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HomeMy WebLinkAboutPolicies and Procedures Manual for Down Payment Assistance L CITY OF HUNTINGTON BEACH MEETING DATE: April 15, 1996 DEPARTMENT ID NUMBER: 96-001 Council/Agency Meeting Held: 5' —q 6, Deferred/Continued to: pproved ❑ Conditionally Approved ❑ Denied City Cl&Ps Ignature ' Council Meeting Date: April 15, 1996 Department ID Number: 96-001 CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL/REDEVELOPMENT AGENCY ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL SUBMITTED BY: CONNIE BROCKWAY, CITY CLERK/CLERK iJ DAVID BIGGS, ECONOMIC DEVELOPMENT DIRECTOR/REDEVELOPMENT DIRECTOR PREPARED BY: CONNIE BROCKWAY, CITY CLERKICLERK SUBJECT: RESOLUTIONS ADOPTING THE POLICIES AND PROCEDURES MANUAL FOR DOWN PAYMENT ASSISTANCE LOAN PROGRAM AND ACCEPTANCE OF LOAN AGREEMENTS FOR OFFICIAL FILING Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Envispn ental Status,Attachment(s) -f Statement of Issue: The City Council/Redevelopment Agency is requested to accept and authorize the City Clerk/Clerk to officially file on behalf of the City, 18 Down Payment Assistance Loan Program Agreements which pursuant to previous direction of the City Council, have been repaired to protect the interests of the city. The City Council/Redevelopment Agency is also requested to approve the Policies and Procedures Manual for the City of Huntington Beach/Redevelopment Agency Down Payment Assistance Loan Program for staff use in future assistance programs. Funding Source: None required. Recommended Action: 1. Authorize the City Clerk/Clerk to file on behalf of the City Council/Redevelopment Agency the 18 Down Payment Assistance Loan Program Agreements, as repaired to protect the city's interests pursuant to the previous direction of the City Council. CK96001M.DOC -2- 04/01/96 5:04 PM REQUEST FOR CITY COUNCIL/REDEVELOPMENT AGENCY ACTION. MEETING DATE: April 15, 1996 DEPARTMENT ID NUMBER: 96-001 AND 2. Adopt Council Resolution No. 96-29 and Agency Resolution No. 273 adopting the Down Payment Assistance Loan Program Policies and Procedures Manual prepared by Kristine Price, Auditor, and direct that any substantial revisions to the manual be approved by the City Council/Redevelopment Agency. Alternative Action(s): Council/Agency may approve the manual with any revisions deemed necessary by Council. Analysis: At the request of the City Clerk's Office and pursuant to City Council/Redevelopment Agency direction on March 20, 1995, repair work has been completed on 18 Down Payment Assistance Loan Program Agreements consisting of 27 notes with an aggregate outstanding balance of $400,826. Kristine Price, outside auditor, has reviewed the repair work and has provided the city with a Letter of Satisfaction stating the city has taken the necessary steps to protect its interests through the appropriate correction of document errors and the creation of a Policies and Procedures Manual. The City Attorney's Office has confirmed by letter that the loan agreement files have been sufficiently repaired to protect the city. During the audit and following the audit, Kristine Price, Auditor held productive meetings with staff prior to preparing a Policies and Procedure Manual that meets our city's needs. With revisions from time to time, this manual will serve our city well. [It should be noted that the manual provides that any substantial revision to this manual shall be approved by the City Council/Redevelopment Agency.] The audit agreement that the City Council approved between the City and Kristine Price included the auditor conducting a training session with city staff. This session was not held due to Economic Development Department personnel turnover. The auditor deducted this from the agreement's final billing cost. However, the training session is available at such time as the city may require. Attachments: Page City Clerk's - ..3 1. Two communications from Kristine D. Price, Auditor, dated 9/10/95 & 12/26/95 2. Communication from the City Attorney dated 11/30/95 j 3. City Council Resolution No. 96-29 "A Resolution Of The City Council Of The City Of Huntington Beach Adopting The Policies And Procedure Manual For Down Payment Assistance Loan Program." } ' 4. Redevelopment Agency Resolution No. 273 "A Resolution Of The Redevelopment Agency Of The City Of Huntington Beach Adopting The Policies And Procedures Manual For Down Payment Assistance Loan Program." 1 5. Policies and Procedures Manual CK96001 M.DOC -3- 04/05/96 1:19 PM RESOLUTION NO. 96-29 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ADOPTING THE POLICIES AND PROCEDURE MANUAL FOR DOWN PAYMENT ASSISTANCE LOAN PROGRAM WHEREAS, the City Council of the City of Huntington Beach desires the preparation of uniform policies and procedures for administrating of the City's Down Payment Assistance Loan Program; and The City contracted the professional services of Kristine D. Price for the purpose of auditing the loan program and creating a manual for staff to utilize when processing loan documentation; and Said manual containing uniform standards, procedures and policies for implementation of the loan program has been prepared; NOW, THEREFORE, IT IS HEREBY RESOLVED that the City Council of the City of Huntington Beach adopts the Polices and Procedure Manual for Down Payment Assistance Loan Program dated September 1, 1995, for use by City staff in implementing the program. BE IT FURTHER RESOLVED that any material revision to the manual be approved by the City Council PASSED AND ADOPTED by the City Council of the City of-Huntington Beach at an adjourned regular meeting thereof held on the 22nd day of April��--771� , 1996. Z) ATTESGi��'�� Mayor City Clerk APPROVED AS TO FORM: R AND APPR or City Attorney 3—let- INITI TED AND APPROVED: y Administrator Director of Economic Development CITY CLERK /AGEN7 CLERK 7/k/downpay/3/19/96 1 � r . Res. No. 96-29 STATE OF CALIFORNIA ) . COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an adjourned regular meeting thereof held on the 22nd of February, 1996 by the following vote: AYES: Councilmembers: Harman, Leipzig, Bauer, Sullivan, Dettloff, Green, Garofalo NOES: Councilmembers: None ABSENT: Councilmembers: None City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California G/resoluti/resbkpg RESOLUTION NO. 273 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ADOPTING THE POLICIES AND PROCEDURE MANUAL FOR DOWN PAYMENT ASSISTANCE LOAN PROGRAM WHEREAS, the Redevelopment Agency of the City of Huntington Beach desires the preparation of uniform policies and procedures for administrating of the Agency's Down Payment Assistance Loan Program; and The City contracted the professional services of Kristine D. Price for the purpose of auditing the loan program and creating a manual for staff to utilize when processing loan documentation; and Said manual containing uniform standards, procedures and policies for implementation of the loan program has been prepared; NOW, THEREFORE, IT IS HEREBY RESOLVED that the Redevelopment Agency of the City of Huntington Beach adopts the Polices and Procedure Manual for Down Payment Assistance Loan Program dated September 1, 1995, for use by Agency staff in implementing the program. BE IT FURTHER RESOLVED that any material revision to the manual be approved by the Redevelopment Agency. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at �gu`13a?r�ii e9Rng thereof held on the 22nd day of Apr;1 , 1995. ATTESTL� Chairman Agency Clerk APPROVED AS TO FORM: 1pc-� RE AND APPROVED: fa/Agency Counsel INITIATED AND APPROVED: Executive erector /v Director of Econom c Development Z"a�c�/4v � CITY CLERK /AGENCY LERK 7/k/downpay/3/19/96 2 Res. No. 273 STATE OF CALIFORNIA ) COUNTY OF ORANGE. ) CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, Clerk of the Redevelopment Agency of the City of Huntington Beach, California, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Redevelopment Agency of the City of Huntington Beach at an adjourned regular meeting of said Redevelopment Agency held on the 22nd day of April, 1996 and that it was so adopted by the following vote: AYES: Members: Harman, Leipzig, Bauer, Sullivan, Dettloff, Green, Garofalo NOES: Members: None ABSENT: Members: None Clerk of the Redevelopment Agency of the City of Huntington Beach, Ca. G/resoluti/resbkpg2 ATTACHMENT # 1 Kristine A Price December 26, 1995 Connie Brockway City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, Ca. 92648 Re: Down Payment Assistance Loan Documentation Audit Dear Ms. Brockway, I have reviewed the repair work performed during the past several months as a result of my audit earlier this year and the letter dated November 30, 1995 from Sarah Lazarus, Deputy City Attorney. I am satisfied that the City has taken the necessary steps to protect its interests by the appropriate - correction of document errors and the creation of a credit policies and procedures manual. If you should have any further questions,please don't hesitate to contact me at any time. Regards, . i Kristine D. Price 412 Fourth Street Encinitas, California 92024 (619) 942-6851 Fax(619) 942-8128 Kristine D. Price September 10, 1995 Connie Brockway City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, Ca. 92648 Dear Connie, Here are the finished manuals. There are five binders; the one on top includes 2 sets of disks containing the complete text of the manual and exhibits. You may want to put one set in your vault as back up. Exhibit#4 is blank as it is for the list of approved escrow and mortgage companies. This exhibit will need to be added when that list is developed. You may want to remind the parties involved that the creation of this approved list was discussed in one of the memos last year between the City Attorney's office,and the Economic Development Department. I believe this material covers all of the areas you were initially concerned about. You should feel gratified that this project has reached its completion and there is some good material to show for all of your hard work. Certainly, your loan documentation is now in.very good shape and the City has some solid written guidance to follow when the lending business starts up again. The final remaining portion of the original contract is the training session. I will wait for your call to set up a time; however, if you find that it will not be necessary to hold this session,just let me know and I will take it off my pending calendar. I certainly have appreciated the opportunity to assist you with this project. I thoroughly enjoyed our time together. The only downside to this type of work is that it eventually comes to an end. If you find that questions arise about the material, or if any documentation issues come up in the future, please don't hesitate to give me a call. Regards, istinc D. Price 412 Fourth Street Encinitas, California 92024 (619) 942-6851 Fax (619) 942-8128 ,�pMillifpl OFFICE OF Y _ - �=_; CITY ATTORNEY c'` P.O. Box 190 2000 Main Street Telephone Gail Hutton Huntington Beach, California 92648 (714) 536-5555 City Arromey Fax (714) 374-1590 November 30, 1995 Kristine Price 412 Fourth Street Encinitas, Ca. 92024 SUBJECT: Audit of Loan Files Ms. Price, After reviewing the files as corrected, it is my determination that the files have been repaired sufficiently to protect the City of Huntington Beach. Should you have any questions you may contact me at the City of Huntington Beach, 2000 Main Street Huntington Beach Ca. 92648 or(714) 536-5555. Sincerely, t � arah Lazarus ~�- Deputy City Attorney k 1.i �p be: Dan Bruening //Connie Brockway C!T' a RESOLUTION NO. 96_29 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH ADOPTING THE POLICIES AND PROCEDURE MANUAL FOR DOWN PAYMENT ASSISTANCE LOAN PROGRAM WHEREAS, the City Council of the City of Huntington Beach desires the preparation of uniform policies and procedures for administrating of the City's Down Payment Assistance Loan Program; and The City contracted the professional services of Kristine D. Price for the purpose of auditing the loan program and creating a manual for staff to utilize when processing loan documentation; and Said manual containing uniform standards, procedures and policies for implementation of the loan program has been prepared; NOW, THEREFORE, IT IS HEREBY RESOLVED that the City Council of the City of Huntington Beach adopts the Polices and Procedure Manual for Down Payment Assistance Loan Program dated September 1, 1995, for use by City staff in implementing the program. BE IT FURTHER RESOLVED that any material revision to the manual be approved by the City Council. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 15 day of April , 1996. ATTEST: Mayor City Clerk APPROVED AS TO FORM: R AND APPR for City Attorney IY/ INITI TED AND APPROVED: :Administistrator— X Director of Economic Development CITY CLERK /AGEN7 CLERK 7/k/downpay/3/19/96 1 RESOLUTION NO. 273 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON BEACH ADOPTING THE POLICIES AND PROCEDURE MANUAL FOR DOWN PAYMENT ASSISTANCE LOAN PROGRAM WHEREAS, the Redevelopment Agency of the City of Huntington Beach desires the preparation of uniform policies and procedures for administrating of the Agency's Down Payment Assistance Loan Program; and The City contracted the professional services of Kristine D. Price for the purpose of auditing the loan program and creating a manual for staff to utilize when processing loan documentation; and Said manual containing uniform standards, procedures and policies for implementation of the loan program has been prepared; NOW, THEREFORE, IT IS HEREBY RESOLVED that the Redevelopment Agency of the City of Huntington Beach adopts the Polices and Procedure Manual for Down Payment Assistance Loan Program dated September 1, 1995, for use by Agency staff in implementing the program. BE IT FURTHER RESOLVED that any material revision to the manual be approved by the Redevelopment Agency. PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington Beach at a regular meeting thereof held on the day of_Apr; 1 , 1995. ATTESTL� Chairman Agency Clerk APPROVED AS TO FORM: RE AND APPROVED: ,fde-Agency Counsel (N INITI ED AND APPROVED: Executive erector IA4d �o (, -*2 Director of Econom c Development CITY CLERK /AGENCY XLERK 7/k/downpay/3/19/96 2 ........... ......... ..... ....... ................ ....... ............................... ..... ----- ..................................... ............. ................ .................... .... ........ ........... .......................... ...... ... .............. .................. ....... ........... ....................................... ..... ............... ................................. ............................ --- -- .... ......... .......... .............................. ........ .. ....... ... .......... ............ .......... ... . . .... . ........ . ..... .......... .. .... ---- ---- ........... .......... ........... .. ......... ft ......... .. ............... .... ............. ....... .... ............. . . .... ........ .. ............. .. .... . ..... ................... . ..... .... .. . .... .. ............ ........... .......................... ............. .......... ... ........ ............................ .......... . ...... . ...... ............. ............................ ............... .......... .......... ........ ................. ...... ......... ........... ..... ......... .......... . .. ........ .. ---- ----------- ..... .. .............. .... ...... qqqw ........ ....... ........................... City of Huntington . Beach Down Payment Assistance Loan Program FIJ Policies and Procedures September 1 , 1995 Kristine D. Price 412 Fourth Street • Encinitas 9 California • (619) 942-6851 TABLE OF CONTENTS Table of Contents Chapter 1 Introduction 1.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Program Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 Program Funding Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.4 Individual Loan Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.5 Loan Documentation Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.6 Exceptions or Waivers to Loan Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.7 Manual Approval and Revision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.8 Approval of Third Party Service Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.9 Financial Privacy Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Chapter 2 Programs -2.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Chapter 3 Underwriting 3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3.2 Underwriting Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3.3 First Time Buyers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.4 Owner Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.5 Housing Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3.6 Loan Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.7 Low or Moderate Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.8 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3.9 Down Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.10 Verifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3.11 Borrower Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.12 Income History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.13 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.14 Property Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.15 Property Taxes and Homeowner's Association Dues . . . . . . . . . . . . . . . . . . . . 6 3.16 Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.17 Prepayment Penalty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Chapter 4 Loan Processing 4.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4.2 The Application Package . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4.3 Application Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4.4 Application List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4.5 Underwriting the Loan . . . . . . . . . . . . . . .!. * * . * . * * . . . . . * * ' . . . . . 2 4.6 The Approval & Documentation Workshee (Exhibit 8) . . . . . . . . . . . . . . . . . . . 3 4.7 Recommending Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4.8 Obtaining Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.9 Obtaining Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4.10 Funding the Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4.11 Closing Escrow .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4.12 Post Funding Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4.13 Safeguarding Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Chapter 5 Documentation 5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5.2 Documents Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5.21 Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5.22 Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5.23 Rider to Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5.24 - Loan- 'Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5.25 Affordable Housing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5.26 Disclosures And Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5.3 Commitment Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5.4 Document Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.5 Document Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.6 Title Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 5.61 Preliminary Report of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.62 Title Insurance Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.63 Opening a Title Policy Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.64 Procedures for Reviewing a Preliminary Title Report . . . . . . . . . . . . . . . . . 12 5.65 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 5.66 Reviewing the Title Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 5.7 Hazard Insurance Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 5.71 Acceptable Insurance Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.72 Name and Property Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.73 Policy Forms and Perils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 5.74 Policy and Premium Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 5.75 Endorsements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 5.76 Minimum Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 5.77 Proof of Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 5.78 Failure to Provide Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 5.79 Other Hazard Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 5.8 Role of Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Chapter 6 Loan Maintenance & Accounting 6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6.2 File Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6.21 Credit File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6.22 Safekeeping File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6.3 Loan Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6.31 Accounting for Charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6.4 Partial Repayment Upon Sale/Refinance 5 6.5 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6.6 Loan Payoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6.61 Responding to a Request for Beneficiary's Demand . . . . . . . . . . . . . . . . . . . . . 