HomeMy WebLinkAboutHousing Rehabilitation Loan Program Policies and Procedures 02- �eA- pkfs
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Council/Agency Meeting Held: d 3
Def ed/Continued to:
Approved ❑ Conditionally Approved ❑ Denied City Clerk's Signat
Council Meeting Date: January 6, 2003 Department ID Number: ED 03-02
7-o CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
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O
SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL
MEMBERS/REDEVELOPMENT AGENCY MEMBERS
r. �_ . .
NO -
SUBMITTED BY: RAY SILVER, City Administrator/Executive Directowal
=� n
PREPARED BY: David C. Biggs, Director of Economic Development /Deputy Executive
Director
SUBJECT: Adopt Resolution Revising Housing Rehabilitation Loan Policies
and Procedures �,S avA,043 �- bey � 3�
Statement of issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: On June 19, 2000 the City Council/Redevelopment Agency approved
the Housing Rehabilitation Loan Policies and Procedures utilized by the Economic
Development Department in processing, underwriting and administering housing
rehabilitation loans funded by the Community Development Block`Grant—P_rogram,_
Redevelopment Funds or HOME funds. It has now become necessary to make certain
changes to the policies and procedures in order to implement new Federal directives and to
clarify some of these policies and procedures.
Funding Source: Not Applicable
City Council Recommended Action: Motion to:
Adopt Resolution No. %P66.3 - ;L , a Resolution of the City Council Approving "Revised
Housing Rehabilitation Loan Program Policies & Procedures."
Redevelopment Agency Recommended Action: Motion to:
Adopt Resolution No. 3 V3 , a Resolution of the Redevelopment Agency Approving
"Revised Housing Rehabilitation Loan Program Policies and Procedures."
Alternative Action(s): Not approve the Revised Housing Rehabilitation Loan Policies and
Procedures
0
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: January 6, 2003 DEPARTMENT ID NUMBER: ED 03-02
Analysis: On June 19, 2000, the City Council/Redevelopment Agency approved the
Housing Rehabilitation Loan Policies and Procedures utilized by the Economic Development
Department in processing, underwriting and administering housing rehabilitation loans
funded by the Community Development Block Grant Program, Redevelopment funds or
HOME funds. It had been quite a long time since these policies and procedures had been
modified or changed.
After administering the rehabilitation loan program for a couple of years, the Economic
Development staff working with the program has found it necessary to modify, clarify and
update some of these polices and procedures. In addition, it is necessary to bring many of
the policies and procedures into compliance with Federal requirements. Moreover, working
with Federal directives on Lead Based Paint has necessitated that these procedures be
spelled out in greater detail. Below please find a summary of some of the changes made to
the Policies and Procedures.
1. Complaint procedures were streamlined.
2. Health and Safety Grants were increased from $500 to $1,000, as costs for repairs
have increased.
3. New Special Needs Grants have been added to enable the Economic Development
Department to work with non-profit organizations that assist the elderly and the
disabled to improve their homes. For example, this could be an organization such as
Rebuilding Together, formerly Christmas in April, a non-profit agency that assists
elderly and disabled individuals in making repairs to their homes. The grants are for a
maximum of$2,500.
4. Application fees were increased pursuant to prior Council action in order for the
program participants to pay for at least a portion of the cost of providing the services.
Most costs are added to the loan amount, except the processing of subordinations.
5. The conflict of interest section was updated to clarify and prevent conflicts by any
employee of the City, while still allowing eligible employees living within the City of
Huntington Beach to take advantage of the program and repair their homes.
6. Lead Based requirements and procedures were updated to include actual operating
experiences. This was necessary as a result of revised Federal rules on Lead Based
Paint procedures.
7. Clarifies language on subordinations of existing City/Agency secondary debt. The
issue here is to prohibit a homeowner from taking out equity out of their property and
placing the City/Agency loan in jeopardy due to its junior position.
8. Clarifies language on Low and Moderate Income designations to precisely follow HUD
rules and regulations.
G:\Gus\REHAB\RCARevRehabPolicy.doc -2- 12/17/2002 12:00 PM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: January 6, 2003 DEPARTMENT ID NUMBER: ED 03-02
9. Corrected the information on the loan servicing company that currently services the
City/Agency loans. Two years ago Bank of America serviced the City's loans. Today
Weststar Loan Servicing services the City's amortized loans.
Environmental Status: Not Applicable.
Attachment(s):
City Clerk's
Page Number No. Description
1. Revised Housing Rehabilitation Loan Policies and Procedures.
2. Resolution No..-x%63-a A Resolution of the City Council Approving
the Revised Housing Rehabilitation Loan Policies and Procedures.
3. Resolution No. 3 3 A Resolution of the Redevelopment Agency
Approving the Revised Housing Rehabilitation Loan Policies and
Procedures.
RCA Author: Gus Duran X1529
G:\Gus\REHAB\RCARevRehabPolicy.doc -3- 12/17/2002 12:00 PM
RESOLUTION NO. 2003-2
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH APPROVING THAT CERTAIN DOCUMENT
ENTITLED "REVISED HOUSING REHABILITATION LOAN
PROGRAM POLICIES AND PROCEDURES—EFFECTIVE
JANUARY 6, 2003."
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000"; and
The Housing Rehabilitation Loan Policies serves as an internal resource to Economic
Development staff to enable them to understand important program administrative matters
and to maintain better administrative control over the various loan and grant programs
offered by the City; and
Market conditions and rehabilitation financing needs of homeowners in the City of
Huntington Beach have changed since 2000; and
The current Housing Rehabilitation Loan Policies have been revised by the City's .
Department of Economic Development to reflect these changes,
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Revised Housing Rehabilitation Loan
Program Policies and Procedures—Effective January 6, 2003," is hereby adopted and
approved.
2. Authorization is hereby given to City staff to administer the various loan and
grant programs described in the Revised Housing Rehabilitation Loan Policies. Any type of
loan or grant, the amount of which exceeds the maximum amount for such loan or grant as
described in Chapter 2 of the Revised Housing Rehabilitation Loan Policies, shall require
approval by the City Council.
3. The Revised Housing Rehabilitation Loan Policies shall become effective
January 6, 2003; shall supercede any existing housing rehabilitation loan policies utilized by
City staff; and shall apply to all loans or grants approved or made by the City on or after
January 6, 2003.
02reso/housing rehab/12/6/02 1
PASSED AND ADOPTED by the City of Huntington Beach at a regular meeting
thereof held on the 6th day of January ,2003 .
ATTEST: ,
City Cfe"'A7 Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
c
City Adminis or �CitAttorney
INITIATED AND APPROVED:
Dir for of Economic Development
02reso/housing rehab/12/6/02 2
Res. No. 2003-2
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 regular meeting thereof held on the
6th day of January 2003 by the following vote:
AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy
NOES: None
ABSENT: None
ABSTAIN: None
City Clerk and ex-officio Cl Ark of the
City Council of the City of
Huntington Beach, California
RESOLUTION NO. 343
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH APPROVING THAT CERTAIN DOCUMENT ENTITLED
"REVISED HOUSING REHABILITATION LOAN PROGRAM POLICIES AND
PROCEDURES—EFFECTIVE JANUARY 6, 2003."
