occupant of the property; 2) the borrower
isnot in default of any of the loan terms; and 3) the dollar amount of any
senior liens does not exceed the dollar amount of senior liens in effect
when the CDCRP loan was recorded; and 4) the borrower will pay a loan
modification processing fee of $500, which fee may be financed in the
principal balance of the deferred -payment loan. The deferred -payment
loan's new term and interest rate will be the less stringent of those
contained in this Program Design or those which may be in effect at the
time the loan modification is approved by the CDCRP. This provision shall
apply retroactively to all housing rehabilitation loans made by CDCRP,
notwithstanding any terms to the contrary that maybe contained in the
promissory note for any loan.
3. Elderly and Disabled Mobile Home Owners: In the unusual instance
where the fair market value of the mobile home at the time the loan is due
is less than the total amount due to the CDCRP plus any superior lien
against the property, it shall be the CDCRP's policy to forgive the
difference between the fair market value and the CDCRP's loan balance
plus any superior lien.
a. At the discretion of the CDCRP's Executive Director or his/her
designee, the fair market value of the property shall be determined
by either: 1) the purchase price paid pursuant to a sale of the
property; or 2) a qualified licensed real estate appraiser whose fee
shall be paid by the CDCRP.
b. If repayment is made prior to the time the loan is due according to
the terms of the Promissory Note and any other loan documents, or
if a loan becomes due through borrower's default of the loan terms,
this provision shall not apply.
E. Loan Defaults
If a borrower appears to be in default of one or more of the loan terms
contained in the Promissory Note, Deed of Trust, Mobile Home Security
Agreement or any other loan document, the CDCRP Executive Director shall
consult with the CDCRP's General Counsel.
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July 2007
2. If the CDCRP Executive Director determines that the borrower is in default of
one or more of the loan terms, the CDCRP Executive Director, with the advice
of CDCRP's General Counsel, may initiate foreclosure proceedings.
a. The CDCRP may contract with a trust deed service company to carry out
a Notice of Default and Sale on behalf of the CDCRP.
b. If the loan is reinstated, any expenses will be the responsibility of the
owner as a condition of reinstatement.
3. If the property goes to sale pursuant to this section, the sale proceeds minus
the amount of any senior liens and the CDCRP's foreclosure costs shall be
credited against the outstanding loan balance.
a. If the sale proceeds minus the amount of any senior liens and the
CDCRP's foreclosure costs exceed the amount of the outstanding loan
balance, the excess funds shall first be used to pay any valid claims of
junior lien holders and any proceeds remaining thereafter shall be
forwarded to the borrower.
b. If the sale proceeds minus the amount of any senior liens and the
CDCRP's foreclosure costs are less than the amount of the
outstanding loan balance, the CDCRP shall seek a deficiency
judgment for the difference by submitting the matter to Collections.
VIII. DEFINITIONS
Applicant/Co-Applicant: Any member of the household who is listed on title to the property and who
will be accepting responsibility for repayment of any loan made by signing the required loan
documents.
Assets: Assets of the applicant and household members shall be considered in determining
household income. Household assets include:
Amounts in savings and checking accounts. (The greater of the current amounts
or the average balance for the last 2 months in savings and checking accounts.)
2. Stocks, bonds, savings certificates, money market funds and other investment
accounts.
3. Equity in real property (other than the applicant's principal residence) or other
capital investments. Equity is the estimated current market value of the asset
less the unpaid balance on all loans secured by the asset.
4. The cash value of trusts that are available to the household, not including
irrevocable trusts.
5. Annuities in the applicant's name that could be liquidated.
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July 2007
6. Assets, which although owned by more than one person, allow unrestricted
access by the applicant.
7. Lump -sum receipts such as inheritances, capital gains, lottery winnings, cash
from sale of assets, insurance settlements, and other claims.
8. Personal property held as an investment such as gems, jewelry, coin collections,
antique cars, etc.