6 6.62 Reconveying the Trust Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 6.7 Closing the Credit & Safekeeping Files . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Exhibits Current Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 1 Prior Loan Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 2 Signature/Approval Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 3 Approved Escrow & Mortgage Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 4 Underwriting Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 5 Income Range Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 6 Agency Application Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . Exhibit 7 Approval & Documentation Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 8 File Summary Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 9 Request for Legal Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 10 Escrow Instruction Letter . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . Exhibit 11 Accounts Payable Demand Invoice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 12 Sample Commitment Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 13 Fair Lending Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit 14 INTRODUCTION Introduction Revised 8/25/95 1.1 General The City of Huntington Beach ("City"), under its commitment to affordable housing, has from time to time provided loans to low to moderate income individuals to assist in the purchase of owner occupied residential real estate. These loan programs have been funded through various sources such as Community Block Grant and Redevelopment Agency funds. Funding for any particular program is authorized by the City Council and is administered through the Redevelopment Agency ("Agency") of the Economic Development Department. These programs are collectively called the Down Payment Assistance Loan Program. The objective of this program is to provide financing to individuals who would otherwise have difficulty qualifying for home ownership. The parameters of each program are such that owner occupancy is - encouraged and speculative investment is discouraged. Loans are independently evaluated by the City and only approved after an institutional lender has approved the buyer for a long term mortgage. This gives the City some assurance that the buyer is credit worthy, has the ability to satisfactory repay debt and that the collateral is acceptable. At any one time the City or the Agency may have several loan programs available, all with slightly different underwriting and repayment requirements. The policies and procedures discussed within this manual will focus on those processes which are common to all loans funded by either the City or the Agency. Specific program requirements may be changed from time to time upon approval by the City Council and will be incorporated into this manual by reference. Exhibit 1 contains current program parameters but the reader is urged to consult with the Director of the Department of Economic Development with specific questions or concerns regarding loan program guidelines. City of Huntington Beach .2�f Down Payment Assistance Loan Program 11 Polices and Procedures - Page 1-1 Introduction 1.2 Program Administration Loan programs are authorized by the Qity Council, are under the direction of the City Administrator and are administered through the Department of Economic Development. 1.3 Program Funding Approval The allocation of funds for any specific loan program is authorized by the City Council upon the recommendation of the City Administrator and the Director of the Department of Economic Development. 1.4 Individual Loan Approval Individual loans are evaluated, underwritten and recommended for approval by the Department of Economic Development with concurrence by the City Administrator and final approval by the City Council. 1.5 Loan Documentation Approval Loan documentation is prepared for each program and individually for each loan by the City Attorney's Office. Master documents for each loan program are approved by the City Council prior to the initiation of a loan program. Individual loan documents, derived from the master document, are prepared upon the request of the Economic Development Department, approved as to form by the City Attorney, reviewed and approved by the City Administrator and submitted to City Council for final approval. City of Huntington Beach Down Payment Assistance Loan Program Ni Polices and Procedures Page 1-2 Introduction The City Council approves the loan request of the individual applicant. The City Council packet contains copies of the original loan documents with all pertinent information complete on forms that match the previously approved Master Document. Other requirements, such as IRS tax returns and income qualifications, are reviewed and approved in-house. The City Clerk's office is responsible for obtaining the appropriate signatures of the Mayor, providing attests and notarizing the City-Agency signatories. Signature requirements are detailed in exhibit 3 of this manual. Escrow notarizes the borrower's signatures. 1.6 Exceptions or Waivers to Loan Policy Exceptions or waivers to policy are categorized as: 1) exceptions to program parameters, and 2) exceptions to underwriting or processing procedures. ► Program parameters are those rules which govern loan size, interest rate, income qualification ratios, percentage down payment, etc. Rarely will there be an exception to program parameters and any exception in this area requires the approval of City Council. ► Procedural exceptions may include such things as: waiver of an appraisal report if the primary lender will not provide it, acceptance of minor derogatory credit or other income documentation variances. Exceptions or waivers to procedures should be rare. In the event an exception to policy is warranted, the exception or waiver must be documented in writing and approved by both the Director of Economic Development and the City Administrator. Any exception to either the program parameters or underwriting or procedural issues must be clearly stated within the approval memorandum City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 1-3 Introduction 1.7 Manual Approval and Revision The policies and procedures containeq in this manual are authorized by the City Council. Any substantive additions or policy revisions require the approval of the City Council. Minor corrections or expansion of existing procedures may be made upon approval of the Director of Economic Development at any time. The entire manual will be reviewed and approved by City Council on an annual basis if any substantive policy changes have been made. 1.8 Approval of Third Party Service Providers During any loan transaction, there are several private service providers . which are also party to the sale transaction. Depending upon their role, any one can either provide an assurance of safety or an element of risk. The risk can range from a mortgage broker providing the City with incomplete or erroneous application information to an escrow company not following directions upon closing. Since the City desires to do business only with those companies with a high degree of competency and integrity, a list of those companies which are known to be reputable has been established and only those on the list may participate as a service provider within the down payment assistance program. The list encompasses escrow companies, title companies, mortgage brokers and financial institutions and is generated from those companies that are well known to the Director of Economic Development, the City Administrator and the City Attorney's office. The current list of approved providers is provided in exhibit 4. Additions to the list may be made without prior approval from City Council upon the recommendation of any of the three individuals cited above. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 1-4 I Introduction 1.9 Financial Privacy Laws Financial privacy rights are governed by several different laws. The primary regulations are the California, Zight to Financial Privacy Act and the Federal right to Financial Privacy Act. Both of these regulations govern the process of releasing a borrower's financial information to California and Federal government agencies. Essentially these regulations require that the lender may disclose a borrower's financial records only upon the receipt of legal process or with the borrower's written authorization. Additionally, the lender is to notify the borrower of the receipt of legal process, unless ordered by the court not to do so. Any request for financial records by legal process or by anyone other than the signer of the promissory note is to be referred to the City Attorney's office for disposition. Written requests by the borrower for copies of financial information may be handled directly by the Economic Development Department. A copy of the written request is to be maintained in the credit file. City of Huntington Beach Jh Down Payment Assistance Loan Program Polices and Procedures Page 1-5 LOANTROGRAMS Loan Programs Revised 8/25/95 2.1 General Loan programs are developed as the need arises and funds are available. The City has provided various loan programs suited for a specific purpose such as assisting in the redevelopment of a certain area of the city or to provide home purchase financing for low to moderate income individuals. Current programs are discussed in detail within exhibit 1. Loan programs that are no longer offered are described in exhibit 2. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 2-1 UNDERWRITING Underwriting Revised 8/25/95 3.1 General i Underwriting is the process of qualifying a borrower and collateral for a loan. It includes determining whether the borrower and collateral fit within a specific loan program and whether the borrower is credit worthy. While specific loan programs may have unique and special requirements, most of the City's loan programs will observe the following guidelines. 3.2 Underwriting Worksheet The Underwriting Worksheet(exhibit 5) is to be completed by an Agency staff member upon receipt of the application package. This form is designed to lead the staff member through the general criteria of the Down Payment Assistance Loan Program. The form is divided into two sections: 1) Underwriting Criteria, and 2) Income Qualification. 1) Underwriting Criteria 10 questions are answered with either a yes or no. Answers which fall into the shaded boxes are exceptions to policy and require a written explanation in the Comments section. Each question also requires that the method of verification for the particular criteria be noted on the form. 2) Income Qualification This section is structured as a series of calculations leading to the Housing Ratio (C), Sufficient Funds to Close Escrow (D & E), and Borrower Funds as a % of Purchase Price (F). Verification sources are also to be noted on the form. City of Huntington Beach .t;Ifs Down Payment Assistance Loan Program Polices and Procedures Page 3-1 Underwriting Any unique program requirements should also be addressed in the Comments section of the form. 3.3 First Time Buyers Some programs are designed solely for the first time home buyer. In these instances it is important to verify that the applicant has not owned a home for at least three years prior to the current purchase. This may be accomplished by reviewing the applicant's tax returns for a home mortgage deduction for three consecutive years. 3.4 Owner Occupancy All loan programs require that the borrower reside in the property being financed. Most loan programs additionally prohibit the rental of the property during the term of the loan and to do so is an event of default. Additionally, co-applicants must usually also be co-owners. 3.5 Housing Ratio The housing ratio is the total housing expense divided by the borrower's gross monthly income. It is one of the basic criteria used to determine if an applicant has the ability to repay a home mortgage. Housing costs include: Principal and interest on the primary loan, taxes, insurance, homeowner's association dues, private mortgage insurance and utilities. In some cases, lenders do not include utilities in this calculation. For the Down Payment Assistance Loan Program, the applicant's housing ratio may be no higher than 35%. In the Underwriting Worksheet (exhibit 5), the Income Qualification section leads the underwriter through the calculations to arrive at this ratio. City of Huntington Beach w Down Payment Assistance Loan Program Polices and Procedures Page 3-2 Underwriting The "total debt ratio", which includes monthly payments of other term obligations and is used additionally by the primary mortgage lender to qualify the borrower, is not considered in the income qualification process for this program. 3.6 Loan Size Current loan size generally ranges from a minimum of$2,500 to a maximum of $35,000. Consult exhibits for current program parameters. 3.7 Low or Moderate Income Income is classified as low or moderate as a result of household size and gross income of all individuals who reside within the household. Very low is 10-5 of median income; low income is 51-80% of median income; moderate income is 81-120% of median income. The current income range schedule is identified in exhibit 6. Gross income includes all sources of income from all household members, with the exception of unemployment or overtime income. 3.8 Interest Rate Most loan programs charge an interest rate of 5%. Collection of interest varies upon the program. Different programs have charged no interest at all; while others require interest, along with principal, to be paid upon sale or refinance. Specific loan documentation should be reviewed for existing loans. Exhibit 1 provides interest rates and terms for current loan programs. City of Huntington Beach G Down Payment Assistance Loan Program Q Polices and Procedures Page 3-3 Underwriting 3.9 Down Payment Most.loan programs will require that the borrower provide a minimum of 3% of the purchase price in cash. Sorge programs require that the borrower match the funds provided-by the City or Agency. When two loan programs are used together, whichever program requires the larger cash contribution from the borrower governs the entire transaction. It is important to instruct the escrow company of these specific program requirements and to check the escrow closing statement after funding to make sure that the program parameters were followed. 3.10 Verifications All income and asset sources must be verified independently of the information provided on the borrower's application. The primary lender - _- will provide copies of the real estate application, the credit-report, deposit and employment verifications and any other relevant documentation. It is the responsibility of the assigned Agency staff member to evaluate this information for accuracy and credibility. One method of quickly evaluating accuracy of an applicant's financial information is to compare items listed on the credit report with the items listed on the application. Any items not listed in one place or the other must be explained and included into the final calculations. Any derogatory credit information must be fully explained in writing by the borrower. Even if the primary lender has approved the first mortgage, significant derogatory credit information is reason for denial of the City or Agency loan. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 3-4 Underwriting 3.11 Borrower Assets Most programs require that the borrower not retain significant liquid assets after the close of escrow. This may be as little as $5,000 for a salaried individual or $10,000 for a self-employed individual. As a part of the application, the City will receive copies of the application, written deposit account verifications and a credit report. To be assured that the borrower has complied with this requirement, the Agency staff member must carefully review all of this documentation for indications of unreported assets. 3.12 Income History To verify that the borrower has the ability to repay the primary mortgage, salaried applicants must provide written verification of three years income. This may be in the form of complete signed tax returns, W-2 forms, current year pay stubs, or direct employment verification forms. Self employed borrowers or those with sole proprietor businesses must provide a minimum of two years income history. Acceptable verification must be in the form of signed federal tax returns and a current year-to- date CPA prepared financial statement. 3.13 Repayment Loans generally require repayment upon the sale or refinance of the property or default of the loan. Some programs provide for an equity sharing or reduced repayment if the property does not appreciate over time. Interest on the loan usually accrues and is repaid only upon sale or refinance. Some programs allow for non payment of interest and even forgiveness of the principal after a certain number of years. For existing loans, loan documentation must be carefully reviewed to determine repayment requirements. New loans must follow the individual program guidelines as described in exhibit 1. City of Huntington Beach Down Payment Assistance Loan Program , +ha Polices and Procedures — Page 3-5 Underwriting 3.14 Hazard/Flood Insurance Borrowers are required to provide evidence of fire and hazard insurance listing the City or Agency as additional icsured prior to loan closing and during the term of the loan. Non payment is an event of default. Flood insurance may be required if the property lies in a designated flood zone. The City may determine this designation by obtaining a flood certificate by requesting one through the Planning Department. If the property does lie within a designated flood zone, this insurance must be obtained by the borrower and evidence of this coverage provided to the City prior to loan closing. 3.15 Property Taxes and Homeowner's Association Dues - Borrowers are required to pay all property taxes and homeowner's association dues during the loan term. Non payment is an event of default. 3.16 Assumptions Most loans are assumable by qualified households and may require that accrued interest be paid upon consummation of the assumption. Some programs may also require sale to low or moderate income households because of the type of property. Existing loan documents should be reviewed carefully to determine specific requirements. New loans must follow parameters set forth in the current program guidelines contained in exhibit 1. Generally, unless the loan documents specifically provide for an assumption, the City will require that the loan be repaid according to the terms of the Promissory Note and Loan Agreement upon sale or transfer of the property. City of Huntington Beach Down Payment Assistance Loan Program Al"i m Polices and Procedures Page 3-6 Underwriting 3.17 Prepayment Penalty There are no penalties assessed if a loan is repaid before the maturity date. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 3-7 LOAN PROCESSING Loan Processing Revised 8/25/95 4.1 General , The process of handling a down payment assistance loan from the acceptance of an application through funding is called loan processing. This process requires the involvement of multiple departments, individuals and levels of authority within the City. 4.2 The Application Package Most loan programs have developed an application package which explains the program parameters and the application and approval process. Included within this package is the Fair Lending-Notice (exhibit 14). Through this package, the city receives the information necessary to make a credit decision. Applications are generally received indirectly from a mortgage broker or the primary lender. Applications may not be given to or accepted directly from a borrower. Usually, a mortgage or real estate broker has determined that the applicant would benefit from one of the loan programs offered by the City. Often, a loan program is offered during the marketing of a specific property, in which case, all application information is provided at the time the property is offered for sale. 4.3 Application Requirements The following information is discussed in the application package and is required in order to consider the loan request: ► Agency application form (exhibit 7) ► Verification of employment and account deposits (copies from primary lender) City of Huntington Beach Down Payment Assistance Loan Program A4112 Polices and Procedures Page 4-1 Loan Processing ► One year's tax returns and current pay stub for each borrower, if salaried ► Two year's tax returns and audited profit & loss statement, if self- employed. ► Copy of credit application (from primary lender) ► Copy of purchase contract signed by seller and buyer ► Written confirmation of approval for first trust deed loan by primary lender. ► Copy of appraisal of real property (from primary lender) ► Copy of credit report (from primary lender) ► Evidence of first time home ownership, if applicable (three years tax returns) 4.4 Application List As each application is received by the City it is logged onto an Application List. This procedure assists staff in the tracking of individual applications and allows for management oversight of the loan origination process. 