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000"; and
The Housing Rehabilitation Loan Policies serves as an internal resource to
Economic Development staff to enable them to understand important program
administrative matters and to maintain better administrative control over the various loan
and grant programs offered by the Agency; and
Market conditions and rehabilitation financing needs of homeowners in the City
of Huntington Beach have changed since 2000; and
The current Housing Rehabilitation Loan Policies have been revised by the City's
Department of Economic Development to reflect these changes,
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Revised Housing Rehabilitation Loan
Program Policies and Procedures—Effective January 6, 2003," is hereby adopted and
approved.
2. Authorization is hereby given to Agency staff to administer the various
loan and grant programs described in the Revised Housing Rehabilitation Loan Policies.
Any type of loan or grant, the amount of which exceeds the maximum amount for such
loan or grant as described in Chapter 2 of the Revised Housing Rehabilitation Loan
Policies, shall require approval by the Agency's governing board.
3. The Revised Housing Rehabilitation Loan Policies shall become effective
January 6, 2003; shall supercede any existing housing rehabilitation loan policies utilized
by Agency staff, and shall apply to all loans or grants approved or made by the Agency
on or after January 6, 2003.
1
rjw/k/00reso/housin;rehab-agency/12/6/02
PASSED AND ADOPTED by the Redevelopment Agency of the City of
Huntington Beach at a regular meeting thereof held on the 6th day of
January 2003 .
ATTEST:
Agency Clerk Chairman
REVIEWED AND APPROVED: APPROVED AS TO FORM:
i
Executive Wrector gency Attorney
INITIATED AND APPROVED:
Director of Economic Development
2
dw/k/00reso/housing rehab-agency/12/6/02
Res. No. 343
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss .
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 a regular
meeting of said Redevelopment Agency held on the 6th day of January,
2003 and that it was so adopted by the following vote:
AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy
NOES: None
ABSENT: None
ABSTAIN: None
Clerk of the Redevelopme Agency
of the City of Huntington Beach, CA
Revised Housing
Rehabilitation Loan Policies
and Procedures
', - ATTACHMENT # 1
I ' I � / Milli"�1141�i
Economic Development Department
City of Huntington Beach
Huntington Beach Redevelopment Agency
Effective January 6, 2003
Table of Contents
CHAPTER 1 INTRODUCTION............................................................................................ 1
General ................................................................................................................................... 1
ProgramAdministration........................................................................................................... 1
Program Funding Approval ..................................................................................................... 1
IndividualLoan Approval.........................................................................................................2
Program Documentation Approval ..........................................................................................2
LoanReview Committee .........................................................................................................2
Approval and Revision of Policies and Procedures.................................................................2
FinancialPrivacy Laws.........................................................................................................I...2
ComplaintProcedures.............................................................................................................3
City Includes Redevelopment Agency.....................................................................................3
Economic Development Director Approval..............................................................................3
CHAPTER2 LOAN PROGRAMS........................................................................................4
General ...................................................................................................................................4
Current Housing Rehabilitation Loan Programs......................................................................4
Deferred Repayment Loans (DPL) ......................................................................................4
Below Market Interest Rate Loans (BMIR) ..........................................................................4
Multi Family Rental Housing Loans (MRH) - 7 Units Maximum...........................................5
Health and Safety Emergency Grants (EG).........................................................................5
CHAPTER 3 PROGRAM REQUIREMENTS.......................................................................7
General ...................................................................................................................................7
ProjectEligibility......................................................................................................................7
Application Consideration Factors...........................................................................................7
Property Eligibility Factors.......................................................................................................7
ApplicationFee .......................................................................................................................8
Determining Interest Rates......................................................................................................8
Nondiscrimination....................................................................................................................8
Inspections..............................................................................................................................8
IneligibleContractors...............................................................................................................8
Conflictof Interest...................................................................................................................9
Bonus, Commission, or Fee....................................................................................................9
Lead-Based Paint Regulation Compliance..............................................................................9
Historic Preservation Compliance ......................................................................................... 10
Construction Contract............................................................................................................ 11
LoanSecurity........................................................................................................................ 11
LoanPayments ..................................................................................................................... 11
PrepaymentPenalty......:....................................................................................................... 11
Subordinations ...................................................................................................................... 12
Assumptions.......................................................................................................................... 12
LoanRequirements............................................................................................................... 12
Make Payments on all Debts............................................................................................. 13
PrimaryResidence ............................................................................................................ 13
PropertyMaintenance........................................................................................................ 13
Fire and Hazard Insurance................................................................................................ 13
FloodInsurance................................................................................................................. 13
Property Taxes and Homeowner Association Dues ..........................................................14
Useof Funds .....................................................................................................................14
Timing of Rehabilitation Projects .......................................................................................14
Additional Loan Requirements for Multi Family Dwellings.....................................................14
Income Restricted (Affordable) Rental Units......................................................................14
MaximumRents.................................................................................................................14
MaximumOccupancy........................................................................................................15
Relocation..........................................................................................................................15
Subordination to City CC&Rs ............................................................................................ 15
CHAPTER 4 LOAN PROCESSING...................................................................................16
General .................................................................................................................................16
TheApplication ..................................................................................................................... 16
Single Family/Mobile Home Loans ....................................................................................16
MultiFamily Loans............................................................................................................. 16
Emergency Grants and Special Needs Grants..................................................................17
ApplicationLog......................................................................................................................17
Qualifying Single Family Loans.............................................................................................17
Low or Moderate Income...................................................................................................17
Loan Underwriting/ Qualifying Form ..................................................................................18
Income...............................................................................................................................18
Debtto Income Ratio.........................................................................................................18
Loanto Value Ratio...........................................................................................................18
IncomeHistory...................................................................................................................18
Verifications........................................................................................................................19
Underwriting Multi Family Loans ........................................................................................... 19
Underwriting Emergency Grants & Special Needs Rehabilitation Grants..............................19
TitleInsurance.......................................................................................................................19
Preliminary Property Inspection ............................................................................................20
LoanApproval .......................................................................................................................20
Selection of Contractors........................................................................................................20
AcceptableContracts............................................................................................................21
ChangeOrders......................................................................................................................21
Construction Progress Inspections........................................................................................21
Fundingthe Loan ..................................................................................................................21
Contractor Lien Releases......................................................................................................22
FinalInspection.....................................................................................................................22
Acceptanceof Work..............................................................................................................22
PostFunding Audit................................................................................................................22
CHAPTER 5 DOCUMENTATION......................................................................................24
General .................................................................................................................................24
DocumentsRequired.............................................................................................................24
PromissoryNote................................................................................................................24
Deedof Trust.....................................................................................................................24
Disclosures and Notices ....................................................................................................25
Notice of Opportunity to Rescind Transaction ...................................................................25
SafeguardingDocuments......................................................................................................25
CHAPTER 6 LOAN MAINTENANCE AND ACCOUNTING...............................................26
General .................................................................................................................................26
FileOrganization ...................................................................................................................26
Accounting for Deferred Repayment Loans ..........................................................................27
Loan Servicing of Amortized Loans.......................................................................................27
Charge-Offs...........................................................................................................................27
Partial Repayment Upon Sale or Refinance..........................................................................27
LoanPayoffs .........................................................................................................................27
Responding to a Request for Beneficiary's Demand.............................................................28
Reconveying the Trust Deed.................................................................................................28
Defaults.................................................................................................................................28
Closingthe Loan File.............................................................................................................29
EXHIBITS
Terms for Single Family Owner Occupied Housing Rehabilitation Loan Program ................31
Terms for Multi Family Rental Housing Rehabilitation Loan Program ...................................32
Terms for Health and Safety Emergency Grant Program......................................................33
List of Eligible Home Improvements......................................................................................34
AuthorizingResolutions.........................................................................................................35
FutureRevisions ...................................................................................................................41
Chapter • • •
General
The City of Huntington Beach provides loans and grants to low and moderate-income
homeowners and owners of rental property where low-income families live to assist in the
rehabilitation of residential properties. Funds for these programs are made available from
different funding sources, such as Community Development Block Grant (CDBG) funds,
Redevelopment Agency Housing Set-Aside funds, HOME Investment Partnership Program
funds, or funds from any State Agency (California Housing and Finance Agency — CHFA or
the State Department of Housing and Community Development - HCD). The City
Council/Redevelopment Agency Board authorizes funding for these programs. The
Economic Development Department administers deferred repayment loans, low interest
amortized loans, and emergency grants for single-family homeowners and mobile home
owners depending on the borrower's income. Loans are also available for multi-family
property owners. All housing rehabilitation loans comprise the City of Huntington Beach
Rehabilitation Loan Program.