9. Cash value of life insurance policies.
10. Household Assets Do Not Include:
a. Personal property (except as noted in #9 above).
b. Interest in Indian trust lands.
C. Assets not accessible by the household (e.g.: irrevocable trusts).
d. Assets that are a part of an active business or farming operation.
e. Retirement plans which, if withdrawn, would result in a penalty.
Below Market Interest Rate: An interest rate lower than the interest rate generally accepted for use
by commercial lenders at the time of consideration.
Code Standards: All applicable housing, planning, fire prevention, building, zoning, health codes,
and other pertinent local ordinances.
Disabled Household: A household in which any applicant or co -applicant is physically or mentally
disabled. It may include two or more disabled persons living together, or one or more of
these persons living with one or more live -in -aides or other household members.
_Elderly Household: A household in which any applicant or co -applicant is 62 years of age or older.
It may include two or more persons 62 years of age or older living together, or one or more of
these persons living with one or more live -in -aides or other household members.
General Property Improvements: Items not specifically required by code which will generally
improve the appearance and/or livability of the property and the neighborhood.
Gross Income: The total income of the household, before any withholdings are taken.
Household: A single person or a collective body of two or more persons living together in one
housing unit as their common home and sharing common income.
Incipient Code Violations: An incipient code violation exists if, at the time of inspection, it is thought
that the physical condition of an element in the structure will deteriorate into an actual code
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July 2007
violation within one year. Examples are an old roof which is beginning to leak or a furnace
which can reasonably be expected to become inoperative or hazardous because of its age or
condition.
Income: All income from persons in a household must be included in the household income.
Except as noted below*, income from minors/dependents is not included in household
income. Annual household income includes:
Annual gross amounts of wages, salaries, tips and commissions.
Net annual income from operation of business or profession.
Net annual income from rental of real or personal property.
If one or more of the bedrooms of an owner -occupied single-family
property is/are rented to non -household members, the non -household
members' incomes shall not be included in income calculations for the
owner's household. However, the rent paid to the owner shall be included
in income calculations for the owner's household.
Actual or imputed annual income from assets.
If household assets are below $5,000, actual income earned from assets
will be added to the household income.
If household assets are $5,000 or more, the actual income earned from
assets will be compared to an imputed income earned figure arrived at by
multiplying the total assets by HUD's imputed income rate, also known as
the passbook rate. This rate is periodically adjusted by HUD. The
current HUD passbook rate is 2%, and may be adjusted from time to
time. The higher of the actual income earned or the imputed income
earned figures will be added to the household income.
Annual income from periodic payments such as Social Security, insurance,
retirement funds, pensions, alimony, or child support.
Annual amount of payment in lieu of earnings, such as unemployment, disability,
worker's compensation.
Annual amount of public assistance allowances or grants.
Total annual income divided by 12 equals monthly income. The income shall mean the
anticipated income of a person or family for the twelve-month period following the date of
determination of income.
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*Survivor's Social Security, SSI, other public assistance or disability payments and pension
payments paid to a minor/dependent are the only types of income received by a
minor/dependent which are included in the household income.
Minor/Dependent: Members of the household (other than the applicant or co-applicant[s]) who are
under 18 years old or who are full-time students and live at home, or who are disabled in
such a manner as to require on-going dependency.
Mobile Home: For purposes of this program, a mobile home is defined as a transportable
structure, designed for use as a dwelling, whose minimum exterior dimensions are 8 1/2
feet wide and 32 feet long measured from wall to wall.
Non -Household Member(§ih A single person or a collective body of two or more persons who rent
one of the bedrooms of a single-family house or mobile home and who do not share common
income with the owner -occupant household.
I HAVE READ AND UNDERSTAND THE INFORMATION PRESENTED IN THIS PROGRAM
DESIGN FOR THE HOUSING REHABILITATION PROGRAM.
Date
CDCRP
July 2007
Property Owner Signature
Property Owner Signature
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