4.5 Underwriting the Loan The applicant's financial information is reviewed for compliance with the particular loan program's parameters. Issues such as first time buyer, asset ceiling, cash available for down payment, housing ratio, and credit history are evaluated using the Underwriting Worksheet(exhibit 5). City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 4-2 Loan Processing Additional guidance may be found in Chapter 3 Underwriting. Any areas requiring exceptions or waivers require written comments and may require written approval according to policy discussed in Chapter 1 Introduction, section 1.6, Exceptions.,or Waivers to Loan Policy . 4.6 The Approval & Documentation Worksheet (Exhibit 8) The balance of the process of approving, documenting and closing the loan is tracked by the completion of the Approval & Documentation Worksheet(exhibit 8). This form consists of 7 sections headed by a block of information about the borrower and the loan transaction. Sections 1 through 7 describe the process of document preparation, document review, approval, funding, post funding review and finally, safekeeping of the documents. Each individual and department is responsible for reviewing their designated tasks and signing off each section as it is completed. Each section should be completed and signed in sequence and no department should continue the processing of the loan if a prior section is incomplete or unsigned. The final section (#7 safekeeping of the original documents) may be completed only if all prior sections have been reviewed and signed by the appropriate department staff member. To assist the Agency staff member to keep track of the status of the loan as it moves through this process, a File Summary form (exhibit 9) is placed in the credit file and completed as approvals are obtained. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 4-3 Loan Processing 4.7 Recommending Approval Upon the receipt and analysis of all rec}pired financial information, a memorandum is prepared by Agency staff discussing the borrower's financial position, credit history, the purchase transaction, any exceptions or waivers to loan program guidelines and a recommendation for approval. This memorandum , along with a copy of the Underwriting Worksheet, is directed to the Director of Economic Development and his or her acknowledgment signifies departmental approval. At the same time the Loan,Information section and section number one of an Approval & Documentation Worksheet (exhibit 8) is completed by Agency staff to begin the documentation preparation and approval process. Loan documents may now be ordered from the City Attorney's Office. 4.8 Obtaining Loan Documents Agency staff prepares a Request for Legal Services (exhibit 10) to order the loan documents from the City Attorney's Office. The form must be accompanied by the Approval & Documentation Worksheet discussed earlier. Legal description of the property from the preliminary title report and exact vesting information from the escrow instructions must be included. Loan documents are prepared by the City Attorney's Office according to the City Council approved master documents. Documents are signed and approved by the City Attorney as to form. No documents may be prepared by any individual or department other than the City Attorney. Documents, accompanied by the Approval & Documentation Worksheet, are returned to the Agency for review. Additional information regarding specific loan documentation may be found in Chapter 5 Documentation. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 4-4 Loan Processing 4.9 Obtaining Approval Final approval of the loan request and documents by City Council is obtained by the preparation and submission of a Request for Council Action (RCA). Redevelopment Agencpstaff prepares the RCA/RAA and sends it along with original loan documents and the Approval & Documentation Worksheet, to the City Administrator for approval to place on the City Council agenda. Upon approval, the City Administrator transmits the RCA/RAA, original documents and the Approval& Documentation Worksheet to the City Clerk's Office. The City Clerk will place the item on the agenda and will obtain the appropriate signatures, as necessary. Signature requirements may be found in exhibit 3. Documents remain in the City Clerk's possession until transmitted to escrow for loan closing. -- 4.10 Funding the Loan All City and Agency loans are funded through escrow. Instructions to escrow are prepared by Agency staff using the sample Escrow Instruction Letter illustrated in exhibit 11. Agency staff prepares Accounts Payable Demand Invoice (exhibit 12) to request a check from the Finance Department for the loan amount payable to the escrow company. Original documents are maintained in the possession of the City Clerk after approval by City Council. Agency staff are to provide an envelope addressed to the escrow company, the Instruction Letter and the funding check to the City Clerk. The City Clerk will place original documents, Instruction Letter and the check in the envelope and call escrow for pick up. The entire document package is copied and the copy retained by the City Clerk until the originals are returned. A copy of the check is used to record receipt of the packet by the escrow company. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 4-5 Loan Processing 4.11 Closing Escrow The escrow company is instructed by the Escrow Instruction Letter to close escrow when they can assure th2 City that they have: ► Monitored the execution by the borrowers of all loan documents included in the package. All blanks except those to be completed at time of escrow pursuant to escrow instructions, shall be completed with the appropriate information. ► Obtained fire and extended coverage on subject property showing the beneficiary of the deed(s) of trust as additional insured. ► Obtained ALTA or CLTA policy in the amount of the loan amount(s) with beneficiary(s) as insured. See Chapters Documentation, section 5.6 Title Insurance for guidance. ► Determined that the borrowers have provided the minimum required cash down payment. ► Placed the City or Agency in the appropriate lien positions behind a first trust deed in the approved amount. Escrow is further instructed to provide the City with the following items upon the close of escrow: ► Certified copy of the first trust deed holder's note and trust deed ► Certified (conformed) copy of the City or Agency signed and notarized trust deed(s) ► Certified copy of escrow settlement statement ► Title policy(s) as described above. ► Property insurance policy or binder as described above. ► All original signed documents provided with the package with the exception of those requiring recordation. Recorded documents are City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 4-6 Loan Processing 4.12 Post Funding Audit After the loan has been funded, the escrow company will provide the items discussed in section 4.10. Some items will be returned directly to the City Clerk's Office, such as the recorded deed of trust and the title policy. Others will go directly to the Economic Development Department/Redevelopment Department. The Economic Development Department staff is responsible for reviewing all documents for accuracy, including those sent directly to the City Clerk's Office. Proper lien position, adherence to program guidelines and any special issues must also be reviewed. The Approval & Documentation Worksheet contains two final sections relating to post funding responsibilities. These sections are to be completed as documents are received. The files, both credit and safekeeping, are to remain in a pending status until all items are reviewed, approved and in file. Both files are complete when all items on the Approval& Documentation Worksheet have been signed off by all responsible parties. 4.13 Safeguarding Documents Original loan documents are to be maintained in a secure and fireproof location within the City Clerk's Office. Documents to be included in the Safekeeping File are listed in Chapter 6 Loan Maintenance, and Accounting, 6.22 Safekeeping Files in this manual. City of Huntington Beach Down Payment Assistance Loan Program -7 Polices and Procedures Page 4 DOCUMENTATION Documentation Revised 8/25/95 5.1 General Loan documentation for a specific loan program is drafted by the City Attorney's office and approved by the City Council before the program is initiated. Subsequently, documents for specific loans are drafted by the City Attorney's office using the council approved master documents as a template. Under no circumstances may documents be created outside of the City Attorney's office. Additional guidance for the handling of loan documents may be found in Chapter 4 Loan Processing. 5.2 Documents Required The following loan documents are required for every loan secured by real property: ► Promissory Note ► Deed of Trust ► Rider to Deed of Trust ► Loan Agreement ► Affordable Housing Agreement ► Disclosure ► Recission Agreement (in certain cases) City of Huntington Beach LJ �� Down Payment Assistance Loan Program Lf l�,f Polices and Procedures Page 5-1 Documentation 5.21 Promissory(Vote The note defines the essential terms of the loan and describes the repayment obligation of the borrower. 'Basic components include: principal amount, interest rate and default provisions. 5.22 Deed of Trust The deed of trust creates a lien on real property serving as collateral for a loan. This lien does not cover personal property not affixed to the land, but does include personal property that is affixed to the land. Basic terms of a trust deed include: a description of the promissory note which the trust deed secures, a definition of the obligations of the borrower that the trust deed covers, a legal description of the real property that is subject to the trust deed and various representations, warranties and covenants pertaining to non-waste, property insurance, events of default and remedies. This document requires the trustor's (borrower's) signature to be signed in front of a notary public and recorded with the county recorder. 5.23 Rider to Deed of Trust This document closely follows the content of the loan agreement and includes conditions regarding the Affordable Housing Program and other program requirements. Like the deed of trust, this document requires signatures to be notarized and the document recorded with the county recorder. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-2 Documentation 5.24 Loan Agreement The loan agreement will set forth the bRsic terms of the transaction, the grant of the security interest, the description of the collateral, and various affirmative and negative covenants, representations and warranties, events of default and remedies. A standard loan agreement is essential where the promissory note is a straight note without detailed provisions regarding the loan transaction and collateral. Loan agreements may be standard, or they may be tailored to the transaction involved. However, the provisions set forth below are common to most loan agreements: Parties to the Agreement Provide legal names and addresses. Recitals This section describes the agreement to purchase the property, the borrower's need for assistance from the City to purchase the property, the low or moderate income requirement of the borrower, the intention of the borrower to reside in the property, and the source of the funds available through the Affordable Housing Program. Representations and Warranties & Covenants These are generally broad statements and cover a representation as to the present facts, as well as a covenant as to the future. A sample of the matters which may be covered include: ► Borrower will maintain property as a personal residence ► Income information provided by the borrower is true and accurate. ► Buyer is a first time home buyer (if required by the program) ► Primary lender shall be reputable and approved by Agency or City. City of Huntington Beach Down Payment Assistance Loan Program —9 J� Polices and Procedures Page 5-3 Documentation ► Borrower will maintain specified types of insurance and name the City as an additional loss payee under a lender's loss payee endorsement. ► Borrower will maintain the property in a manner consistent with community standard. ► Borrower will notify City or Agency if property is sold with a possible acceleration/due on sale if the property is sold or transferred without City approval. ► Description of any "equity share" or unusual repayment conditions. ► Borrower will comply with Affordable Housing covenants as recorded within the Orange County recorder's office. Events of Default A list of events that will cause a default to exist including the time to cure the default. Documents A list of documents, including the promissory note, disclosure statement, deed of trust, Affordable Housing Agreement, and Notice of Right of Recission, if applicable. Indemnity Borrower indemnifies the City against all claims arising from or relating to the borrower, the loan agreement and any breach by the borrower. Waivers Borrower agrees that City or Agency's failure to require strict compliance does not constitute a waiver of any part of the loan agreement. City of Huntington Beach I Down Payment Assistance Loan Program :� Polices and Procedures Page 5-4 Documentation General Provisions These include a notice clause, no right to assign without the City's prior written approval, entire agreement, creditor/debtor relationship, amendments in writing, governing law,etc. 5.25 Affordable Housing Agreement The Affordable Housing Agreement is a document that places restrictions on the real property so that the property may be owned only by individuals whose income falls within certain income guidelines. 5.26 Disclosures And Notices Various laws and regulations govern real estate-secured loans and require that a lender provide the applicant or borrower certain information pertaining to the regulation, the lender or the credit transaction. These regulations are discussed as follows: Truth in Lending-Regulation Z Regulation Z is a consumer protection regulation that requires a lender to provide clear and understandable credit terms to consumers granted credit under specific situations. Regulation Z covers credit secured by any real property for any amount when granted to consumers for personal and household purposes. Notice of Right of Recission Regulation Z also allows consumers the right to cancel a loan transaction when a security interest is taken in their personal residence. This regulation does not apply to purchase money transactions as it covers property that is already owned by the applicant. However, in some cases, City of Huntington Beach Down Payment Assistance Loan Program Z, Polices and Procedures Page 5-5 Documentation the senior lien holder has required that the junior liens be provided recission notices. In order to comply with the senior lien holder's requirements, the City often provides this notice to the borrower. According to the regulation, the rescission period is three business days. No funds may be disbursed, no service may be performed, and no materials may be delivered in connection with the transaction until this time period has expired. However, the City may perfect its security interest and record the deed of trust prior to the expiration of this time period. If an applicant has requested a waiver to this period, the City may consider granting a waiver as an exception to policy only if the client provides a detailed, handwritten request describing the circumstances. Approval for a waiver of the recession period may only be granted by the City Attorney's office. Real Estate Settlement Procedures Act ("RESPA") RESPA requires that a lender provide disclosure information regarding the expenses involved in the 1-4 family real estate mortgage settlement process. Since the City is acting as a junior lender in all transactions, compliance with this regulation will be provided by the senior lender. For instructional purposes, however, the applicant should be receiving the following from the senior lender or broker at the time of application: ► A Good Faith Estimate of Closing Costs within 3 days of receipt of application. ► A booklet called Guidance to Settlement Costs within 3 business days of receipt of application. ► A Notice of Transfer of Servicing Disclosure at application or within 3 days of receipt of application. City of Huntington Beach Down Payment Assistance Loan Program �(� Polices and Procedures Page 5-6 Documentation At funding: ► The uniform HUD Settlement Statement (escrow provides this disclosure) ► Escrow account information if an impound account is used Flood Verification The Flood Disaster Protection Act requires a federally regulated lender to determine whether any real property associated with a loan transaction is located in a special flood hazard area. A flood certificate should be ordered by the Agency from selected flood information providers early in the credit evaluation process. If the property is found to be located within a flood hazard area, it is necessary for the borrower to obtain flood insurance. Evidence of such insurance must be provided to escrow prior to funding of a loan. 5.3 Commitment Letters A commitment letter may be provided to the applicant after the loan has been approved by City Council. The commitment letter sets forth the essential terms and conditions on which the loan will be consummated and funded. The letter should clearly state that the terms set forth in the letter constitute a proposal to lend and do not constitute an unqualified commitment. Consummation and funding of the loan is subject to the execution of loan documentation acceptable in form and substance to the City. (See exhibit 13 for a sample letter.) All commitment letters must be reviewed and signed by the Director of Economic Development. City of Huntington Beach I Down Payment Assistance Loan Program �; Polices and Procedures Page 5-7 Documentation 5.4 Document Preparation All documents are prepared by the City�4ttorney's office using template documents which have been previously approved by City Council. The City Attorney's office is responsible for the preparation of the appropriate documents to fit the particular loan program. Documents should be free of typographical errors and approved as to form by the City Attorney. This approval is indicated by the City Attorney's signature on the Loan Agreement. 5.5 Document Approval Master documents for each loan program are approved by the City Council. Specific loan documents are drawn and submitted to City Council. Additional guidance may be found in Chapter Loan - Processing. 5.6 Title Insurance Requirements The City's ability to lend money where real estate is being used as collateral is dependent in most cases upon the applicant having clear title to the property and being able to give the City a fully-perfected security interest in that property. In order to assure that title to real property collateral has been accurately represented, all loans made by the City of Huntington Beach that are secured by real estate shall be protected by a title insurance policy conforming to the guidelines described in this section. Title insurance is a guarantee by an insurance company that it will indemnify the insured (the owner of real property or other interested parties such as the City) against losses resulting from defects in the title City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-8 Documentation to the property. Those items specifically excepted from the policy of title insurance are not covered by the policy. Title insurance is substantially different,from other types of insurance. Fire, auto, health and life insurance protect against losses due to future events that cannot generally be eliminated. Title insurers, however, seek to eliminate future losses by accurately performing searches and examinations of title to real property. The major expense of a title company is incurred in conjunction with the search and examination functions and not for losses paid on policies. 