The primary objective of this program is to provide financing to households who would
otherwise have difficulty paying for the cost of necessary housing repairs to protect their
health and safety, which if not corrected could contribute to further damage and deterioration
to the home. Loans are underwritten by the City and approved by the Loan Review
Committee. The underwriting process is intended to give the City assurance that the
borrower is creditworthy, has the ability to repay the debt, has collateral that is acceptable,
and poses minimal risk to the City/Agency.
At any one time, the City may have one or several loan programs available, all with slightly
different underwriting and repayment requirements. Property owners may contact the
Economic Development Department to obtain the most current program information.
Program Administration
Loan programs are authorized by either the City Council or the Redevelopment Agency, are
under the direction of the City Administrator (Executive Director) and are administered by the
Department of Economic Development, which also is the Redevelopment Agency staff.
Program Funding Approval
The allocation of funds for any specific loan program is authorized by the City Council or the
Redevelopment Agency upon the recommendation of the City Administrator (Executive
Director) and the Director of Economic Development (Deputy Executive Director).
Introduction 1
Individual Loan Approval
Individual loans are evaluated, underwritten, and recommended for approval by staff
members or an authorized representative of the Economic Development Department, with
final approval by the Loan Review Committee.
Funding limits for an individual loan or grant may be increased with the approval of the
Director of Economic Development and/or the City Administrator up to 10% of the stated
maximum of the loan or grant, if deemed absolutely necessary.
Program Documentation Approval
Loan documents are prepared by the Economic Development Department according to
master documents approved by the City Attorney's Office. These documents include the
Promissory Notes, Deeds of Trust, Truth in Lending Statements, and the Notice of Right to
Rescind Transaction.
Loan Review Committee
There is a standing Loan Review Committee comprised of Economic Development
Department employees appointed by the Department Director. The members of this
committee have extensive experience and knowledge of real estate lending, real estate
transactions, title and escrows. This committee has approval authority for all loans and
grants that are recommended by staff.
Approval and Revision of Policies and Procedures
The policies and procedures contained in this manual are authorized by the City Council and
the Redevelopment Agency. Any substantive additions or policy revisions require the
approval of the City Council/Redevelopment Agency. Minor corrections or expansion of
existing procedures may be made, as necessary, upon the approval of the Director of
Economic Development.
Financial Privacy Laws
Several different laws govern financial privacy rights. These include the California Right to
Financial Privacy Act and the Federal Right to Financial Privacy Act, both of which govern
the process of releasing a borrower's financial information. Essentially, these regulations
allow a lender to disclose a borrower's financial records only upon the receipt of legal
process or with the borrower's written authorization. The lender is then required to notify the
borrower of the receipt of legal process, unless ordered by the court not to do so.
Because credit and application information is not subject to public disclosure to anyone other
than the borrower, any request for such information 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
2 Introduction
by the Economic Development Department. A copy of the written request is to be
maintained in the loan file.
Complaint Procedures
Complaints concerning the Rehabilitation Loan Program should be in writing and
addressed to the Program Administrator. Complaints will be accepted only if they are
in writing and are received within 30 days from the date of the problem. The Program
Administrator will contact the complainant and attempt to resolve the problem. A
written response will be made to the complainant within 10 business days.
If a complainant is not satisfied with the written response, a request for an appeal may
be filed with the Loan Review Committee. The written request must set forth the
reasons for the appeal and must be received by the Housing and Redevelopment
Manager within 15 days from the date of the Program Administrator's written
response. In the event the request does not meet these requirements, the
complainant will be notified that the request is denied; otherwise, the complainant will
be invited to appear before the Loan Review Committee to express his/her complaint.
The response of the committee will be made in writing within 10 business days.
Should the complainant not be satisfied, a further written appeal can be made to the
Director of Economic Development. The Director will review the complaint and then
make a final ruling on the issue. The decision of the Director of Economic
Development will be final.
City Includes Redevelopment Agency
These policies shall apply equally to loans or grants made or approved by the
Redevelopment Agency of the City of Huntington Beach ('Agency'). As used in these
policies, the word 'City' means and includes the Agency; and the term 'City Council' means
and includes the Agency's governing body. The only exception is under Chapter 4
('Preliminary Property Inspection'), on page 17 of these policies, where the term 'City Code
violations' refers only to the City of Huntington Beach.
Economic Development Director Approval
Any type of loan or grant, the amount of which exceeds the maximum amount for such loan
or grant as described in Chapter 2 of these policies, shall require approval of the Director of
Economic Development (Deputy Executive Director of the Redevelopment Agency). The
Director will be responsible for ensuring the proper administration and evaluating the risk to
the City/Agency when exceeding approved maximum loan and grant amounts. The
Director/Deputy Executive Director will only be involved when a rehabilitation project is
absolutely necessary to improve the health and welfare of the occupant and is
recommended for approval by the Loan Review Committee but the loan exceeds their
lending authority.
Introduction 3
ChapterLoan Programs ;,
General
Housing Rehabilitation Loan Programs are developed as funds are available and as the
need arises. The City/Agency has provided various loan programs suited for specific
purposes such as assisting redevelopment of a certain area of the City or providing financing
targeted to a specific income population.
Current Housing Rehabilitation Loan Programs
The City currently offers five kinds of Housing Rehabilitation Loans and Grants. These
include Single-Family Owner Occupied Housing Rehabilitation Loans with deferred
repayment, Single-Family Owner Occupied Housing Rehabilitation Loans with an amortized
repayment schedule, Multi-Family Rental Housing Rehabilitation Loans, Health and Safety
Emergency Grants and Special Needs Rehabilitation Grants (SNRG). Details for each of
these programs is provided below.
Deferred Repayment Loans (DPL)
Extremely Low and Very Low-Income homeowners and owners of mobile homes are eligible
to apply to the City's Deferred Payment Loan Program (DPL). The US Department of
Housing and Urban Development (HUD) defines low-income households as those with gross
income from all sources totaling up to 50% of the area's median income. HUD income
guidelines are revised annually. Current income guidelines are available in the Economic
Development Department. Homeowners can qualify for a maximum loan of $25,000 and
owners of mobile homes, town-homes, or condominiums can qualify for a maximum of
$15,000. The annual interest rate for these loans is currently indexed at 3% below the
current Fannie Mae 30-year mortgage commitment rate, rounded down to the nearest half-
point. For example, if the Fannie Mae rate were currently 8.65%, the corresponding annual
interest rate available for low-income borrowers would be 5.5%. (The interest rate index and
amount may be adjusted at the discretion of the Director of Economic Development in order
to address current market conditions). Payment of the principal and accrued interest is
deferred until the property is sold, transferred, or refinanced. A homeowner is not eligible for
a DPL if an Emergency Grant has been funded within one year. If a homeowner determines
that it is in his/her best interest to repay the loan, the City/Agency will permit early repayment
of a portion or the entire loan amount. However, in no case shall this be within the first two
years. There is a prepayment penalty if the loan is repaid within two years.
Below Market Interest Rate Loans (BM/R)
Low and Moderate-Income homeowners and owners of mobile homes are eligible for the
City's Below Market Interest Rate Loans (BMIR). Low and Moderate-income households are
those with income from all sources totaling between 51% and 80% of the area's median
income. Homeowners can qualify for a maximum loan of $25,000 and owners of mobile
homes, town-homes, or condominiums can qualify for a maximum of $15,000. The annual
4 Loan Programs
interest rate for these loans is indexed at 2% below the current Fannie Mae 30-year
mortgage commitment rate, rounded down to the nearest half-point. For example, if the
Fannie Mae rate were currently 8.65%, the corresponding annual interest rate available for
moderate-income borrowers would be 6.5%. (The interest rate index and amount may be
adjusted at the discretion of the Director of Economic Development in order to address
current market conditions.) These loans are amortized over a 15-year term with monthly
payments beginning on the first day of the month following 30 days after loan closing. All
remaining principal and accrued interest becomes due if the property is sold, transferred, or
refinanced during the term of the loan.
Multi Family Rental Housing Loans (MRH) - 7 Units Maximum
Owners of multi family rental housing buildings with seven or fewer residential units may be
eligible for rehabilitation assistance. It is a requirement of this program that during the term
of the loan, all residents in the building must meet the low-income standard established by
this program. Not more than one household may occupy a single residential unit.
Property owners are expected to have a minimum 20% pre-rehabilitation equity investment
in the property and must accept covenants on the property that ensure tenancy of low-
income households, maintenance of affordable rents, compliance with occupancy
restrictions, and maintenance of the property. These covenants are described in more detail
in Chapter 3.
There is a minimum loan amount of $600 per unit and a maximum of $15,000 per unit; the
interest rate is indexed at two (2%) percentage points below the current Fannie Mae 30-year
mortgage commitment rate, rounded down to the nearest half-point. For example, if the
Fannie Mae Rate were currently 8.65%, the corresponding annual interest rate available for
owners of qualifying rental property would be 6.5%. (The interest rate index and amount
may be adjusted at the discretion of the Director of Economic Development in order to
address current market conditions.) The total debt is amortized over a 15-year term with
monthly payments beginning one month following loan closing. All remaining principal and
accrued interest becomes due if the property is sold, transferred, or refinanced during the
term of the loan.
Qualified nonprofit owners of properties with more than seven residential units may submit a
written proposal to the Department of Economic Development that includes specific details
of the proposed rehabilitation and financing requirements for consideration on a case-by-
case basis.
Health and Safety Emergency Grants (EG)
The City offers a one-time grant not to exceed $1,000 to homeowners for health and safety-
related emergency household repairs. Emergency household repairs may include
restoration or replacement of inoperable or severely deteriorated plumbing, heating, and
electrical systems, structural and appliance replacement. These grants are available only to
low-income property owners who live in single-family homes, mobile homes, condominiums,
Loan Programs 5
or town-homes. A homeowner is not eligible to receive an EG if a rehabilitation loan has
been funded within the past two years.
As with the City's Single Family Rehabilitation Loan Program, the Loan Review Committee
must approve the proposed grant and scope of work. With this approval, the grant recipient
may proceed with the authorized rehabilitation. After work is completed and inspected, the
homeowner may submit to the City either an original receipt or invoice for payment. A
licensed contractor must perform all work.
Special Needs Grants (SNG)
The City may offer a one-time grant not to exceed $Z500 for health and safety related
household repairs for special needs households, including disabled persons and
elderly persons. These grants are available only to Low-Income property owners who
live in single-family homes, mobile homes, condominiums, or town homes. The US
Department of Housing and Urban Development (HUD) defines low and moderate-
income households as those with gross income from all sources totaling less than
50% of the area's median income. Current income guidelines are available in the
Economic Development Department. HUD updates these income guidelines annually
during the first quarter of the year.
Special Needs Grants may be available directly through City or through non-profit
organizations. If a non-profit organization is selected to implement the Special Needs
Grant, it will be authorized to be the coordinating agency that provides rehabilitation
services to these specific households. A homeowner is not eligible for SNG if a
rehabilitation loan or grant has been received within the past two years.
The Loan Review Committee must approve the proposed grant application and scope
of work. With this approval the administering agency can proceed with the
rehabilitation work and then request reimbursement upon final inspection and
homeowner approval of the work.
6 Loan Programs
-Chapter-3 • • / I Requirements
-Ch
General
There are a number of regulatory requirements associated with federally funded municipal
housing rehabilitation loan programs. In addition to these, the City has elected to impose
certain additional restrictions in order to assure that the Rehabilitation Loan Program will be
utilized in a manner that best serves the community. Details on how the program is
administered in order to comply with these standards are provided below.
Project Eligibility
The City will only consider loan applications for properties that are located within the City of
Huntington Beach. Properties must be in need of repair in order to meet housing and
property maintenance standards and applicable codes of the City. Actual eligibility and
approval will be determined in accordance with individual loan program qualification criteria.