5.61 Preliminary Report of Title Title insurance policies are issued on the basis of a preliminary report of title which is prepared by a title underwriter. These reports are prepared after a search of public records, maps and other relevant documents to ascertain title ownership and the existence of easements, restrictions, rights of way, conditions, encumbrances or other matters affecting the title to, or use of, real property. A visual inspection of the property may also be made prior to the issuance of certain title insurance policies, such as construction loan policies or policies exceeding specific dollar limits. Definition A preliminary report of title is a signed and dated formal report which sets out in detail the current conditions of title to a particular parcel of land. Issuance A preliminary report is issued in advance of the title policy so that the interested parties (i.e., the primary lender, escrow, the City or the buyer) can be aware of all matters. The matters shown on the report are: ► The estate or interest covered City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-9 Documentation ► The record owner of the estate or interest ► The parcel of land involved ► The exceptions, liens and encumbrances which affect the parcel at the . time of the report Additional information may be added to the report for information purposes but deleted on the title policy when issued. Examples are: ► Conveyances ► Rates ► Notices of Completion ► Endorsements ► Mechanics' Lien Insurance 5.62 Title Insurance Companies The title insurance company is selected by the particular escrow handling the sale of the property. The City will not normally have the ability to select a specific company; however, the title company identified by the escrow company should be reputable within the community. The most important single consideration in selecting a title insurer is the quality of its title work. One aspect of quality is the degree of risk that the title insurance company is willing to assume in eliminating or insuring against enforcement of known exceptions to title. The quality of a particular title insurance company in one county may be considerably different from the quality of the same company in another county. To determine this quality, it is necessary to have intimate local knowledge with parties who have enough experience in dealing with the company to assess its quality of service. City of Huntington Beach Down Payment Assistance Loan Program —�� Polices and Procedures Page 5-10 Documentation The financial stability of a title insurance company is also important. Should there be a claim for loss, the City wants to be insured by a company that has the ability to defend, at its own cost and without undue delay, all title-related litigation. Should an actual loss occur, the financial stability of the title company is a keyfactor in the timely payment and settlement of the claim. 5.63 Opening a Title Policy Order Escrow should be notified early in the application process that the City will require title insurance for all loans funded for a particular purchase. They will transmit this information to the title company so that the title company is prepared to issue a title policy upon the close of escrow. The escrow company will need to know the following: ► Amount of title insurance requested ►_ _.Type of title policy to be issued ► Individual to whom the policy will be directed, the City's address, phone number and a reference number for the loan After this information has been furnished, advise the escrow officer to send the following: ► 2 copies of the preliminary report ► Copies of all underlying documents (exceptions). From the time the initial contact is made with the escrow company and throughout the closing process of the loan, the escrow officer should be made aware of any information that might affect the issuance of the title policy at closing. This close communication is essential to ensure a smooth closing and avoid any last minute delays. City of Huntington Beach L.J ��1 Down Payment Assistance Loan Program Polices and Procedures Page 5-11 Documentation 5.64 Procedures for Reviewing a Preliminary Title Report A review of a preliminary title report and related documents should include: IN ► Verifying that the legal description of the property matches the property appraised. ► The status of the real property as to any existing encumbrances (including priority and amount). Encumbrances could include trust deeds, tax liens, judgments, etc. The City's general policy is to require that these encumbrances be subordinated, reconveyed or otherwise removed from title prior to the recordation of the City's deed of trust. ► The various CC&Rs which affect the property. Title can revert to the borrower free and clear from all rights, interest and liens created by the City if there is a breach in the CC&Rs. Therefore, when reviewing CC&Rs, it is important to look at the conditions and make sure the CC&Rs contain a lien subordination clause to the effect of: "provided that a breach of the foregoing conditions shall not defeat or render invalid the lien of any deed of trust made in good faith." This clause protects the lien of the deed of trust from the effect of any future revision. ► The size and location of all easements which affect the property. Easements are shown on the report in various formats. Typical easements that may not be locatable include underground conduits, cables, wires, etc. If these appear on the report, they may remain on the final title policy if the title company issues a 102.1 ("Unlocatable Easements") endorsement ► Taxes and assessments must be current; if not, they should be paid prior to funding of the loan. When reviewing the preliminary title report, the Agency staff member should write comments directly on the report next to each item, evidencing the review. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-12 Documentation Approving a Preliminary Title Report After thoroughly reviewing the preliminary title report in the manner described in this section, including the making of written comments and requirements on the report as necessary, the Agency staff member should approve the report by signing on the front page. The report, together with any related documentation collected, should be retained for comparison with the final title insurance policy following loan closing. 5.65 Title Policies There are two basic policy forms and two basic types of coverage. These are the CLTA policy and the ALTA policy. The two types of coverage available are "standard" or"extended" coverage. The number of printed exceptions to coverage determines if the coverage provided is "standard" or "extended". CLTA Policy The CLTA (California Land Title Association) standard coverage policy is used as an Owner's Policy to insure ownership of the interest or estate, or it is used in combination insuring both the City and the owner in a Joint Protection Policy. It may be modified in a variety of ways through the use of endorsements. For the most part, this policy relies on those matters of public record that impart constructive notice. However, protection against some off-record items is afforded under the policy: hidden defects of forgery, competency of persons in the chain of title and fraud are but a few. It insures against all defects in the insured's title disclosed by the public records and certain off-record risks, but it does not insure against the interest that would be disclosed by an inspection of the premises and inquiry of parties in possession. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-13 Documentation The CLTA standard policy will insure the City and/or owner against loss or damage if: ► Vesting is other than listed ► An undisclosed title defect, lien or encumbrance materializes ► A defect is found in the execution of the insured instrument. ► An assignment of the insured trust deed is found to be invalid, provided it is listed in Schedule B of the policy. ALTA Policy The ALTA (American Land Title Association) loan policy is written for lenders only and broadens the standard coverage to handle the requirements of both out-of-state and local lenders. This is an "extended" coverage policy of title insurance in which greater risks are borne by the title company, leaving less for the City to concern itself with. The security that the City seeks is a valid, enforceable lien that will have priority over both known and unknown claims and interests in the property. The City also wants assurance that the borrower has true title to the property given as security for the loan. The ALTA loan policy provides this coverage. In addition to the basic policy, endorsements are available to further amplify or alter the coverage so as to handle a variety of circumstances and interests in real property. The ALTA Extended Loan Policy will insure the City against loss or damage if: ► Vesting is other than as listed ► An undisclosed title defect, lien or encumbrance materializes ► There is no right to of access to a public street ► The title is unmarketable as insured City of Huntington Beach Al" own Payment Assistance Loan Program Polices and Procedures Page 5-14 Documentation ► The insured trust deed is invalid or unenforceable (unless a claim is based on usury or any consumer credit protection or truth-in-lending law). ► Liens superior to the insured trust deed are not shown in Part 1, Schedule B. ► Mechanics' liens gain priority over the insured trust deed (unless those liens arise from contract work started after the policy date and are to financed by the insured loan). Title Endorsements Either at the time the trust deed is originally recorded, at some time during the course of construction, when extending or modifying a loan or taking an assignment of an existing deed of trust, title endorsements should be obtained on each property, as appropriate. The most common standard endorsements are: ► CLTA Form 100 Violations of CC&Rs, Encroachments, Extraction of Minerals ► CLTA Form 102.5 Foundations ► CLTA Form 104 Assignment of Beneficial Interest in Deed of Trust ► CLTA Form 108.8 Additional Advances ► CLTA Form 110.5 Modifications to Notes or Deeds of Trust ► CLTA Form 116 Street Addresses CLTA Form 100 and 116 are commonly required for loans secured by single family residences. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-15 Documentation 5.66 Reviewing the Title Policy Title insurance is required for all loans secured by real property. The City requires that a minimum CLTA and pre prably an ALTA lender's policy be obtained through escrow. The Agency staff member is responsible for reviewing the title policy after escrow for the following: ► City or Agency is listed as insured. (should be same as the "beneficiary" on the trust deed) ► Borrower's name(s) are same as loan documents ► Primary lender loan amount is no greater than that which was known and approved by the City ► Lien position of City or Agency is as approved (second or third) ► Legal description is same as deed of trust and same as appraised property ► Policy is either a CLTA or ALTA policy ► The insurance amount is at least the amount of the City loan 5.7 Hazard Insurance Requirements All real and personal property taken as collateral must have adequate insurance coverage to protect the City from loss from fire or other hazards. Real and personal property collateral should be insured for an amount equal to the lesser of: (1) the loan amount, including all senior encumbrances, or (2) the replacement cost of the improvements. City of Huntington Beach "h Down Payment Assistance Loan Program Polices and Procedures Page 5-16 Documentation 5.71 Acceptable Insurance Companies Property Insurance should be obtainedonly from known insurance companies in strong financial condition. 5.72 Name and Property Address The name(s) of the insured(s) in the policy must be identical to the names of the borrowers listed in the loan documents. The property address must be that shown on the deed of trust. A legal description must be shown for rural properties, condominiums, or other situations if property address does not adequately define the location of the property (Example: Star Rout 5, Box 1 is inadequate.) 5.73 Policy Forms and Perils 1 to 4 Units On 1 to 4 unit properties, the policy must contain coverage equal to or broader than both fire and special form. Condominium, PUD, or De Minimus PUD Property Units must be insured under a policy or policies covering the entire fire division containing the subject units. The amount of coverage protecting the subject units must be in an amount not less than one hundred percent (100%) of the insurable value (based upon replacement cost). A co- insurance clause of less than 100% is not acceptable. The Homeowner's Association must have a comprehensive policy of public liability with a "Severability of Interest" endorsement covering all of the common areas. The coverage against dishonest acts (fidelity bond coverage) should generally be in the amount of$1,000,000 per occurrence. City of Huntington Beach U u Down Payment Assistance Loan Program Polices and Procedures Page 5-17 Documentation The City requires one complete, legible copy of the master policy covering the fire division in which the subject unit is located. Any additional loans on units within the diviion shall be referenced to this copy of the master policy. Each loan must have a separate Certificate of Insurance and Separate Lender's Loss Payable Form No. 438BFU. The certificate must specify: ► Name and address of entity being insured, or ► Homeowner's Association (if applicable) ► Borrower's Name ► Address or lot/tract number if address unknown ► Insurance agent name and address ► Expiration date of policy ► Description of borrower's property (unit#. townhouse #, etc.) Note: If the face of the Master Policy contains all of the above, a certified - copy will suffice in lieu of a Certificate. Where an Insurance Certification and Authorization form is received and accepted by the City, a Master Policy and Certificate will not be required. 5.74 Policy and Premium Term The policy term must be written for at least one year, or continuous until canceled. The City will accept an existing policy if it meets all requirements, for a minimum term of 90 days following closing of the loan. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-18 Documentation 5.75 Endorsements Generally, the City receives two types o.f endorsements in connection with its property insurance policies. - 438 BFU Endorsement or(equivalent) The salient provisions of a 438 BFU endorsement are: ► Insurance proceeds will be paid directly to the City. ► Insurance coverage shall not be terminated if the City initiates foreclosure proceedings. ► In the event that a borrower fails to pay an insurance premium when due, the insurance company must give the City a non-payment notice _.within 60 days and an opportunity to pay the premium due within 10 days after the receipt of such notice. ► The insurance company must give the City at lease ten days prior written notice of cancellation. ► After expiration the insurance policy will continue in effect for an additional ten days. This endorsement is required in all cases. The City's address must be shown either on the face of the policy or on the Form No. 438BFU. The following mailing address should be used: City of Huntington Beach Attn: Department of Economic Development 2000 Main Street Huntington Beach, Ca. 92648 City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 5-19 Documentation Replacement Cost Coverage Endorsement This endorsement provides that the insurance proceeds will be sufficient to allow for the complete replacement o' the property to a similar condition as before the event leading to the claim. 5.76 Minimum Coverage The policy must be in an amount sufficient to at least cover the City's security in the property. This is normally equivalent to the aggregate amount of the loan balance(s) or the replacement cost of improvements, whichever is less. 5.77 Proof of Coverage The escrow officer must certify the details of the coverage upon close of escrow by providing the original policy or binder. Policies must show an inception date prior to, or corresponding with, the date of the loan recordation. The policy must be complete when submitted. All endorsements must be attached or indicated on the policy. Policies replacing existing insurance must have an inception date not later than the expiration date of the policy it replaces. Binders Binders will be acceptable only if it gives the City the same level of protection we would receive in a policy. The binder must contain a clause that the lender will be protected for at least 10 days following notice of cancellation of the policy. The insurance agent may substitute a letter on his or her letterhead for this clause stating that he or she has the authority City of Huntington Beach Down Payment Assistance Loan Program AMI m Polices and Procedures Page 5-20 Documentation to act on behalf of the insurance company and that he or she guarantees our coverage under the policy will remain in effect at least 10 days after he or she notifies us in writing that the policy has/will be canceled. 5.78 Failure to Provide Coverage Escrow is instructed to fund the City or Agency loan when it has obtained evidence of insurance coverage. If escrow has followed instructions properly, coverage should be adequate at loan inception. However, a short term binder could expire quickly and may require follow-up soon after loan funding. Any renewal policy must be received at least 5 days prior to expiration of existing coverage. In the event a renewal is not received before the expiration date, the City may order insurance meeting its requirements as provided in the loan documents. If_a.Notice Of Cancellation is received on an existing policy and not reinstated prior to the cancellation effective date, the City may order replacement coverage. Such replacement coverage will include only fire and extended coverage, and will not provide for other risks such as liability or contents coverage. All premiums for new loans or assumptions are to be paid by the borrower. 5.79 Other Hazard Insurance The City may require flood, mudslide, and/or earthquake insurance depending upon the location of the property. City of Huntington Beach = q Down Payment Assistance Loan Program Polices and Procedures Page 5-21 Documentation 5.8 Role of Escrow The escrow company provides the services of an independent third party or intermediary to the buyer and seller of the property. Escrow may take action only upon written instruction. They will generally receive written instruction from several different sources during the escrow process, such as the holders of any existing loans on the property, termite inspectors, the title company, taxing agencies, etc. All are entities with specific interests in the transaction. Escrow has no obligation to act on anyone's behalf unless they receive instruction in writing. The City asks the escrow company to supervise the signing of the loan documents, verify identification of the parties through notarizing the deed of trust and rider, obtain evidence of hazard insurance, record the deed of trust in the appropriate lien position, obtain title insurance, and confirm the borrower's minimum cash down payment, To protect the City's interests in these loan transactions, all loans granted by the City require that these closing instructions be communicated to escrow in writing City of Huntington Beach � Down Payment Assistance Loan Program UN Polices and Procedures Page 5-22 LOAN MAINTENANCE & ACCOUNTING Loan Maintenance & Accounting Revised 8/25/95 q 6.1 General During the life of a loan several issues can arise which cause the City to revisit the credit file. Some of those issues may involve defaults, partial payments, full repayment, property insurance cancellation, etc. This chapter addresses those situations which may occur after the loan has been funded up to the point of full repayment. 6.2 File Organization = Credit and safekeeping file organization is an important aspect of the management of a loan portfolio. The City has elected to organize these files according to a basic credit file format. The objectives of this procedure are: ► To support the effort to ensure that all credit files contain the documentation necessary to support sound credit decision-making and the safekeeping files contain the appropriate documentation to protect the City's interests. ► To ensure that credit files are organized in a way that is efficient and clearly understood by individuals requiring access to the files. Legal documents and credit underwriting documentation are maintained in two separate files in two different locations. Material relating to the credit decision, such as applications, verifications, copies of primary lender documents, etc. are maintained in the Credit File located in the offices of the Redevelopment Agency. Original loan documents, such as the promissory note, recorded deed of trust, loan agreement, etc. are maintained in the Safekeeping File in the vault of the City Clerk's Office. City of Huntington Beach Down Payment Assistance Loan Program L1 Polices and Procedures Page 6-1 Loan Maintenance & Accounting Both departments are charged with maintaining their respective documents according to the following file organization system. 