Application Consideration Factors
Loan applicants will be considered on a first-come, first-serve basis and approved as funding
permits. The following factors should be analyzed when approving projects:
• Availability and source of City funds for the program
• Remaining economic life of the proposed improvements on the property
• Location of the project — although a Citywide program, preference will be granted to
those units located within the Redevelopment Agency's Project Area or a Community
Development Block Grant Program Enhancement Areas
• Extent of rehabilitation required to meet health and safety codes and to meet building
requirements such as architectural compatibility with the neighborhood
• The degree of economic/fiscal health of the project
• The degree of impact the project will have on the neighborhood
• Equity position of the borrower — under no circumstances may the total of all liens on
the property (including the new rehabilitation loan) exceed 100% of the property value
• Amount of relocation involved — for rental rehabilitation projects, the City will make
every effort to avoid dislocating families; however, each project will be evaluated on
its own merits and in some circumstances, some relocation may be considered
• The owner of rental property agrees to restrict his rental units to low-income tenants
with affordable rental rates
Property Eligibility Factors
Any property for which a loan is made must satisfy the following minimum requirements:
• The property must be located within the City of Huntington Beach
• The property must be zoned for appropriate residential use
Program Requirements 7
• The City's Municipal Code must allow the proposed improvements
• The rehabilitation must bring the property (including all units within the property) into
compliance with existing City building and zoning codes and HUD Housing Quality
Standards
Application Fee
Borrowers will pay a loan-processing fee for title search, title update, appraisal, credit
report, and recording as needed. The fee for Single Family Loans is $300, and it may
be included in the loan. The fee for Multi Family Loans is $500, and it must submitted
with the loan application. These fees may be adjusted to reflect current market
conditions at the discretion of the Director of Economic Development
Determining Interest Rates
The City's Single Family and Multi Family Loan Programs charge an interest rate indexed to
the Fannie Mae 30-year mortgage commitment rate. This rate is published in newspapers
such as the Los Angeles Times and the Wall Street Journal. The rate that is published on
the day when the Loan Review Committee approves a loan will be used to set the interest
rate for that loan. Should the Director of Economic Development determine that the Fannie
Mae rate no longer best reflects current market conditions, at his/her discretion, another
index rate may be adopted.
Nondiscrimination
Applicants will not be discriminated against on the basis of race, color, religion, national
origin, religion, sex, familial status, and handicap. In addition, applicants may not
discriminate in the lease, rental, use, occupancy, and awarding of contracts with respect to
the property to be rehabilitated with the assistance of a Rehabilitation Program Loan.
Inspections
The applicant shall agree that required inspections of the property to be rehabilitated may be
conducted at any time during the rehabilitation process to assure compliance with City and
State Building Codes and HUD Housing Quality Standards and Lead Based Paint Standards
pertaining to the rehabilitation of single and multi family dwelling units. The applicant must
also permit all other inspections deemed necessary regarding the property such as the
rehabilitation work, materials, equipment, payrolls, and conditions of employment pertaining
to the work.
Ineligible Contractors
The applicant may not award any contract for rehabilitation work with any contractor who, at
the time of bid acceptance, does not have a current and valid State of California contractor's
license and a City of Huntington Beach business license. A contract may not be awarded to
a contractor who has been disqualified by the City of Huntington Beach, State Department of
8 Program Requirements
Housing and Community Development (HCD), or the US Department of Housing and Urban
Development (HUD). The City reserves the right to disqualify any contractor it deems
unqualified to carry out the work to be performed. A homeowner is eligible to perform his/her
work provided they have the proper license to perform said work.
A homeowner is eligible to perform his/her work provided they have the proper license to
perform said work. In this case, the loan or grant will only pay for materials (not labor).
Conflict of Interest
No member of the governing body of the City of Huntington Beach or an employee
who exercises any functions or responsibilities in the administration of this program
can have any interest, direct or indirect, in the proceeds of the loan or in any contract
entered into by the applicant for the performance of work financed. No City employee
can have any financial interest in any contract, subcontract, or agreement either for
themselves or those with whom they have business or immediate family ties. City
employees who are members of a group or class of low or moderate income persons
intended to be beneficiaries of the program will be permitted to participate in the
interest and benefits of the program. In no instance shall an employee of the
Economic Development Department be permitted to apply and participate in the
program.
Bonus, Commission, or Fee
The applicant may not pay a bonus, commission, or fee to any individual or business for the
purpose of obtaining approval of the loan application or for any other approval to complete
the rehabilitation work financed.
Lead-Based Paint Regulation Compliance
The 1992 the Housing and Community Development Act included regulations
requiring that federally funded housing rehabilitation programs assess lead base
paint risks and abate hazards in specific circumstances. This Act was amended in
1999 by adding additional requirements. For more complete details regarding lead-
based paint regulation requirements, refer to Title X of the HCD Act (a copy of this
regulation is maintained in the Economic Development Department). In summary, the
City's level of commitment regarding lead-based paint is determined by the amount of
funding the City provides per residential unit, as described in the following chart.
Program Requirements 9
Required Activities to Address Lead-Based Paint
<$5,000 $5,000-$25,000 >$25,000
Approach to Lead Do no harm Identify and control Identify and abate
Hazard Evaluation lead hazards lead hazards
and Reduction
Notification Yes Yes Yes
Lead Hazard 1. Paint Testing of 1. Paint Testing of 1. Paint Testing of
Evaluation surfaces to be surfaces to be surfaces to be
disturbed by disturbed by disturbed by
rehabilitation rehabilitation rehabilitation
2. Risk assessment 2. Risk assessment
Lead Hazard 1. Repair surfaces 1. Interim controls 1.Abatement
Reduction disturbed during 2. Safe work 2. Safe work
rehabilitation practices practices
2. Safe work 3. Clearance of unit 3. Clearance of unit
practices
3. Clearance of
work site
Lead base paint inspections will be performed and paid for by the City/Agency unless
the home is exempt according to HUD standards, in which case an inspection is not
required. The City will assist the homeowner in acquiring grants to pay for the
treatment or abatement of all lead base paint found, if grant funds are available. If
grant funds are unavailable, the City will consider increasing the loan amount if the
repairs exceed the maximum loan amount the City can approve.
Lead based paint reports will be provided to each contractor working on the property.
Only a Certified Contractor can perform the removal of lead base paint on homes that
contain lead base paint. The contractor performing removal of lead base paint will not
be paid until evidence of a lead base paint clearance is presented to the City. Any
costs associated with the removal or clearance of lead base paint will be added to the
rehabilitation loan or grant. When these costs exceed the maximum loan or grant, the
Director of Economic Development can authorize increasing the loan or grant to pay
for these Federally mandated procedures.
Historic Preservation Compliance
Any property listed on the City, County, or State historic survey must obtain approval from
the Planning Department for any exterior improvements planned in order to assure that the
improvements are compatible with the style and architecture of the building and that they
maintain or enhance the character of the property.
10 Program Requirements
Construction Contract
The City of Huntington Beach is not a party to a construction contract. Through its loan
programs, the City provides financing to projects and is charged with the responsibility of
ensuring that work is completed according to the approved scope of work.
Loan Security
As security for the City's loans on Real Estate, the borrower is required to sign a promissory
note secured by a deed of trust. The deed of trust will be recorded with the County
Recorder's Office. This document protects the City's investment should the borrower
attempt to sell the property or incur additional debt against the property before their loan with
the City has been repaid.
For a loan on a Mobile Home, the borrower is required to allow placement of the City as a
lien holder on the mobile home certificate of title until the loan has been paid in full.
Loan Payments
Loans generally require payment in one of the following three methods depending on the
type of loan and the borrower's compliance with loan terms:
• Principal payment is deferred until the property is sold, transferred, transferred to a
trust or refinanced.
• Payment begins on the first day of the month following the 30th day after loan closing
with monthly payments over a 15-year term.
• Immediate payment of principal and accrued interest is triggered by the borrower's
default of the loan agreement, upon the sale of the property or transfer of title or the
unauthorized refinance of the property.
Loans must follow the individual program guidelines as described below in this chapter.
Prepayment Penalty
If a loan is paid within two years of the date of the loan agreement, there will be a
Prepayment penalty of 25% of the original principal balance. This penalty may be waived at
the discretion of the Loan Review Committee. If a prepayment penalty is waived, the
circumstances and justification must be clearly documented in the loan file. A loan may be
paid in full with no penalties assessed at any time after two years. The purpose of this
condition is so that borrowers do not use these funds solely for the purpose of upgrading a
home and then putting on the market for sale. The program's basic purpose is to help
people repair the home in which they intend to live.
Program Requirements 11
Subordinations
Subordinations are not generally permitted. In the event a borrower determines that it
would be in their best interest to refinance to lower the interest rate and monthly
payments on their First Trust Deed, the City may allow subordination. The City will
not subordinate should the new mortgage include any increase in equity. The City
has the right to decline a request to subordinate should it determine that its loan
might be jeopardized.
The City of Huntington Beach will consider subordination of City of Huntington Beach
Housing Rehabilitation Loan Program loans under the following circumstances:
1. Borrower will be refinancing their first mortgage at a reduced interest rate that
results in a lower monthly mortgage payment.
2. Borrower will not be withdrawing or using any equity("pulling out cash") for
any reason. However, any fees associated with the refinance may be included
in the new first mortgage.
The City will not approve a subordination that involves the following:
• Withdrawal of equity for any reason
• Subordination to a loan involving negative amortization
• Subordination to a variable rate mortgage loan
• Change of ownership, including adding new owners or co-signer(s) onto the
loan or title.
• The combined total of the new first mortgage loan and City's existing second
mortgage loan exceeds the appraised value of the subject borrower's property.
The City's loan will become immediately due and payable if the borrower at any time:
(1) takes out any other loan against the property in lieu of subordinating the City's
loan, OR (2) uses refinance proceeds to repay revolving or other debt.
Assumptions
Unless loan documents specifically allow an existing loan to be assumed by a new owner
upon the sale or transfer of the property, the City will require that the loan be repaid by the
borrower according to the terms of the Promissory Note and Loan Agreement when a
property is sold or transferred.
Loan Requirements
The Rehabilitation Loan Program is intended to help homeowners and owners of rental
property make needed repairs for health and safety purposes. It is not intended to help
owners profit from increased equity resulting from improvements to the property. It is
additionally not intended for the City to make loans that are unreasonably risky thus
12 Program Requirements
jeopardizing its investment. The requirements discussed below are designed to address
these matters.
Make Payments on all Debts
Borrowers must agree to remain current on their payments for all debts recorded against the
property. Should a borrower default on any debt recorded against the property, thus
triggering foreclosure proceedings, the City would be at risk of losing its investment. Failure
to remain in good standing with all creditors who have a claim against the property is a
cause of default and would make the loan immediately due and payable.
Primary Residence
Under the Single Family Housing Rehabilitation Loan Program, the borrower is required to
own and reside in the property being financed and have a likelihood of continuing to reside in
the property for a minimum of two years. There is a prohibition of renting the property during
the term of the loan and doing so is an event of default. This does not prevent a homeowner
from renting out a maximum of two rooms in a home.
Property Maintenance
The borrower is required to maintain the property in good condition during the term of the
rehabilitation loan (15 years) and in compliance with applicable City and State laws and
codes. The applicant will further agree to comply with HUD Housing Quality Standards for
the duration of the loan (for apartments).
Fire and Hazard Insurance
All real property taken as collateral must have adequate insurance coverage to protect the
City from loss due to fire or other hazards. Property 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. Borrowers are required to provide evidence of
insurance during the term of the loan on an annual basis. The City must be designated on
such insurance as an additional loss payee. Nonpayment of insurance is an event of default
and will make the loan due and payable. `
The borrower must certify the details of the coverage before a loan is disbursed by providing
the City with the original policy or binder. Policies must show an inception date prior to, or
corresponding with, the date of loan funding.
Flood Insurance
The City will determine if the property is located in a special flood hazard area early in the
credit evaluation process by reviewing flood maps located at the Building Department. If the
property is found to be located within a 100-year flood hazard area, the borrower will be
required to obtain flood insurance. Evidence of such insurance must be received prior to
loan funding.
Program Requirements 13
Property Taxes and Homeowner Association Dues
Borrowers are required to pay all property taxes and homeowner's association dues during
the term of the loan. Nonpayment is an event of default and will make the loan due and
payable.
Use of Funds
Rehabilitation loan funds are for the sole purpose of financing construction or reimbursing
construction expenditures as identified in the approved scope of work. In the event the City
determines that a borrower misused loan funds, the loan will become immediately due and
payable.
Timing of Rehabilitation Projects
After the loan has been approved and loan documents have been signed, the borrower will
have 30 days to commence construction work. All work must be completed within a period
not to exceed 180 days.
Additional Loan Requirements for Multi Family Dwellings
Covenants, Conditions, and Restrictions (CC&Rs) will be recorded against multi family
properties rehabilitated with loan funds. The CC&Rs will reiterate the requirements of the
Promissory Note including a nondiscrimination clause among other California Health and
Safety Code requirements. Additional elements of the CC&Rs are described below.
Income Restricted(Affordable) Rental Units
For rental properties rehabilitated with City assistance, the owner and all successors/assigns
must restrict residency to low-income households for the term of the City loan. The owner
shall maintain records of income verification for all tenants. For the purposes of determining
household income, all adult household members must be considered. Income must be
verified at least annually.
If a tenant's household gross income increases from low-income and thus the household no
longer qualifies for residency in the project, that family will be given 90 days to relocate to a
non-restricted unit. Should a tenant face extraordinary hardship satisfying this requirement,
a written appeal may be submitted to the City. Upon receipt of a written appeal and at the
sole discretion of the Director of Economic Development, this period may be extended for a
period not to exceed 90 additional days.
Maximum Rents
The maximum allowable rents for assisted units will be determined by applying the most
restrictive rent limits established on an annual basis by: 1) California Redevelopment Law, 2)
Section 8 Fair Market Rents, or 3) HOME Program Guidelines. The current rents are
available in the Economic Development Office of City Hall. Rent includes the tenant monthly
14 Program Requirements
rent payment and utilities (i.e., electricity, water, gas, trash, etc.) but does not include
telephone. All tenant paid utilities must be subtracted from the rent figures.