6.21 Credit File The credit file is organized with two sections located on the left and right sides of a file folder. With the file folder open, documents are stacked one on top of the other with the first document on the following list on top, the second one underneath, and so on. Left Side . File Summary Sheet . RCA . Approval Memorandum Down Payment Assistance Program Application (exhibit 7) • Information about Loans Secured by Home (exhibit 7) • First Lienholder's Approval Commitment • FNMA Form 1003 (Uniform Underwriting and Transmittal Summary) ' • FNMA Form 1003 (Uniform Residential Loan Application)' Credit Report . Verification of Employment, W-2s, Tax Returns . Verification of Deposits, Bank Statements, etc. • Copy Certified Escrow Instructions and all amendments • Copy Purchase Agreement . Appraisal • Preliminary title report • Fair Lending Notice • Settlement Cost Estimate • Disclosures or other documents provided by primary lender • Miscellaneous Provided by primary lender DI of Huntington Beach JI' Down Payment Assistance Loan Program L- Polices and Procedures Page 6-2 Loan Maintenance & Accounting Right Side . Approval & Documentation Worksheet (exhibit 8, copy) . Title Policy (copy) . Escrow communication at closing . Escrow settlement statement . Escrow Instruction Letter (exhibit 11, copy) . Loan Agreement (copy) . Promissory Note (copy) . Deed of Trust (copy) • Declarations of CCR's (copy, if applicable) . Disclosure (copy) . Recission (copy, if applicable) . Primary Lender loan documents(copy note, deed of trust, disclosure) 6.22 Safekeeping File Each safekeeping loan file is maintained by the City Clerk's office and housed in the vault. The file is organized with all documents (originals) stacked on top of each other on the right side, with the top document listed first. Right Side . Approval & Documentation Worksheet . Loan Agreement Disclosure Statement . Promissory Note . Deed of Trust and Rider . Affordable Housing Agreement, if applicable • Notice of Right of Recission, if applicable . Title Insurance Policy . Escrow Closing Statement • RCA containing approval of loans (copy, original RCA remains with City Clerk) City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 6-3 Loan Maintenance & Accounting 6.3 Loan Accounting The Down Payment Assistance Loan Program does not require principal or interest payments to be made during the term of a loan, except for accrued interest if a loan is assumed. Essentially, the principal balance of a loan will likely stay the same until it is paid in full or forgiven. For that reason, the loan accounting system employed by the City is a relatively simple one using a personal computer based spreadsheet program. The spreadsheet program keeps track of each loan by loan amount, borrower name, date made and program. The accounting for disbursed and undisbursed program funds is also monitored by a PC based spreadsheet program. At any one time, the software can produce a listing of loans disbursed under a specific program and the available funds for future loans. At least monthly, this information should be reviewed and checked for accuracy. by staff and a recap provided to the Director of Economic Development and the City Administrator for review 6.31 Accounting for Charge-offs A loan is considered a charge-off if it has been deemed uncollectable. These may be loans which have been forgiven according to the terms of the loan agreement or approved for partial repayment or no repayment according to section 6.4 of this chapter. In any event, the loan must be indicated as such on the spreadsheet accounting system and removed from the outstanding loan balance figures. City of Huntington Beach i Down Payment Assistance Loan Program I,�' Polices and Procedures Page 6-4 Loan Maintenance & Accounting 6.4 Partial Repayment Upon Sale/Refinance If a sale or refinance occurs in which there are insufficient funds to fully repay the loan due to depreciation in property value or over- indebtedness, approval to accept a partial payment as payment-in-full must be obtained from both the Director of the Economic Development Department and the City Administrator. 6.5 Defaults Even though no loan program requires repayment of principal and interest during the term of the loan, a borrower may still default on the terms of the loan if he or she violates other conditions of the loan agreement. These default issues can range from renting the property; selling or transferring the property without obtaining City approval; selling to a non- qualified household, non-payment of taxes, insurance or association dues, or non-payment of the first mortgage. Because of the time required to monitor these issues, the City will generally enforce only those defaults which come to the attention of staff through the on-going management of the loan portfolio. For example; if the City becomes aware of a sale transaction because a new property insurance policy has been received indicating a new owner, the City would pursue and expect payment in full from the original borrower. A demand letter would be sent to both the new owner and original borrower citing the sale of the property as an event of default. This action would undoubtedly prompt discussion with both of these parties. Further measures, such as filing a notice of default and proceeding with foreclosure would require the approval of the City Attorney. _ City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Page 6-5 Loan Maintenance & Accounting 6.6 Loan Payoffs From time to time the loans will be rep*d because the property has sold or is being refinanced. The City will generally receive a request for a payoff amount in writing. The request will usually come in the form of a Request for Beneficiary's Demand from an escrow, title insurance company or financial institution. Due to potential errors and misunderstandings when discussing payoffs verbally, the City will provide a payoff quote only upon a written request. Additionally, the City will communicate a payoff quote to the requester only in writing. While the calculation of the payoff amount may be performed by a staff member, the responsibility for reviewing and confirming the correct payoff amount lies with the Director of Economic Development. 6.61 Responding to a Request for Beneficiary's Demand The following steps should be taken when the City has received a request for loan payoff: ► Retrieve the credit file and review the Loan Agreement for repayment requirements. ► Prepare a memorandum describing the principal balance, interest rate, date of loan and current date, calculation of interest amount to the current date, and a per day interest amount for the estimated payoff date. Attach a copy of the Loan Agreement. ► Obtain the Director's review and signature on the memorandum. ► Attach a copy of memorandum to a copy of the Request for Beneficiary's Demand and send both to the requesting party. City of Huntington Beach Down Payment Assistance Loan Program La Polices and Procedures Page 6-6 Loan Maintenance & Accounting ► Place original memorandum and original Request for Beneficiary's Demand in the credit file at the top of the right side. Do not send the reconveyance of the trust deed at this time, even though the escrow company or title company may request it. Send the reconveyance only after the City receives payment in full. 6.62 Reconveying the Trust Deed After the City has received payment in full of"goodi2 funds, the deed of trust must be reconveyed. A Reconveyance of Trust Deed document should be requested from the City Attorney's office through a Request for Legal Services (exhibit 10). Provide the City Attorney with a copy of the recorded trust deed, the payoff quote memorandum and a copy of the instrument received for payoff(check from escrow or title company). The Reconveyance should be prepared with the borrower's name and address for receipt after recording and the document may be sent directly to the county recorder or to the entity which provided the payoff funds, such as the title or escrow company. They will record the document to finalize their transaction. They may require that the City pay the recording fee of$5-$10. A copy of the reconveyance should be sent to the City Clerk for filing with the original deed of trust. 6.7 Closing the Credit & Safekeeping Files After the deed of trust has been reconveyed, the credit and safekeeping files may be indicated on the exterior of the file folders as "closed" and filed in a separate area, if desired. `"Good" means that the funds are drawn on a title company. escrow or financial institution. Funds drawn on a personal account should be cleared first before reconveving the deed of trust. City of Huntington Beach 1�w Down Payment Assistance Loan Program a Polices and Procedures Page 6-7 EXHIBITS Current Loan Programs Exhibit 1 Revised 8/25/95 Program Iri : frf� � `:%`:.' N� ff.: � € . 'frra3isrr���`:'>tw %{.��:.,:w�r;::s; �ii.,n;5 si'i;.!.;;.:..�,w,s :;✓ r�.vim$ss.�y.,a 'sc ?;;.f,,�� f ^%,�:�;; '.so.:S`5„''':�;;;?rfs,,:�•; rN.�%�::wa,:;���"�'�.,f^�;£„�s%`%r�,�':,:fi ;s/..:N<;r xNAr,,�.;>ry,,.✓�,,� : ................. .... Date of DDA Unknown 12/20/93 11/1/93 Approval Funding Amount $100,000 $100, 00 $400,000 Income Level Moderate Low-Moderate Low Term 5 years Due on Sale 30 years Interest Rate 0% 5% 5% Max Loan $15,000 $15,000, reduced to $32,000 $10,000 3/7/94 First Time Buyer? Yes Yes Yes Matched Funds? Yes Yes No Repayment/Maturity Forgiven after 5 Principal & accrued Equity share and years interest due on sale. based on sale As of 3/7/94, based price % increase of on sales price % at least 5%, increase of at least otherwise interest 5%, otherwise interest is forgiven. is forgiven. Resale to Qualified Not Required Not Required Yes Household Default Conditions Repay Principal Principal & interest is Principal, accrued due. interest and equity share is due. Loan Assumable? No No Yes to qualified household. Interest is due upon assumption. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Exhibit 1 Prior Loan Programs Exhibit 2 Revised 8/25/95 Programxxi- Y.::.r:r.r,,:: .4xU{�(JJ��yi� :�,.::::r.::::::.....:.:::, t+,..�:,.�i.. �y �y.;:.:.... ..y+�y y,�y r/� A }}yy} i:clR�3:7::?:•':;i:::;iG'L�{f.jv':2C.v:Yi.'•i:}.iti:v:3�:.iiL k:.�i.:': t�. i;il:':>.:..;FF►Ni...... Date of DDA Unknown Approval Funding Amount $750,000 Income Level i Moderate Term 30 years Interest Rate 5% Max Loan $35,000 First Time Buyer? Yes Matched Funds? Repayment/Maturity Equity share and based - - - on sale price % increase of at least 5%, otherwise interest is forgiven. Resale to Qualified Yes. First Right of Household refusal after 60 days of marketing (selling to a non-qualified household) Resale to a non qualified household requires repayment of principal, interest & equity share.. Default Conditions Principal, accrued interest and equity share (declining value) is due. Loan Assumable? Yes to qualified household. Interest is due upon assumption. City of Huntington Beach M Down Payment Assistance Loan Program Polices and Procedures Exhibit 2 Signature/Approval Requirements- Exhibit 3 Revised 8/25/95 Approvals Required: . .A' .......... --------------- Economic Economic Loan Agreement Initiate & Development Development Approve Director Director or Redevelopment Director City Attorney Agency Counsel All Documents Approve as to form City Administrator Agency Executive Loan Agreements Approve Director Signatures Required: Borrower Borrower All documents Sign after council/agency approval at escrow. Mayor and City Chairman and Loan Agreement Sign after Clerk Clerk council/agency approval Additional Signature Requirements: ► Deed of Trust requires a Deed Certificate prepared and signed by the City Clerk's Office after the documents have been approved by the Council or Agency and prior to transmittal to escrow. City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Exhibit 3 Approved Escrow & Mortgage Lenders Exhibit 4 Revised City of Huntington Beach U �v Down Payment Assistance Loan Program Polices and Procedures Exhibit 4 Underwriting Worksheet Exhibit 5 Revised 8125/95 DOWN PAYMENT ASSISTANCE LOAN PROGRAM UNDERWRITING WORKSHEET Underwriting Criteria Yes No Means of Verification 1 j Is loan amount between$2,500 and$35,0007 2 ; Is this the applicant's principal residence? 3 Is the size of the household exceed the capacity of the unit being purchased? 4 Is gross income greater than program requirement of j $ [Enter maximum income for household size] 5 Are there any co-owners,other than co-occupants? 6 Is total housing expense ratio 35%or less? i 7 Does borrower have at least 3%minimum down payment? 16 Are household assets greater than$5,000 after dosing for salaried individuals and$10,000 for self-employed individuals? ii 9 Does the self-employed applicant have at least two years of income history? Is borrower a first time homeowner? Comments:Any shaded boxes which are checked must have a caomnwit explaining policy exception i 1 I ! Income Qualification Amount Verification Source A I Monthly Income Sources $ $ i $ i !I I Total Gross Monthly Income........... $. 8 I Proposed Monthly Housing Costs i Principal&Interest ! $ Taxes $ Insurance $ Association Dues $ Private Mortgage Ins. $ Utilities $ Total Monthly Housing Costs .......... I $ C Housing Costs/Gross Monthly Income(%) 1 % D i Funds Required to Close Escrow: i I l 1 Purchase Price $ Loan Expenses s Escrow Expenses $ Total required to close escrow ......... $ iE f Funding Sources: First Mortgage $ Borrower Funds ; $ City/Agency Loan#1 $ City/Agency Loan#2 ! s I ! Total funding sources ................ $ D must be sufficient to cover E F Borrower funds percentage of purchase % I ! price(must be greater than 3%) City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Exhibit 5 LowlModerate Income Range Exhibit 6 Revised 2/6/95 INCOME GUIDELINES AS DETERMINED BY HUD-NEIGHBORHOOD ENHANCEMENT AREA PROGRAM 1995 SPECIFIC SPOT BLIGHT ONLY FAMILY SIZE VERY LOW LOWER MEDIAN 120°/.MEDIAN INCOME INCOME INCOME INCOME TYPE OF LOAN DPL 3% 6% 9% 1 20,700 28,150 41,400 49,680 2 23,650 32,150 47,300 56,760 3 26,600 36,200 33,200 63,940 4 29,550 40,200 59,100 70,920 5 31,900 43,400 63,800 76,560 6 34,300 46,650 68,600 82,320 7 36,650 49,850 73,300 87,960 8 39,000 53,050 78,000 93,600 1. ORANGE COUNTY MEDIAN INCOME FOR FISCAL YEAR 19951S$59,100 2. LOWER INCOME IS NOT CALCULATED AT 90%OF MEDIAN 3. CALIFORNIA MEDIAN FAMILY INCOME IS S46,600 G/Housin8:95income 2J6/95 City of Huntington Beach Down Payment Assistance Loan Program l�,yJ Polices and Procedures Exhibit 6 Agency Application Form Exhibit 7-Page 1 CITY OF HUNTINGTON BEACH DOWN PAYMENT ASSISTANCE PROGRAM APPLICATION Name Current Address Home Phone No. Business Phone No. Household Income (Monthly Gross) Monthly Payment (Principal&Interest) Taxes Insurance Association Fees Private Mortgage Insurance Utilities(estimate) Percent of Income Indicate: Low_ Moderate_ Amount of Assistance Requested CDBG N/A Set-Aside What is the smallest amount of assistance from the City/Agency that will allow this borrower to qualify for the purchase of this unit? $ City of Huntington Beach Fl� Down Payment Assistance Loan Program LJR[12 Polices and Procedures Exhibit 7 Agency Application Form Exhibit 7-Page 2 INFORMATION ABOUT LOANS SECURED BY HOME TO BE PURCHASED Please complete the following: 1st Mortgage $ Uenholder Name Loan Number Loan Balance Address City St. Zip 2nd Mortgage $ (Redevelopment) Uenholder Name Loan Number Loan Balance Address City St. Zip 3rd Mortgage $ (CDSG) Uenholder Name Loan Number Loan Balance Address City SL Zip rarr►araaraaaarraraairrrraraaaararaaaaarraarrrrrrrarara Property Description Purchase Date Year-Built ❑Single Family OCondo/PUD OManufactured Home/Lot Purchase Price$ 02-4 Units OManufactured Home OOther Description of Home Estimated Living Area #of Bedrooms_ #of Full Bath(s)i#of 12 Baths Sq.FL(Heated Area Only) Remodeled Amenities Coveted Parking View:O No O Yes Please Specify OKitchen O In Ground Pod O None Major improven►ents/additions since property was bulk. OBath O In Ground Hot Tub/Spa O Garage:#of Cars_ O Completely. O Central AIr ConditioningO Carport#of Can_ Other Other Converted Garage Are Improvements on leased land? Please Specify Please Specify. O Yes O No O Yes(if yes,include copy of lease) ONo �1. City of Huntington Beach F:l Down Payment Assistance Loan Program U - Polices and Procedures Exhibit 7 Agency Application Form Exhibit 7-Page 3 Is this unit a condo conversion? Yes No If so; Are you currently a tenant in the project? Yes No Are you currently a Huntington Beach resident? _ '► Yes No How long? Are you currently employed in Huntington Beach? .Yes No How long? Empioyer. Certification: I/We certify that the information provided in this application is true and correct as of the date set forth opposite my/our signatures)on this apprication and acknowledge mylour understanding that any intentional or negligent misrepresentation(s)of the information contained in this application may result in civil liability and/or criminal penalties. Borrower Co-Borrower Name Name Date Date 2 City of Huntington Beach Al. Down Payment Assistance Loan Program Polices and Procedures Exhibit 7 DOWN PAYMENT ASSISTANCE LOAN PROGRAM APPROVAL & DOCUMENTATION WORKSHEET This form is a guide only. Complete instructions for the documentation and processing of a loan can be found in the Down Payment Assistance Loan Policies and Procedures Manual. . . .. ,t? ,N, -OA1 Mt�TtQN Borrower #1 Loan Amount Program Property Address #2 Loan Amount Program Purchase Price Primary Lender Down Payment Request Escrow Company&Address Escrow No.: Agency Approval(Signature of Director) Date LeP 1. LOAN.D4CUMENTATT4N�R PARATZQN(Legal Department) c,txei . .. .. . Request for Legal Services attached? Legal description attached? Exact borrower vesting or copy of escrow instructions: Name of trustee: _- Name of beneficiary: Documents approved as to form by attorney? Completed by City Attorney's office?(initial&date) 2. DOCUMENTATION REVI �V ( conQmic Development Documents Reviewed for: Correct vesting? Correct trustee&beneficiary Correct down payment percentage Correct program requirements Signature of City Attorney Insert pertinent information in all blank areas of documents except information to inserted by escrow Prepare RCA/RAA Submit to Administration to transfer to City Clerk for agenda Review documents&this worksheet for completion?(Initial&date of staff member) 3. LOAN.:&DOCUMENTATION APPROVAL (City Clerk) Send to City Council for approval City Clerk obtains signature of Mayor and attests to Mayor's signature Notarizations of Mayor and City Clerk's signature to be done by deputy City Clerks who are notaries City Clerk sends copies of all documents to Economic Development Department Completed. (Initial&date of City Clerk) Page 2 Down Payment Assistance Loan Program Approval & Documentation Worksheet 4. 1{UNDING PREPARATION; conomie Dvelo mend{ P Set up Purchase Order for funding amount Prepare Escrow Instruction Letter Correct lien position Correct down payment percentage Correct insured Request check from Finance Department Give final review of all documents Deliver Escrow Instruction Letter&check to City Clerk Complete(Initial&date of staff member) 5.:...: . FUNDING (City CIerk) Copy entire loan document package Copy of check signed by messenger to be used as record of receipt of packet by escrow company Call escrow to pick up Escrow pick ups and has all documents signed by borrower;Deed of Trust signed and notarized Escrow Company returns deed to City Clerk to attach Certificate of Deed Acceptance Complete(Initial&date of City Clerk) POST FUNDING RE' TEWEconomc Development) _ _ ._. _. _ Review escrow closing statement for correct down payment requirement Review and approve title policy for: Lien position is correct Vesting matches loan documents Insured matches beneficiary(either City of BB or Agency) Insurance amount is loan amount Property address is correct Review property insurance;amount&City or Agency as additional insured Review complete(Initial&date) _ __ __._. ....__ _. SAFIJKEEPING REVIEW ( �tyClerk) _ .. Review loan documents for: Correct borrower signatures Title Insurance approved by Economic Development Review this worksheet for completeness Copy of this worksheet sent to Economic Development for filing in credit file Documents filed in vault(Initial&date) This form remains with original documents and is filed in safekeeping in the City Clerk's office; a copy of completed form is filed in credit file. Request for Legal Services Exhibit 10 CITY OF HUNTINGTON BEACH REQUEST FOR LEGAL SERVICES RIS No. Gall Hutton, City Attorney Assn To Date Date Request made by Telephone Department INSTRUCTIONS: File request in the City Attorney's Office. Outline reasons for this request and state facts necessary for City Attorney to respond. Please attach all pertinent information and exhibits. TYPE OF LEGAL SERVICES REQUESTED: [ ] Ordinance [ ) Opinion [J Stop Notice [ ] Resolution [] Lease [ ] Bond [ ] Meeting O Contract/Agreement [] Deed [ ] Court Appearance [ ] Insurance [ ] Other Is Request for Preparation of Contract form attached? [ J Yes [ ) No Are exhibits attached? I Yes No If for Council action, If not for Council action, Signature of Department Head Agenda deadline desired completion date Council Meeting COMMENTS: Routing: GCH PDA JCB ATF SL ADL TM WBS RCS WSA This Request for Legal Services has been assigned to attorney telephone extension . His/her secretary is extension Keep the goldenrod copy for your files. Please reference the above RLS number for inquiries. Notes Filename Date completed: WP No. RCS 2/28/92 Rev. City of Huntington Beach �LN1�� Down Payment Assistance Loan Program 1 Polices and Procedures Exhibit 10 Escrow Instruction Letter Exhibit 11 Escrow Company Date: Address Re: Escrow# ,Borrower: Property Address: Loan Amount(s): The City of Huntington Beach is providing down payment assistance financing to the above referenced borrower(s)for the purchase of the subject property. You are instructed to record the deed(s)of trust and utilize the funds provided with this package when you can assure us that you have: ► Administered the execution by the borrowers of all loan documents included in this package. ► Obtained fire and extended coverage on subject property showing the beneficiary of our deed(s)of trust as additional insured. ► Obtained CLTA ❑ or ALTA ❑policy in the amount of our loan amount(s) with beneficiary(s) as insured. ► Determined that the borrowers have provided at least_% of the purchase price as a cash deposit into escrow. ► Placed us in the following positions behind a first trust deed in an amount no greater than$ Second position for loan#1 in the amount of$ Third position for loan#2 in the amount of$ You are instructed to provide us with the following upon the close of escrow: ► Certified copy of the first trust deed holder's note and trust deed. ► Certified (conformed) copy of our signed and notarized trust deed(s) ► Certified copy of escrow settlement statement ► Title policy(s) as described above. ► Property insurance policy or binder as described above. ► All original signed documents provided with this package with the exception of those requiring recordation. Recorded documents are to be returned to the attention of the City Clerk at the above address. If there are any questions, please don't hesitate to contact me at any time. Sincerely, City of Huntington Beach Down Payment Assistance Loan Program Polices and Procedures Exhibit 11 Accounts Payable Demand Invoice Exhibit 12 CITY OF HUNTINGTON BEACH ACCOUNTS PAYABLE DEMAND INVOICE VENDOR NAME I I I I I I I I I I I I I I A I I I I I I I I I I VENDOR NUMBER I I I I I I I I I J (IF XNOA20 PURCHASE ORDER # I I I I I I I (IF APPLICABLE) ASSIGNED INVOICE# I I I I I I I I I I I I I DATE REQUEST SENT DATE CHECK DESIRED ACCOUNT NUMBER }!cm L1J - L1J $LJJ,1 I 111_ _1•1 1 1 U - 1 I I - I I - W—I - " - I 1 J ' LJ_I $1 l_1_1J�l_L_L_1•L�J U ' 1J ' 1 1 1 - I l l l - LJ ' 1J ' 1 1 1 $W•I I I I,111 •W IJ - 1J ' 1 1 1 - I I I I - LJ ' LJ - W $W•I i 1 l,I I ► J•W U - 1J - W - l 1 l l - L-1 1 - 1- W $I- I 1,1 I I 1,1 1 1 1•1_1_1 L-1 - L_1__1 - 1 - 1 I I I - LJ - 1 - 1 LJJ $L_J•I I I I,I I I 1.1 LJ ' lJJ ' W - I I I I - LJ ' Ll ' W $W•) i I l.I I I I•W TOTAL $UJ,( I I J,u 1 .LU I cmg18 Anap n1UR4CXN Ir Imo'MNU CFMMM IUR39M CEM4 �B L AFHOOL 2aMU AP2UM his fa=is to be used QM PMOMW guts to amass or IndEv3Aas sr Qh1ch m 3aodts ems. City of Huntington Beach Down Payment Assistance Loan Program Lam` ` Polices and Procedures Exhibit 12 Sample Committment Letter Exhibit 13 Date [Borrower Name] [Mailing Address] Re: [Property Address] Dear [Borrower]. The City of Huntington Beach is pleased to inform you that your request for a down payment assistance loan to purchase the above property has been approved. This approval is for a second trust deed loan containing the following general terms and conditions: ► Amount: $ ► Interest Rate ► Maturity: This conditional approval is predicated on the statements made by you and the financial information provided to us in your loan application package.:These conditions are: ► Total purchase price of$ ► Maximum first mortgage amount of$ ► Your cash contribution of at least$ ► You are a first time home buyer[if applicable] ► Your stated household income is $ / You will occupy this property as your personal residence. The following items are still required to complete your package prior to funding: U any of these conditions should change or if your financial position should deteriorate prior to loan funding, the City reserves the right to withdraw this approval. Sincerely, City of Huntington Beach mil? Down Payment Assistance Loan Program lf�, Polices and Procedures Exhibit 13 Fair Lending Notice Exhibit 14 FAIR LENDING NOTICE To: All applicants fora real property secured loan to purchase,colhstruc.-rehabilitate,improve or refinance an owner-occupied one-to-four family residence;and all owner-applicants for a real property secured home improvement loan to improve a one-to-four family residence(whether or not owner occupied): "Ttie Federal Equal Credit Opportunity Ad prohibits creditors from-discriminating against credit appliicantslon the basis of race.color.religion.national origin,sex.marital status.age(provided that the applicant has the capacity to enter into a binding contract);because all or part of the applicanCs income derives from any pubra assistance program;or bemuse the applicant has in good faith exercised any right under the Consumer Credit Protection.AcL The Federal agency that administers compliance with this taw concerning this creditor is the U.S.Comptroller of the Currency.Consumer Affairs Division,Washington.D.C.20219:' The California Housing Financial Discrimination Ad of 1977 provides in part as follows.. **35810.No financial institution shall discriminate in the availability of.or In the provision of,financial assistance for the purpose of purchasing.constructind.•rehabifrtating.improving.or refinancing housing acoortutwdations due.in whole orin part,to the consideration of conditlons.characteristics. or trends In the neighborhood orgeographic area surrounding the housing acconuttodation,unless the financial instibASon can demonstrate that such oonskWadon In the particular case Is required to avoid an unsafe and unsound business practice. . 35811.No financial htstibipon shall discriminate in the availability of.or In the provision of.financial assistnce for the purpose of purchasing.eonst xx".rehabilitating.knpfovlrlg or refinancing - hogsing aocommodations due..in whole or in part.to the consideration of race,color.religion,sex. marital status.national origin.or ancestry. 35812 No financial institution shall consider the racial.ethnic.relg'wus.or national origin compost- tkm of a neighborhood or geographic area surrounding a housing accommodation orwhetheror not such composition is undergoing change.or is expected to undergo change.In appraising a housing accommodation or in determining whether or not and under what terms and corididom to provide financial assistance for the purpose of purchasing,constructing.rehabilitating,improving.or refi- nancing a housing accommodation.No financial institution shall utffize appraisal practices that are inconsistent with the provisions of this part.'* If you wish to file a complaint,or if you have questions about your rights.contact Comptroller of the Currency Administrator of National Banks Western District Consudi er Complaint Department 50 Fremont Street Suite 3900 San Francisco.California 94105 t(We)received a copy of this notice. ERE (S;gnature Of Applicant) (Date) (S;gnatufe of Applicant) (Date) An Equal Housing Lendei `ENDER City of Huntington Beach r7i�I Down Payment Assistance Loan Program I� �f Polices and Procedures Exhibit 14 � Loan Documentation � Audit � � prepared for the � City of Huntington Beach 1 February 11 , 1995 tKristine D. Price 412 Fourth Street*Encinitas*California 92024 1 � t ATRch Purpose .r ' Loan Documentation Audit ' Purpose of Audit ' The purpose of this audit was to determine if specific loan documentation is adequate to protect the City's security interest in property taken as collateral for funding under various down payment assistance programs. Additionally, the audit was to provide recommendations to correct any deficiencies noted. ' Documents for each loan were examined for the following: ► Appropriateness to the transaction; its function and requirements ► Accuracy in preparation; correct names, approved terms and conditions ' ► Accuracy of execution; appropriate signatures, notaries, dates ► Missing original documentation ' ► Fair Lending, Regulation Z, RESPA and Flood Act regulations g � ' Specific documents were also reviewed as follows: ► Escrow opening and closing statements for appropriate funding requirements, ► Title Insurance to determine lien position and accurate document preparation. ' This report is directed to and intended for the sole use of the City of Huntington Beach. City of Huntington Beach February 10, 1995 Page 1 Scope ' Loan Documentation Audit ' Scope The audit examined 19 borrowers consisting of a total of 27 notes with an aggregate outstanding balance of$400,876. This encompassed 100% of the list of borrowers provided ' to the auditor.' The audit was performed at the office of the City Clerk of the City of Huntington Beach at 2000 Main Street, Huntington Beach during the period January 25, 1995 through January 27, 1995. Original documents and credit files were provided for review. List was dated 9/28/94 and attached to memorandum dated 10/4/94 from Gail Hutton to Michael Uberuaga. ' City of Huntington Beach February 10, 1995 Page 2 t Ratings _ � _ � _ Loan Documentation Audit Ratings Adherence to generally accepted practices to document loans. N/A Needs Improvement Adequacy and consistency in choosing the appropriate documents for the N/A Satisfactory particular loan transaction. Accuracy in preparing documents; completing the document and N/A Unsatisfactory obtaining correct signatures. Quality of follow-up and file completion. N/A Unsatisfactory Adherence to federal consumer laws and regulations, as applicable to the N/A Needs type of loan and specific documentation contained in the file. Improvement Quality and condition of the Bank's credit files. N/A Satisfactory Overall Documentation Quality N/A Needs Improvement Ratings Dermitions Good Consistent adherence to generally accepted loan documentation procedures. No regulatory deficiencies or violations of law. Satisfactory Generally consistent adherence to generally accepted documentation policies and procedures or to prudent documentation practices with deviations/deficiencies not of a serious nature and with a minimal number of occurrences. If there are regulatory deficiencies they are minor and not violations of law. Needs Inconsistent or lack of adherence to generally accepted documentation policies and Improvement procedures with deviations/deficiencies significant enough to warrant appropriate management attention. If there are regulatory deficiencies they are minor and are not violations of law but are a large percentage of the sample or a violation of law which appears to be an isolated incident. Unsatisfactory Consistent lack of adherence to generally accepted documentation policies and procedures significant enough to require immediate corrective action by City management. If there are regulatory deficiencies, they may include consistent regulatory violations of law. _ City of Huntington Beach February 10. 1986 Page � Frequency � - ~ � _ _ _ _ _ _ _ _ Loan Documentation Audit Exception Frequency UTLI hazard insurance showing City as loss payee 17 Documents refer to exhibits which are not attached 17 UTL evidence that flood zone was determined 16 Documents not dated, incomplete or have blanks 16 UTL evidence that Fair Lending Notice was provided to applicant 15 UTL copy of credit report 11 UTL copy of primary bank appraisal 11 Disclosure cash down payment % not filled in or is inconsistent with other documents I I UTL certified escrow instructions 10 UTL copy of settlement statement 10 UTL title insurance policy 8 Trustor's name not complete on deed of trust 5 UTL tax returns or insufficient number of years in file 5 Document contains corrections, white-out, etc. without borrower's initials 5 Fax paper in credit file 4 UTL original documents, or originals were found at escrow company 4 Mayor's signature is not attested by City Clerk 4 Deed of Trust missing Exhibit A, legal description -3 UTL copy of purchase contract 3 Deed of trust and/or rider not recorded 2 Credit file worksheet lists primary loan amount incorrectly 2 Down payment amount is less than City matching funds 2 Tax returns not signed 2 Title insurance policy is incorrect 2 UTL commitment/approval letter to applicant _ 2 Unable mlocate City of Huntington Beach February 10. 1905 Page _ General Findings .r ' Loan Documentation Audit ' General Findings The City of Huntington Beach's Down Payment Assistance Program is currently operated under three basic assumptions, all of which carry some risk. Depending upon the City's goal for this program, these risks may be unacceptable. The first assumption is that the primary lender will underwrite and qualify the borrower and the collateral adequately and that the City does not need to perform independent due diligence in these areas. Generally, if working with a highly reputable lender, this assumption may be ' safe. However, junior lenders have historically been the recipients of "bad deals" when it comes to taking a junior position behind a primary lender. The senior lender does not care if the junior lender has perfected his position or if the junior lender ever gets paid. Lending ' behind an unfamiliar senior lender, not reviewing the senior lender's appraisal or obtaining certified escrow instructions could inadvertently result in the City's Down Payment Assistance Program providing the borrower with 100% financing. The second assumption is that brokers and escrow companies will protect the City's interests P P P Y during the funding process. These individuals are motivated only to close the deal. An escrow company is obligated to perform only to the extent of the written instructions they receive from the City. They are not required to record the deed of trust or rider (they didn't ' in two cases), return original documents (not in four cases), provide settlement statements (ten cases) or provide title insurance policies (eight cases). Unless told so, they will also not insure that the borrower provides the correct down payment. As an entity acting in a fiduciary role, there are important reasons why the City has attached specific eligibility requirements to these loans. If the funding is not reviewed, how does the ' City know that their down payment assistance program is providing funds properly? A relaxed approach to the settlement of funds by the lender can also result in potential fraud on the part of borrowers and service providers. An unethical escrow company knowing that the ' City never asks for settlement statements, title insurance or the original documents will quickly determine that this is a potential source for easy money. The third assumption is that these loans may never be repaid. Whether the City expects to ever be repaid is not the issue. Often lenders provide financing for community benefit with ' the full knowledge that the loans may not be repaid. That doesn't deter them from documenting the credit accurately and fully. They know that any loan that is repaid will create an opportunity to lend those funds to someone else. City of Huntington Beach February 10, 1995 Page 5 Loan Documentation Audit ' This examination clearlyreflects the operation of these three assumptions. Specifically, there P P P Y� ' is far too much expectation by staff that the other parties to the transaction will do their tasks properly and will act on the City's behalf. In many cases, the escrow companies failed to complete documents properly, record documents, return original documents to the City and ' provide basic reporting. In turn, the City failed to follow-up for these items and provide adequate review of the completed transactions. This points to systemic problems within the documentation and funding delivery system. Systemic issues are those practices which tend to be continuous, and are not by themselves major documentation errors but when grouped together or with other systemic issues can ' become a problem for a lender and may eventually result in loss. It is this reviewer's opinion that the City's systemic issues are primarily the result of the lack ' of well-defined written policies and procedures for the approval, documentation, funding and maintenance of the loan portfolio. Specifically, the audit revealed the following: ' ► the existence of a significant number of documentation preparation errors, such as percentages, dates, addresses and names left off entirely, incomplete or incorrect. ► inconsistent clauses within the documentation, where one document instructs one way and another instructs differently. ► attachments are listed, described and incorporated into various documents, but were not attached and made a part of the document. ► the failure to instruct escrow of the minimum requirements for funding and to obtain basic post funding documentation, such as title reports, settlement ' statements, and in some cases, original City documents. ' ► the failure to review settlement statements to confirm borrower's down payment amount and that other funding conditions were met. In one case, the borrower received a refund from escrow reducing his contribution to the transaction to ' less than the City's matching funds. City of Huntington Beach ' February 10, 1995 Page 6 ' Loan Documentation Audit ' ► the failure to determine correct borrower's names before drawing loan documents. ' ► the failure to obtain basic underwriting documentation from the primary lender, such as credit reports, appraisals, certified escrow instructions, etc. ' ► the failure to obtain verification of flood map status before funding the loan. As a lender of federal funds, the City may also be covered by the Flood ' Protection Act and must obtain this verification as any other federally regulated lender would. ' ► the failure to provide California Fair Lending Notices to applicants. ' ► the failure to confirm property insurance coverage listing the City as an additional loss payee before or as a condition of loan funding. ' ► the retention of fax paper underwriting documentation in the credit file, which will rapidly deteriorate eventually resulting in an empty file. ' ► the confusion regarding the authorization of certain individuals to sign on behalf of the City. Documents prepared prior to February 1994, generally did not have Mayor or City Clerk signatures. Documents post 2/94 often had the ' Mayor's signature but without the City Clerk's attest. ' ► requiring unnecessary documents, such as rescission notices, or having signatures unnecessarily notarized. ' City of Huntington Beach February 10, 1995 Page 7 Recommend s ' Loan Documentation Audit Recommendations -► Obtain all missing title policies, settlement statements and property insurance policies to complete the review of those specific loans. —+ Upon the advice of counsel, repair any documents which, without repair, could cause a potential loss to the City. —► Establish a detailed written policy and procedures manual for the use of all staff ' involved in any manner with the granting of credit. Topics should include, but not be limited to: ► Specific program descriptions and borrower requirements ► Criteria and methods to approve primary lenders, mortgage brokers and escrow ' companies. ► Underwriting procedures and minimum documentation requirements ' ► Credit file organization ' ► Approval authority, process to obtain approval and approval procedures for exceptions to policy ' ► Documentation preparation, including approval and signature requirements ► Requirements for flood, hazard and title insurance ' ► Funding the loan, including preparation of escrow instructions ' ► Post funding auditing requirements ► Safe keeping procedures, including specific responsibilities of City Clerk's office and safekeeping file organization. ► Default procedures ' ► Payoff procedures City of Huntington Beach ' February 10, 1995 Page 8 ' Loan Documentation Audit ' Create a series of checklists to enable staff to implement these policies and procedures; for example: ' ► Create a simple form with a format to follow for underwriting the loan request. This form should show all underwriting criteria and analysis. List specific ' program requirements, the borrower's method of meeting those conditions and the source within the