Maximum Occupancy
The maximum number of persons in a household that may occupy an assisted unit of a
specified number of bedrooms will be based on the Section 8 limits established by the
Orange County Housing Authority. The allowable number is determined, in part, by the sex,
age, and relationship of the tenants and the total amount of living space. It is generally
accepted by the Housing Authority to be two persons per living space plus one, as follows:
Occupancy Standards
Unit Size Maximum Occupancy
Studio 2 Persons
1 Bedroom 3 Persons
2 Bedrooms 5 Persons
3 Bedrooms 7 Persons
4 Bedrooms 9 Persons
Relocation
Applicants must be advised that State and Federal regulations require that persons
displaced either temporarily or permanently, as a direct result of rehabilitation work must be
offered relocation assistance. Relocation costs may be included in the cost of the project.
Subordination to City CC&Rs
The holder(s) of any prior liens on a property to receive rehabilitation assistance shall be
required to subordinate to the City's CC&Rs ("Affordability Restrictions"). This subordination
shall pertain solely to those units required to remain affordable to low-income tenants under
the terms of the Rehabilitation Loan Program.
Program Requirements 15
,-Chapter 4 Loan Processing
General
The process of handling a loan from the acceptance of an application through funding is
called loan processing. The following is a step-by-step outline of the loan processing
procedures for the Rehabilitation Loan Program.
The Application
The City's Housing Rehabilitation Program has the following three application packages:
Single Family/Mobile Home Loans
The application for single-family homes and mobile home loans was developed by the
Economic Development Department specifically for this program. The applicant is requested
to provide information in the following subject categories:
• Property information and purpose of loan
• Applicant information
• Employment information
• Income and expense information
• Assets and liabilities information
• Declarations (credit history, citizenship, ethnicity)
This information is to be used strictly for statistical reporting purposes only and is strictly
confidential.
All submitted applications are reviewed for completeness and program eligibility. When an
applicant is determined eligible based on the information in the application, a preliminary
property inspection, credit report, title, appraisal and lead base paint inspection are ordered
and scheduled.
Multi Family Loans
The application for multi family home loans was developed by the Economic Development
Department specifically for this program. Applicants are requested to provide information in
the following subject categories:
• Property information
• Applicant information
• Schedule of real estate owned
• Schedule of rents (including proposed repairs for each unit)
• Declarations (credit history, citizenship, ethnicity) Some of this information is used
strictly for statistical purposes only.
16 Loan Processing
All submitted applications are reviewed for completeness and program eligibility. When an
applicant is determined eligible based on the information in the application, a preliminary
property inspection is scheduled, a credit report is ordered, a real estate appraisal is
requested, a lead based inspection is performed and a title report is ordered.
Emergency Grants and Special Needs Grants
The application for the Emergency Grant and the Special Needs Grant Program was
developed by the Economic Development Department specifically for this program. Each
applicant is requested to provide information in the following subject categories:
• Property information and purpose of grant
• Applicant information
• Employment information
• Income and expense information
• Assets and liabilities information
• Declarations (credit history, citizenship, ethnicity)
All submitted applications are reviewed for completeness and program eligibility. When an
applicant is determined eligible based on the information in the application, a preliminary
property inspection and a credit report is scheduled and obtained.
Application Log
As the City receives each application, it is recorded in an application log. This procedure
assists City staff in tracking individual applications and allows for management oversight of
the loan origination process.
Qualifying Single Family Loans
Upon receipt of a completed application package, Economic Development staff will verify the
applicant's eligibility. The applicant's financial information is reviewed for compliance with
the particular loan program's parameters. Issues such as debt to income ratio, loan to value
ratio, and credit history are evaluated.
Low or Moderate Income
Income is classified as Extremely Low, Very Low and Low and Moderate Income as a
result of household size and gross income of all adult individuals who reside within
the household. Extremely Low and Very Low-income households earn up to 50% of
Orange County median income and Low and Moderate income households earn
between 51% and 80% of median income. The US Department of Housing and Urban
Development (HUD) publishes updated income guidelines annually for Orange
County.
Program Requirements 17
Loan Underwriting/Qualifying Form
Upon receipt of completed application package, the Program Administrator will perform the
underwriting using the Qualifying Form. This form is designed to guide the Program
Administrator through the general approval criteria of the loan program.
Income
All income for the applicant(s) is counted for qualifying purposes. Income includes base
employment earnings, overtime, bonuses, commissions, dividends, interest, net rental
proceeds (including depreciation), Social Security, pensions, and retirement earnings. The
applicant's housing expenses are delineated. These expenses include payment on any
existing mortgages, mobile home space rent, hazard insurance, real estate taxes, mortgage
insurance, and homeowner association dues.
Debt to Income Ratio
The applicant's non-housing liabilities such as auto loans, revolving charge accounts,
alimony, and child support will be noted as listed in the credit report. Since housing related
expenses are accounted these should exclude housing liabilities. The applicant's debt to
income ratio is then calculated using the sum of monthly housing expenses and liabilities
divided by monthly gross income.
The debt to income ratio is the applicant's total housing expenses and liabilities divided by
gross income. It is one of the basic criteria used to determine if an applicant has the ability
to repay a home mortgage. For the Rehabilitation Loan Program, the applicant's total debt
to income ratio may not be higher than 50%, unless the Loan Review Committee approves
an exception.
Loan to Value Ratio
The total of all liens on the subject property, including the City loan, may not exceed 100% of
the after-rehabilitation appraised value. The Loan Review Committee may set lower Loan to
Value limits, depending on current market conditions. All existing and proposed
encumbrances on the property are determined, and a comparison of the encumbrances to
the value of the property is made. The value of the property is then established. This is the
loan to value ratio.
When there is more than one loan on a piece of property and the City/Agency will assume a
third position, the loan to value ratio including the after rehab loan cannot exceed 80%. No
loans will be made beyond those in a third position. Third position loans will receive more
stringent review and risk analysis than those in a first or second position.
Income History
To verify that the borrower has the ability to repay the debt, salaried applicants must provide
written verification of two years income. This may be in the form of completed and signed
Federal Tax Returns, W-2 forms, pay stubs, and/or direct employment verification forms, and
bank statements in case of direct deposited funds, such as pensions or Social Security.
18 Loan Processing
Self employed applicants or those with sole proprietor businesses must also provide a
minimum of two years income history. Minimum acceptable verification must be in the form
of completed and signed Federal Tax Returns.
Verifications
All income and asset sources must be verified independently of the information provided on
the borrower's application. It is the responsibility of the City to obtain and evaluate
verifications for accuracy.
One method of evaluating accuracy of an applicant's financial information is to compare
items listed on the credit report with the items listed on the application. The applicant must
account for any item not listed in one place or the other.
Any derogatory credit information must be fully explained in writing by the borrower.
Significant derogatory credit information may be reason for denial of the loan.
Underwriting Multi Family Loans
Upon receipt of a completed application package and an acceptable project proposal, the
Economic Development Department will determine initial eligibility and schedule a
preliminary property inspection, order a credit report, appraisal, lead base paint inspection,
title report and preparation of a minor rehabilitation environmental report.