credit file; for example: "First time homeowner: Borrower provided three year's tax returns which do not show any mortgage interest deductions" ' ► Create an "Approval Worksheet" which is initiated at the time the loan is recommended for approval and follows the loan documents from drafting, City Council approval, City officials' signatures, transmittal to escrow by the City ' Clerk, and finally return for review and safekeeping. The worksheet should have specific instructions for each stage and should be laid out in a sequential manner. ' ► Create a "Document Request" form to be used to order documents from the City Attorney. Should contain a list of all approved documents by form# or ' revision date. The objective is to have two groups responsible for proper documentation, both the Agency staff and the City Attorney. This should avoid inconsistencies within documents and to provide all appropriate attachments. ' ► Create a "Pre-funding Audit Checklist" to be used by the Agency staff to check all loan approval conditions and to help prepare the escrow/title instructions. ► Create or use a commercially prepared title company/escrow instruction form. This form accompanies the funding check to escrow and specifically describes ' the City's conditions for funding, including down payment requirements, lien position, hazard insurance, and title insurance requirements. ► Create a "Post-funding Documentation Checklist" for Agency staff to check all original loan documents upon their return from escrow, prior to transmittal to the City Clerk for safekeeping. Includes title policy review, settlement ' statement review and hazard insurance policy review. ► Create a "Safekeeping Documentation Checklist" for City Clerk's office listing ' each document to be held for safekeeping and the signature/approval requirements. City of Huntington Beach February 10, 1995 Page 9 Limiting Conditions 4 Loan Documentation Audit Limiting Conditions This documentation review and any recommendations that the reviewer may make in respect to specific documentation practices are the sole opinion of the reviewer. It is expected that the City will take whatever prudent action necessary in regards to loan documentation considering the requirements of the transaction, including seeking the advice of internal or outside counsel. Recommendations contained in this report are necessarily general in nature and may not be appropriate for all loan transactions. Because of the large number of title policies and settlement statements unavailable for review, those particular loans have not had the benefit of a complete audit. For that reason this audit cannot provide the City with full assurance that all possible documentation errors have been found. Areas not reviewed include the accounting and control procedures for the release of loan funds, procedures for the monitoring of loan balances or program funding limits, or specific underwriting policies for each loan program. All of these issues were outside of the scope of this audit but are valid subjects for review considering the general lack of written operating policies and procedures. Finally, the audit methods and procedures were not intended or expected to uncover fraud or malfeasance of any kind. Kristine D. Price Date City of Huntington Beach February 10, 1995 Page 10 Exception Sheets Loan Documentation Audit Borrower: Bastou: Valerie Borrower #: 94-11 Note Date: 6/94 Property Address: Program and Loan Amount: ' 409 Utica D-43 1). Agency $25,000 2). CDBG $ 5,000 ' Item Dcurixent +� �u . 1 UTL tax returns for three years. 1992 only in file. ' 2 UTL hazard insurance showing City as loss payee. 3 UTL evidence that flood zone was determined ' 4 UTL certified escrow instructions 5 UTL copy of settlement statement ' 6 UTL evidence that Fair Lending Notice was provided to applicant ' 7 UTL title insurance policy. 8 Loan Agreements refer to exhibits which are not attached (A, B, C, D). ' Agreements are not dated. Borrower initialed statement within the agreement which says that the property is not affordable housing. Other records indicate that this property is a recorded affordable housing project. ' 9 Disclosures are not dated. 10 Promissory notes are not dated, 11 Deed of Trust is missing exhibit A, legal description. City of Huntington Beach ' February 10, 1995 Page 11 ' Loan Documentation Audit ' Borrower: Culaciati, Diana C. Borrower #: 93-1 Note Date: 12/93 Property Address: Program and Loan Amount: ' 1200 Pacific Coast Highway #104 1). CDBG $13,000 Um........................ [ .:#...:......ratan._.-. .................. . .......... . . . . .:.:...::.::.:::.:.:.::. 1 Copy of primary bank application for credit is on fax paper. Any fax paper items should be recopied on plain paper to avoid deterioration. ' 2 UTL copy of credit report. 3 UTL copy of primary bank appraisal. ' 4 UTL hazard insurance showing City as loss payee. ' 5 UTL evidence that flood zone was determined. 6 UTL certified escrow instructions. 7 UTL copy of settlement statement. 8 UTL evidence that Fair Lending Notice was provided to applicant. 9 UTL title insurance policy. 10 Loan Agreement refers to exhibits which are not attached (A, B, C, D). ' 11 Disclosure refers to a minimum cash down payment required. Percentage amount is not filled in. ' 12 Deed of trust Rider is signed by Mayor. No attest by City Clerk. Signature of trustor was signed over an area of white-out. This practice is not advisable. City of Huntington Beach ' February 10, 1995 Page 12 ' Loan Documentation Audit Borrower: Diekmeyer, Barbara J. Borrower #: 94-06 TNote Date: Unknown iProperty Address: Program and Loan Amount: ' 409 Utica B-21 1). CDBG $10,000 2). Agency $23,000 i U ' 1 UTL hazard insurance showing City as loss payee. 2 UTL evidence that flood zone was determined. ' 3 UTL copy of settlement statement. ' 4 UTL evidence that Fair Lending Notice was provided to applicant. 5 Title insurance: Insured is incorrect for both loans. Lien position is listed ' incorrectly, but recording sequence is correct. Policy coverage is limited; would recommend obtaining CLTA coverage for any purchase money transaction. ' 6 Loan Agreements refer to exhibits which are not attached (A, B, C, D). 7 Disclosure refers to a minimum cash down payment required. Percentage ' amount is not filled in for loan #1. 8 Documents do not contain full name of trustor. Middle initial "J" is not ' included. 9 Deed of trust contains a white out area with retyping that was not initialed ' by trustor. The clause is benign and has no material effect on the transaction. Exhibit A, legal description, is not attached. 10 Credit file worksheet refers to the primary loan amount of$71,300. ' Recorded lien was $71,000. ' City of Huntington Beach February 10, 1995 Page 13 tLoan Documentation Audit t Borrower: Dixson, David C. Borrower #: 93-10 Note Date: 1/5/94 ' Property Address: Program and Loan Amount: ' 6600 Warner #176 1). CDBG $10,000 tern W.Ue . .... 1 UTL copy of credit report. 2 UTL copy of primary bank appraisal. ' 3 UTL hazard insurance showing City as loss payee. 4 UTL evidence that flood zone was determined. 5 UTL certified escrow instructions. ' 6 UTL copy of settlement statement. 7 UTL evidence that Fair Lending Notice was provided to applicant. ' 8 The following original documents were found at Hallmark Escrow during the audit: Promissory Note, Disclosure, Loan Agreement and the Rider to ' the Deed of Trust. 9 Loan Agreement refers to exhibits which are not attached (A, B, C, D). ' Affordable housing clause not initialed. Participant address not completed. 10 Disclosure refers to a minimum cash down payment required. Percentage ' amount is not filled in. 11 Rider to the Deed of Trust was not attached to recorded document and was found, along with the other original documents, at Hallmark Escrow. ' Apparently, escrow did not record the Rider along with the deed of trust. 12 Credit file contains fax paper. Copies should be made to avoid ' deterioration. tCity of Huntington Beach February 10, 1995 Page 14 ' Loan Documentation Audit Borrower: Griffin, Olga Cristina Borrower #: 94-17 Note Date: 10/4/94 ' Property Address: Program and Loan Amount: ' 409 Utica C-23 1). CDBG $ 5,300 2). Agency $25,000 T€ rn . aumettlt3 :Iu ..:::.....:::.:.:.:: :::>::: ....................................... ,::::::.:: .::.>::.>:.::::. . . ' 1 UTL copy of credit report. 2 Tax returns are not signed. ' 3 UTL copy of primary bank appraisal. 4 UTL hazard insurance showing City as loss payee. 5 UTL evidence that flood zone was determined. ' 6 UTL certified escrow instructions. 7 UTL copy of settlement statement. ' 8 Loan Agreements refer to exhibits which are not attached (A, B, C, D). 9 Rider to the deed of trust does not contain the complete address of the collateral (city and state are missing). 1 ' City of Huntington Beach February 10, 1995 Page 15 ' Loan Documentation Audit Borrower: Hoang, Tam Borrower #: 94-10 Note Date: 3/16/94 ' Property Address: Program and Loan Amount: ' 409 Utica D-37 1). CDBG $ 6,143 2). Agency $23,000 .:..;.. . Item acumentat IIssue 1 Only two years tax returns in file. 2 UTL copy of primary bank appraisal. 3 UTL hazard insurance showing City as loss payee. ' 4 UTL evidence that flood zone was determined. 5 UTL copy of purchase contract. ' 6 UTL certified escrow instructions. 7 UTL copy of settlement statement. ' 8 UTL evidence that Fair Lending Notice was provided to applicant. ' 9 Property vesting is Tam Nho Hoang; all documents are in the name of Tam Hoang. Should be the same. 10 Loan Agreements refer to exhibits which are not attached (A, B, C, D). ' 11 Disclosure for loan #1 refers to a minimum cash down payment required. Percentage amount is not filled in. ' 12 Promissory note amount has been erased and re-typed without borrower's initials. ' 13 UTL commitment/approval letter to applicant. 14 Rider is signed by the Mayor without City Clerk attest. ' City of Huntington Beach February 10, 1995 Page 16 ' Loan Documentation Audit ' Borrower: Kormeluk, Nicholas Borrower #: 93-9 Note Date: 12/29/93 Property Address: Program and Loan Amount: 17202 Corbina Lane #201 1). CDBG $10,600 .... . tet�n Dti«tx��ex►� tion Issre :. 1 UTL copy of credit report. 2 UTL copy of primary bank appraisal. ' 3 UTL hazard insurance showing Y as City loss payee. 4 UTL evidence that flood zone was determined. 5 UTL evidence that Fair Lending Notice was provided to applicant. ' 6 Loan Agreements refer to exhibits which are not attached (A, B, C, D). 7 Disclosure refers to a minimum cash down payment required. Percentage ' amount is not filled in. 8 Promissory note date is typed 12/29/92, with 1993 preprinted after date. Date referring to loan agreement is blank. 9 Rider to deed of trust refers to loan agreement; date of loan agreement is blank. 10 Deed of Trust exhibit A, legal description, is not attached. ' City of Huntington Beach February 10, 1995 Page 17 i iLoan Documentation Audit 1 Borrower: Lawson, Sally Borrower #: 94-4 TNote Date: 2/94 Property Address: Program and Loan Amount: i 409 Utica A-1 1). CDBG $ 6,000 2). Agency $23,000 em .......... It # r c xe x tto 1 UTL hazard insurance showing City as loss payee. ' 2 UTL evidence that Fair Lending Notice was provided to applicant. 3 UTL title insurance policy. ' 4 Loan Agreements refer to exhibits which are not attached (A, B, C, D). 5 Disclosure refers to a minimum cash down payment required. Percentage ' amount is not filled in. 6 Property is vested "Sally S. Lawson", documents drawn "Sally Lawson". ' Should be the same. 7 Rider to the Deed of Trust signed by Mayor; no attest by City Clerk. 1 1 ' City of Huntington Beach February 10, 1995 Page 18 i ' Loan Documentation Audit Borrower: Love, Treva Borrower #: 94-2 TNote Date: 1/10/94 ' Property Address: Program and Loan Amount: ' 7881 Woodlake Dr. #370 1). CDBG $14,000 Its Dr t xr€e # t v SS .. «: 1 UTL copy of primary bank appraisal. 2 UTL hazard insurance showing City as loss payee. ' 3 UTL evidence that flood zone was determined. ' 4 UTL evidence that Fair Lending Notice was provided to applicant. 5 UTL title insurance policy. ' 6 Loan Agreements refer to exhibits which are not attached (A, B, C, D). Agreement indicates that property is not affordable housing, yet list of attachments includes exhibit D, the affordable housing agreement. 1 ' City of Huntington Beach February 10, 1995 Page 19 ' Loan Documentation Audit Borrower: Melvin: Patrick & Nelide Borrower #: 94-13 Note Date: 7/94 ' Property Address: Program and Loan Amount: 409 Utica D-39 1). CDBG $10,000 2). Agency $35,000 itm Dcun to e as All documents were prepared by hand writing in names, amounts, dates, etc. ' 1 UTL copy of credit report. 2 UTL copy of primary bank appraisal. ' 3 UTL hazard insurance showing City as loss payee. 4 UTL evidence that flood zone was determined. ' 5 Settlement statement was obtained from escrow during audit. Disclosure states borrower is to provide 8% cash down; actual cash down 7.5 ' 6 UTL evidence that Fair Lending Notice was provided to applicant. 7 Title insurance policy shows property vested in Patrick M. Melvin and ' Nelide Ito, H/W J/T. Deed of trust drawn as "Patrick & Nelide Melvin.", and has no document date. Preprinted year is 1993 instead of 1994, date is not filled in for the loan agreement date within the body, no name inserted ' for trustor in the rider, names, dates and loan amounts are all handwritten. 8 Loan Agreements refer to exhibits which are not attached (A, B, C, D). ' 9 Disclosure states minimum cash down payment of 8% is required. Loan Agreement states 3% required. Inconsistent. ' City of Huntington Beach February 10, 1995 Page 20 ' Loan Documentation Audit Borrower: Ommondson: Ellen Borrower #: 94-3 TNote Date: 1/94 ' Property Address: Program and Loan Amount: ' 21372 Brookhurst#323 1). CDBG $9,000 ......::. . .. ....:::: tetra' # Dtexta . ssae'` > . 1 UTL copy of credit report. ' 2 UTL copy of primary bank appraisal. 3 UTL hazard insurance showing City as loss payee. 4 UTL evidence that flood zone was determined. 5 UTL copy of purchase contract (Counter offer signed only by one party). ' 6 UTL certified escrow instructions. 7 UTL copy of settlement statement. ' 8 UTL evidence that Fair Lending Notice was provided to applicant. ' 9 Title insurance policy shows vesting Helen C. Ommondson. Deed of trust is missing middle initial "C". Document recorded 10 months after escrow closed. ' 10 Loan Agreement refers to exhibits which are not attached (A, B, C, D). ' City of Huntington Beach February 10, 1995 Page 21 ' Loan Documentation Audit Borrower: Otto: Thomas & Borrower #: 94-8 Note Date: 2/94 ' Shorb: Ray Property Address: Program and Loan Amount: 409 Utica A-7 1). CDBG $ 8,831 2). Agency $23,000 XXXXXXXX tag# anaton 1 UTL tax returns. ' 2 UTL hazard insurance showing City as loss payee. 3 UTL evidence that flood zone was determined. 4 UTL evidence that Fair Lending Notice was provided to applicant. ' 5 UTL title insurance policy. 6 Loan Agreements refer to exhibits which are not attached (A, B, C, D). ' Kaiser's signature on #1 loan not dated. 7 Disclosure for loan #1 refers to a minimum cash down payment required. Percentage amount is not filled in. ' 8 Promissory note for loan #1 is not dated. ' City of Huntington Beach February 10, 1995 Page 22 Loan Documentation Audit Borrower: Quick: Shauna C. Borrower #: 94-5 Note Date: 2/94 ' Property Address: Program and Loan Amount: ' 409 Utica Ave C-32 1). Agency $16,717 Itet Avxr€ nattan`issue . ' 1 UTL hazard insurance showing City as loss payee. 2 UTL copy of settlement statement. ' 3 UTL evidence that Fair Lending Notice was provided to applicant. 4 Title insurance policy shows incorrect recording sequence number 94- 168378. It should be 94-168379. Lien position is shown correctly. 5 Loan Agreements refer to exhibits which are not attached (A, B, C, D). City of Huntington Beach February 10, 1995 Page 23 ' Loan Documentation Audit Borrower: Quick: Teresa Borrower #: 94-12 Note Date: ' Property Address: Program and Loan Amount: ' 409 Utica A-9 1). Agency $25,000 . tem # r+ iori i<Ssile'' ' Unable to locate original or copies of documentation during audit. t t City of Huntington Beach February 10, 1995 Page 24 t Loan Documentation Audit Borrower: Rivera: Hector & Borrower#: 94-14 Note Date: 9/94 Cuesta-Aparicio: Itziar Property Address: Program and Loan Amount: ' 409 Utica A-5 1). CDBG $ 5,000 2). Agency $25,000 Item# Uoeumebtalon ' All documents were prepared by hand writing names, amounts, dates, etc. Borrower names were handwritten as "Hector & Iciar Rivera". Mrs. Rivera's name is actually Itziar Cuesta-Aparicio, ' which is how the property is vested. 1 UTL copy of credit report. ' 2 Tax returns not signed. 3 UTL copy of primary bank appraisal. ' 4 UTL hazard insurance showing City as loss payee. 5 UTL evidence that flood zone was determined. ' 6 UTL certified escrow instructions. 7 UTL copy of settlement statement. ' 8 Deed of trust has been corrected to reflect Mrs. Rivera's proper name, however, white-out and the changes were not initialed by the trustors. The address of the ' property should be completely described. The city is handwritten as "HB" on loan #2. No city is indicated on loan#1. Page 5 of rider does not contain trustor's initials and Mrs. Rivera's name was not corrected. ' 9 Loan Agreement for loan #1 has no document date; loan#2 Mrs. Rivera's signature not dated. Loan#2 contains formatting problems, the text on pages 6-8 is off-center due to incorrect margins or tabs. Both loan agreements refer to exhibits 1 which are not attached (B, C, D). 10 Promissory notes are not dated. Loan #1 wife's signature is not dated. Date of loan agreement not filled in. 11 Disclosure for loan#1 is not dated. ' City of Huntington Beach February 10, 1995 Page 25 Loan Documentation Audit Borrower: Schmederer: Michelle Borrower #: 93-7 Note Date: 12/93 ' Property Address: Program and Loan Amount: ' 660 Warner #199 1). CDBG $14,400 t1 Credit file worksheet lists primary loan amount as $99,000; actual loan amount $99,200. Cash down requirement by borrower is short $582. ' 2 UTL copy of credit report. 3 UTL copy of primary bank appraisal. ' 4 UTL hazard insurance showing City as loss payee. 5 UTL evidence that flood zone was determined. 6 UTL certified escrow instructions. ' 7 UTL evidence that Fair Lending Notice was provided to applicant. 8 UTL title insurance policy. ' 9 Original loan documents were not in City's possession at time of audit and they were located at escrow company and were requested during audit. Original loan agreement document was not located. Escrow company to ' provide a certified copy for the City's file. 10 Loan Agreement refers to exhibits which are not attached (A, B, C, D). Affordable housing clause not initialed by borrower. 11 Disclosure refers to a minimum cash down payment required. Percentage amount is not filled in. 12 Promissory note refers to the loan agreement date. Not filled in. ' 13 Rider to the deed of trust is signed by the Mayor but not attested by City Clerk. City of Huntington Beach February 10, 1995 Page 26 1 Loan Documentation Audit Borrower: Sutherland: Caroline Borrower #: 93-6 Note Date: 11/93 Property Address: Program and Loan Amount: t21372 Brookhurst #332 1). CDBG $6,825 > >.............> > va. s� .......... 1 1 UTL copy of credit report. 2 UTL tax returns-copies of W-2s only. 3 UTL copy of primary bank appraisal. ' 4 UTL hazard insurance showing City as loss payee. 5 UTL evidence that flood zone was determined. 6 UTL copy of purchase contract. ' 7 UTL certified escrow instructions. 8 UTL evidence that Fair Lending Notice was provided to applicant. 9 Loan Agreements refer to exhibits which are not attached (A, B, C, D). Borrower initialed statement within the agreement which says that the property is not affordable housing, yet exhibit "D", the affordable housing ' agreement was in list of attachments. 10 Deed of trust reference to loan agreement date is blank. "Certificate of ' Acceptance " is signed by Ray Silver. City Clerk should have signed this document. ' 11 Most of the income verifications and correspondence are on fax paper which will deteriorate over time. City of Huntington Beach February 10, 1995 Page 27 Loan Documentation Audit Borrower: Taban: Osmond Borrower #: 93-3 Note Date: 11/93 Property Address: Program and Loan Amount: ' 8311 Magic Circle 1). CDBG $15,000 Tteap # ' .... _ . 1 UTL copy of credit report. 2 UTL tax returns or any other verification of income. 3 UTL evidence that flood zone was determined. ' 4 UTL certified escrow instructions. 5 UTL copy of settlement statement. 6 UTL evidence that Fair Lending Notice was provided to applicant. 7 UTL title insurance policy. 8 UTL the following original documents: Disclosure 9 Loan Agreements refer to exhibits which are not attached (A, B, C, D). ' Borrower initialed statement within the agreement which says that the property is not affordable housing yet exhibit D, affordable housing ' agreement, is listed as attached. 10 Disclosure refers to a minimum cash down payment of 12% required. Loan Agreement states 3%. Inconsistent. t11 Fax papers are in credit file and will deteriorate over time. ' City of Huntington Beach February 10, 1995 Page 28 ' Loan Documentation Audit Borrower: Young: Judy Borrower #: 94-1 TNote Date: 1/94 ' Property Address: Program and Loan Amount: ' 16972 Limelight #B 1). CDBG $8,000 . . ..;.::.::::::::...:..::::::;:.: t # ' 1 UTL copy of credit report. 2 UTL copy of primary bank appraisal. 3 UTL hazard insurance showing City as loss payee. ' 4 UTL evidence that flood zone was determined. 5 UTL evidence that Fair Lending Notice was provided to applicant. ' 6 UTL title insurance policy. 7 Loan Agreements refer to exhibits which are not attached (A, B, C, D). ' 8 Disclosure refers to a minimum cash down payment required. Percentage amount is not filled in. ' 9 Borrower to provide matching funds for down payment. Borrower provided $7,108, City provided $8,000. Borrower was refunded $891 out of escrow ' at closing. ' City of Huntington Beach February 10, 1995 Page 29 Contract I PROFESSIONAL SERVICES CONTRACT BETWEEN ' THE CITY OF HUNTINGTON BEACH AND KRISTINE D. PRICE FOR DOCUMENT REVIEW SERVICES 1 1� 1 PROFESSIONAL SERVICES CONTRACT BETWEEN ' THE CITY OF HUNTINGTON BEACH AND KRISTINE D. PRICE FOR DOCUMENTATION REVIEW SERVICES Table of Contents ' 1 Work Statement................................................................................................... 1 2 City Staff Assistance............................................................................................ 2 3 Time of Performance........................................................................................... 2 4 Compensation ..................................................................................................... 2 5 Extra Work........................................................................................................... 2 6 Method of Payment .............................................................................................2 7 Disposition of Plans, Estimates and Other Documents........................................ 4 8 Indemnification and Hold Harmless..................................................................... 4 9 Independent Contractor.......................................................................................4 ' 10 Termination of Agreement................................................................................... 5 11 Assignment and Subcontracting.......................................................................... 5 12 Copyrights/Patents .............................................................................................. 5 ' 13 City Employees and Officials............................................................................... 5 14 Notices................................................................................................................. 5 15 Immigration.......................................................................................................... 6 ' 16 Legal Services Subcontracting Prohibited........................................................... 6 17 Entirety................................................................................................................ 6 PROFESSIONAL SERVICES CONTRACT BETWEEN ' THE CITY OF HUNTINGTON BEACH AND KRISTINE D. PRICE FOR DOCUMENT REVIEW SERVICES THIS AGREEMENT, made and entered into this day of 1994, by and between the City of Huntington Beach, a municipal corporation of the State of California, hereinafter referred to as "CITY", and ' KRISTINE D. PRICE, hereinafter referred to as "CONTRACTOR." ' WHEREAS, CITY desires to engage the services of a contractor to conduct a ' documentation and processing audit of fifteen (15) original City of Huntington Beach/Redevelopment Agency Down Payment Assistance Loan Agreements and ' related documents; and The provisions of HBMC Chapter 3.03 relating to procurement of professional ' service contracts has been complied with in that the services shall be less than Ten ' Thousand Dollars ($10,000) and the City Administrator has given his approval and the City Council has given its approval to this agreement; and ' CONTRACTOR has been selected to perform said services, NOW, THEREFORE, it is agreed by CITY and CONTRACTOR as follows: ' 1. WORK STATEMENT CONTRACTOR shall provide all services as described in the letter dated ' August 24, 1994, (hereinafter referred to as Exhibit "A"), which is attached hereto and ' incorporated into this Agreement by this reference. Said services shall sometimes hereinafter be referred to as "PROJECT." ' CONTRACTOR hereby designates Ms. Kristine D. Price, who shall represent it and be its sole contact and agent in all consultations with CITY during the performance ' of this Agreement. 1 ' 7/pricell 011"4 2. CITY STAFF ASSISTANCE ' The City Clerk shall work directly with CONTRACTOR in the performance of this Agreement, with assistance as may be required from the ' Department of Economic Development. 3. TIME OF PERFORMANCE Time is of the essence of this Agreement. The services of the ' CONTRACTOR are to commence as soon as practicable after the execution of this Agreement and all tasks specified in Exhibit "A" shall be completed within three weeks from the date of this Agreement. These times may be extended with the written ' permission of the CITY. The time for performance of the tasks identified in Exhibit "A" are generally to be shown in the Scope of Services on the Work Program/Project ' Schedule. This schedule may be amended to benefit the PROJECT if mutually agreed by the CITY and CONTRACTOR. ' 4. COMPENSATION ' In consideration of the performance of the services described herein, CITY agrees to pay CONTRACTOR a fee not to exceed Two Thousand Five Hundred ' Dollars ($2,500). 5. EXTRA WORK ' In the event CITY requires additional services not included in Exhibit "A," ' or changes in the scope of services described in Exhibit "A," CONTRACTOR will undertake such work after receiving written authorization from CITY. Additional ' compensation for such extra work shall be allowed only if the prior written approval of CITY is obtained. ' 6. METHOD OF PAYMENT A. CONTRACTOR shall be entitled to payments for time and ' materials expended. Invoicing will be per the procedure below. 2 ' Vprice/10/19/94 B. Delivery of work product: A copy of every technical memo and ' report prepared by CONTRACTOR shall be submitted to the CITY to demonstrate progress toward completion of tasks. In the event CITY rejects or has comments on any such product, CITY shall identify specific requirements for satisfactory completion. ' Any such product which has not been formally accepted or rejected by CITY shall be deemed accepted. ' C. The CONTRACTOR shall submit to the CITY an invoice for each progress payment due. Such invoice shall: 1) Reference this Agreement; ' 2) Describe the services performed; 3) Show the total amount of the payment due; 4) Include a certification by a principal member of the CONTRACTOR's firm that the work has been performed in accordance with the ' provisions of this Agreement; and ' Upon submission of any such invoice, if CITY is satisfied that CONTRACTOR is making satisfactory progress toward completion of tasks in ' accordance with this Agreement, CITY shall promptly approve the invoice, in which event payment shall be made within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be unreasonably withheld. If the CITY does not approve an ' invoice, CITY shall notify CONTRACTOR in writing of the reasons for non-approval, within seven (7) calendar days of receipt of the invoice, and the schedule of ' performance set forth in Exhibit "A" shall be suspended until the parties agree that past performance by CONTRACTOR is in, or has been brought into compliance, or ' until this Agreement is terminated as provided herein. ' D. Any billings for extra work or additional services authorized by CITY shall be invoiced separately to the CITY. Such invoice shall contain all of the ' information required above, and in addition shall list the hours expended and hourly 3 ' 7/price/1 o/19/94 rate charged for such time. Such invoices shall be approved by CITY if the work ' performed is in accordance with the extra work or additional services requested, and if CITY is satisfied that the statement of hours worked and costs incurred is accurate. ' Such approval shall not be unreasonably withheld. Any dispute between the parties concerning payment of such an invoice shall be treated as separate and apart from the ongoing performance of the remainder of this Agreement. ' 7. DISPOSITION OF PLANS ESTIMATES AND OTHER DOCUMENTS CONTRACTOR agrees that all materials prepared hereunder, including ' all original drawings, designs, reports, both field and office notices, calculations, maps ' and other documents, shall be turned over to CITY upon payment in full of all outstanding invoices, termination of this Agreement or upon PROJECT completion, ' whichever shall occur first. In the event this Agreement is terminated, said materials may be used by CITY in the completion of PROJECT or as it otherwise sees fit. Title ' to said materials shall pass to the CITY upon payment of fees determined to be earned ' by CONTRACTOR to the point of termination or completion of the PROJECT, whichever is applicable. CONTRACTOR shall be entitled to retain copies of all data ' prepared hereunder. 8. INDEMNIFICATION AND HOLD HARMLESS ' CONTRACTOR hereby agrees to indemnify, protect, and hold and save ' harmless CITY, its officers and employees against any and all liability, including any claim of liability and any and all losses or costs solely arising out of the negligent ' performance of this Agreement by CONTRACTOR, its officers or employees. 9. INDEPENDENT CONTRACTOR ' CONTRACTOR is, and shall be, acting at all times in the performance of this Agreement as an independent contractor. CONTRACTOR shall secure at its ' expense, and be responsible for any and all payment of all taxes, social security, state ' disability insurance compensation, unemployment compensation and other payroll 4 7/price/10119/94 deductions for CONTRACTOR and its officers, agents and employees and all business ' licenses, if any, in connection with the services to be performed hereunder. 10. TERMINATION OF AGREEMENT ' All work required hereunder shall be performed in a good and workmanlike manner. CITY may terminate CONTRACTOR's services hereunder at any time with or without cause, and whether or not PROJECT is fully complete. Any ' termination of this Agreement by CITY shall be made in writing, notice of which shall be delivered to CONTRACTOR as provided herein. t 11. ASSIGNMENT AND SUBCONTRACTING This Agreement is a personal service contract and the supervisory work ' hereunder shall not be delegated by CONTRACTOR to any other person or entity without the consent of CITY. 12. COPYRIGHTS/PATENTS ' CITY shall own all rights to any patent or copyright on any work, item or material produced as a result of this Agreement. ' 13. CITY EMPLOYEES AND OFFICIALS CONTRACTOR shall employ no CITY official nor any regular CITY employee in the work performed pursuant to this Agreement. No officer or employee ' of CITY shall have any financial interest in this Agreement in violation of the applicable provisions of the California Government Code. ' 14. NOTICES Any notice or special instructions required to be given in writing under ' this Agreement shall be given either by personal delivery to CONTRACTOR's agent ' (as designated in Section 1 hereinabove) or to the City Clerk as the situation shall warrant, or by enclosing the same in a sealed envelope, postage prepaid, and depositing the same in the United States Postal Service, addressed as follows: 5 7/price/10/19/94 ' TO CITY: TO CONTRACTOR: Connie Brockway Kristine D. Price City Clerk 412 Fourth Street City of Huntington Beach Encinitas, CA 92024 ' 2000 Main Street Huntington Beach, CA 92648 15. IMMIGRATION CONTRACTOR SHALL be responsible for full compliance with the immigration and naturalization laws of the United States and shall, in particular, comply with the provisions of the United States Code regarding employment verification. 16. LEGAL SERVICES SUBCONTRACTING PROHIBITED CONTRACTOR and CITY agree that CITY is not liable for payment of ' any subcontractor work involving legal services, and that such legal services are ' expressly outside the scope of services contemplated hereunder. CONTRACTOR understands that pursuant to Huntington Beach City Charter Section 309, the City ' Attorney is the exclusive legal counsel for CITY; and CITY shall not be liable for payment of any legal services expenses incurred by CONTRACTOR. 17. ENTIRETY ' The foregoing, and Exhibit "A": attached hereto, set forth the entire Agreement between the parties. 6 7/p►iW10/20/94 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by and through their authorized offices the day, month and year first above ' written. ' CONTRACTOR: CITY OF HUNTINGTON BEACH, A municipal corporation of the State of KRISTINE D. PRICE California 'stine D. Price City Clerk City—Acrahrrisirator ATTEST: t ' City Clerk ' APPROVED AS TO FORM: City Attorney 1 y 7/pdce/10/19194 Kristine`. 'r ram t S w L,Vli PolieusY¢o Procedures bocudentA ;kme,w .i Credit SuPextfldii.,' *' �'��'^•• 412 Fou Encinitas; Califoniia . Tel: (619)94«-922% :•, Fax: (610) 1 t \ 08-11-94 02:41PM P03 Kr"Is ine D. Price August 24, 1994 ' Connie Brockway City Clerk City of Huntington Beach ' 2000 Maui Street Huntington Beach, Ca. 92648 Dear Ms. Brockway, ' As we have discussed I am providing you with a brief outline of the process I will undertake to review the P �Y loan documentation generated by the City's Down Payment Assistance Program. It is my understanding ' that this Portfolio currently consists of approximately 12-15 individual loans and that they are all collateralized by real property anti contain thr attrnclani donunientRtion generally found within real property secured transactions. I also understand from the material provided to me that the loans are ' generated under several different loan programs and that the documentation is likely to be customized for the particular loan program, specifically as it relates to rates, terms and maturities. ' You have told me that your primary area of concern is that the existing loan documents have been properly drawn and executed reflecting.the appropriate signatures, terms and conditions of approval and that the real property security Interests have been properly perfected. You have indicated to me that the credit ' underwriting process is not a subject of concern and that Us aspect of the lending process will not be reviewed. You have requested that a detailed review of each loan be performed to ascertain documentation accuracy and that the current documentation preparation process be evaluated for any procedural revisions or additions. ' If you elect to engage my services for this project, I will evaluate each loan as follows: ' Using a proprietary documentation review checklist, I will evaluate each document for the following: ► Appropriateness to the transaction; its function and requirement ► Accuracy in preparation; correct names, approved terms and conditions ► Accuracy of execution; appropriate signatures, notaries, dates 412 Fourth Street Encinitas, California 92024 (619)942-9226 Fax(619)942-8128 0 Brockway. City of liurttington Beach pa&o Two _ In addition. I will rcvaew: ' Escrow opening and closing statements for appropriate funding requirements, ' Any documents required to satisfy federal and state regulatory requirements such as Hti1DA, RESPA and Reg Z, and ' Lien position through review of title policies or other materials, depending on existing file content. ' I will also note any necessary documents which were not obtained and recommend action for document repair, including the suggestion to seek legal counsel assistance, If necessary. You should be aware that I am not an attorney and my review of theiaari documents does not extend to the intricacies of boiler plate verbiage contained in most form documents. I will assume that the City has taken the steps necessary to insure that these documents meet any particular legal requirements unique to municipal lending. In addition, unknown to me there may be exemptions or waivers of certain rcquiretttents common to federally regulated banks but not required by municipalities. If I note federal or state regulatory issues which may be exempted, I would expect the City to allow me these errors of omission. ' After review of the loan documentation I will provide you with a synopsis of each loan and a two to three page report containing my opinion of the current documentation process and specific recommendations for ' new or enhanced procedures and controls. If desired, full written policies and procedures covering this operational unit can be discussed at that time. ' I expect that the review process will require approximately three on-site work days with off-site report preparation of approximately 1/2 day. Billing is at the rate of$85.00 per hour for actual hours expended up to a maximum of$2,500.00. ! If you have any farther questions please don't hesitate to contact me at any time. ' Sincerely, ristitte D. Price ' 412 Fourth Street Encinitas, Cnlifornla 92024 (619)942-9226 Fax(619)942-8128 '" (l l) Page 11 -Council/Agency Agenda-8/15/94 ' F-3. (City Council/Redevelopment Agency) DOWN PAYMENT ASSISTANCE PROGRAM ORIGINAL LOAN DOCUMENTS TRANSMITTED FOR THE CUSTODY OF THE OFFICE OF THE CITY CLERK -DOCUMENTATION AND PROCESSING AUDIT REQUESTED Communication from the City Clerk regarding Down Payment Assistance Program original loan documents transmitted by Administration and Economic Development/Redevelopment for responsibility and official custody of the Office of the City Clerk. RECOMMENDED ACTION: Enable the Office of the City Clerk to utilize an ' outside Loan Documentation Expert to conduct a Documentation and Processing Audit of all original City of Huntington Beach/Redevelopment Agency Down Payment Assistance Loan Agreements and related documents ' for which the City Clerk is now being asked to assume responsibility and official custody at a cost not to exceed $2500. Ac�cam. W.4-- -f— Nrn-ZJ0 '41- or c.,k W^9'�`r` ` d1 a- CvJriC� CD•v-�v► r Lor }o oc.0 rnRn'( fiz an_P►`d c�eJS. /q-p pi-- v-e b 6— Z F-4. (City Council) DEED RESTRICTION ON PARCELS TRANSFERRED TO ' COUNTY OF ORANGE - BOLSA CHICA REGIONAL PARK PHASE 1A (650.10) Communication from Director of Administrative Services and Director of ' Community Development regarding deed restriction on parcels transferred to the County of Orange for the Bolsa Chica Regional Park. RECOMMENDED ACTION: To re-affirm the transfer and release of the subject parcels for recordation by the County of Orange for Phase IA of the Bolsa Chica Regional Park without deed restrictions and finding that the .Lconditions of approval restricting? plant materials to native species is sufficient. , COVr C: b eU $}�0.4L� -+oTvrSve- 'fee- d-e r'c.T•l%,c.LO�s j 5+r+vc+VR� 0�-N �'ru �r� Q. L'O. 1)� TiC-ficr� ker W•T►�WOr�1r�°�-t*`Ow�'4�e �•COn-o $16,.., 'tIn� / p 2 F-5. DELETED wogy-eD;bvl- w�-h V,M,4 a-S-}a ff w-.4 -, -0rectst Ian`��a e. 4 b.e Cwnr"k PC--OrAppgavacr i L.E. "CtL e. c `#ieSfi cib�s n h�c-b:L.t*d.es/ (cud held ivJ prrcu��y/rcrcnerre�:caj/vzV►�5c a p�rkiHg� eft') F-6. (City Council)ADOPTION OF TAX RATE FOR 1994/95 -RESOLUTION NO 6626 -APPROVAL OF DRAFT LETTER FROM COUNCIL TO COUNTY AUDITOR (340.90) Communication from Director of Administrative Services transmitting Resolution ' No. 6626 setting the tax rate for Charter approved indebtedness. RECOMMENDED ACTION: 1. Adopt Resolution No. 6626-"A RESOLUTION OF THE CITY COUNCIL OF ' THE CITY OF HUNTINGTON BEACH FIXING THE FISCAL YEAR 1994/1995 TAX RATE." ' 2. Approve the final form of the draft letter to the Auditor Controller which is Attachment#9 to the RCA dated 8/15/94 and authorize the Mayor to sign said letter. a 0r t0� n N ©) (11) 1 HB CITY OF HUNTINGTON BEACH ' INTER-DEPARTMENT COMMUNICATION ' TO: SETTLEMENT COMMITTEE MEMBERS ' FROM: JOE BARRON, Deputy City Attorney DATE: September 16, 1994 SUBJECT: Insurance wavier, Kristine Price ' This is to ask you to consider waiving the insurance requirements in connection with a professional service agreement between the city and Kristine Price. Ms. Price will audit certain ' records which are in the possession of the City Clerk's office. The contract price is less than $2,500 and the job is expected to take only about three days. The review of the records may --Lake-p1we outside of City Hall, therefore the exposure to liability is minimal. RRON, ' puty City At CB/SL/k ' Insurance Waiver Approved: -� dated dated ' dated ' dated dated The foregoing instrument is a correct copy of the on fi nal on file in this office. Attest_ 19 r CONNIE BROCKWAY ' City Clerk and Ex•officio Clerk of the City Council of tl;e City of Huntington Beach, California. _ ' By Deputy