As part of the underwriting review, staff members will verify that all resident tenants of the
property are low income as defined by HUD. Additionally, staff will review the applicant's
management of the property, income and expense statements, balance sheet, and
construction plans.
Underwriting Emergency Grants & Special Needs Rehabilitation Grants
Upon receipt of a completed Grant Program Application, Economic Development
Department staff will determine initial eligibility. The applicant's financial information will be
reviewed for compliance with program parameters. Issues such as debt to income, loan to
value, and credit history are not considered when underwriting a grant application. Funding
approval is primarily based on the applicant's income and the applicant's emergency need
for rehabilitation assistance. Exceptional circumstances will be subject to the review of the
Loan review Committee. Grant funds may only be used for health and safety-related
emergency repairs. Such repairs may include work on plumbing, heating, and electrical
systems.
Title Insurance
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 secured interest in the property. In order to assure that the borrower has accurately
represented title to real estate, all such loans shall be supported by a preliminary title report
obtained by the City.
Program Requirements 19
A Title Officer prepares a title report after a search of public records, maps, and other
relevant documents. This report ascertains 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.
A preliminary title report is a signed and dated formal report that sets out in detail the current
conditions to a parcel of land. The following matters should be checked carefully when
reviewing a title report:
• The estate or interest covered
• The recorded owner
• The parcel of land
• Exceptions, liens, and encumbrances
Conveyances
Endorsements
Preliminary Property Inspection
After an applicant has been determined initially eligible for rehabilitation assistance, a
preliminary property inspection will be scheduled. This inspection will allow the City to verify
the extent of repairs needed to correct City code violations or to ascertain the existence of
other property deficiencies. The Scope of Work Report will need to be approved by the Loan
Review Committee. Only items identified in this scope of work may be funded by the City's
loan, unless change orders are necessary to address unknown items.
Loan Approval
Upon the receipt and analysis of all required financial information by the City, the Loan
Review Committee will meet to evaluate the borrower's financial position, rehabilitation work
to be done, and credit history and will determine approval of the loan. The application and
other pertinent documentation (cost estimates, income verification, title report, bid amounts,
etc.) will be reviewed. The Loan Approval form summarizes that the borrower sufficiently
satisfies each approval criteria for a loan. The Loan Review Committee must unanimously
approve a loan before a loan may be funded, at which time each committee representative
will sign the Loan Approval Form to document approval of the loan.
Selection of Contractors
Contracting will be done on a competitive bid basis. After the Loan Review Committee has
approved a loan, the City will work with the property owner to prioritize the necessary scope
of work, and the borrower will request bids from home improvement contractors. The
homeowner will attempt to obtain at least 3 bids. The homeowner may award the contract to
the lowest-cost, qualified bidder who meets the City's licensing and insurance requirements.
When a contractor has been approved, the City will authorize work to begin. In the event a
borrower begins construction work before City approval is given, such work will not be an
eligible activity under the rehabilitation loan.
20 Loan Processing
Acceptable Contracts
Three forms of contracting will be allowed under this program as follows:
• Contracts between the homeowner and a general contractor
• Contracts between the City and the homeowner where the homeowner is the
contractor— in this situation, the homeowner cannot be compensated for labor
• Contracts between the homeowner (acting as a contractor) and a subcontractor
Change Orders
All change orders to the contract require the signature of both the contractor and the
borrower. The City must first approve change orders.
Construction Progress Inspections
From time to time during construction, a contractor may request payment for work
completed. Before payment will be approved, the City must inspect the property to
determine that the work has been completed or that an appropriate increment of the work
has been completed. A material and lien release must be supplied for the portion of the work
completed and in amount equal to the payment being made.
Funding the Loan
Upon loan approval by the Loan Review Committee and selection of qualified contractors by
the borrower, a staff member will create material requisitions for each contractor (material
requisitions are used to open purchase orders). If payments are made through the City,
separate material requisitions are required for each individual contractor so that checks will
be made payable to the contractor or to an escrow company in the amount of the loan for the
disbursement of loan funds on behalf of the City and borrower. All funding documents will
be made part of the permanent file.
When a purchase order is opened, a copy should be placed in the file. Another copy should
be given to the Economic Development Department's finance coordinator. A final copy
should be filed in the department's purchase order file system.
Before funding preparation is complete, the City's Rehabilitation Loan Database must be
updated to include the new loan. The Economic Development Department's Rehabilitation
Loan Program Coordinator maintains this database in Microsoft Access.
After each phase of work has been completed and inspected, a Loan Disbursement Request
will be completed. This form authorizes payment to be made to a contractor. It is submitted
to Accounts Payable or to an escrow company contracted by the City to have a check
printed and provided to the contractor. A copy will be maintained in the permanent file. If an
escrow company disburses the funds, an Authorization of Loan Disbursement form is sent to
the escrow agent authorizing payment to the contractor.
Program Requirements 21
After securing the borrower's loan thorough the recording of documents with the County
Recorder's Office, a copy of the loan application and the Loan Service set-up form is
forwarded to the City's loan service company, currently WestStar. Monthly accounting
statements from the loan service company are reviewed and reconciled. The loan servicing
company sends out late letters to delinquent borrowers.
Contractor Lien Releases
After a contractor completes the approved rehabilitation work, but before final payment is
made to the contractor, the contractor must release any and all construction and material
liens whether or not recorded against the subject property.
Final Inspection
After all rehabilitation work is finished, the property will be inspected to verify that the
approved scope of work has been competed. This inspection is required before the final
loan disbursement will be approved.
Acceptance of Work
In the event a dispute arises between the homeowner and the contractor concerning the
contracted scope of work, the City will work with both parties to negotiate a satisfactory
solution.
Post Funding Audit
The Economic Development Department is responsible for reviewing all application and loan
documents for accuracy. Proper lien position, proper designation of
Beneficiary/Trustor/Trustee, adherence to program guidelines, and any special issues will
also be reviewed.
22 Loan Processing
(intentionally Blank)
Program Requirements 23
Chapter Documentation
General
Master loan documents for a specific loan program are prepared by the City Attorney's
Office. Subsequently, individual loan documents are prepared by City staff in accordance
with the City Attorney approved master documents.
Documents Required
The following loan documents are required for every Housing Rehabilitation Loan Program
loan secured by real property:
• Promissory Note
• Deed of Trust
• Truth in Lending Statement
• Disclosures (i.e., Fair Lending, Lead Based Paint)
• Notice of Opportunity to Rescind Transaction
• Minor Rehabilitation Environmental Review
Promissory Note
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.
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. There are three parties to a deed of trust: (1) the Trustor (the
borrower), (2) the trustee (for City loans, the Agency will act as trustee/for Agency loans, the
City will act as trustee), and (3) beneficiary (the lender, either the City or Agency). Basic
terms of a deed of trust include:
• A description of the promissory note that 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
• Warranties and covenants
• Property insurance
• Events of default
• Remedies
The deed of trust requires the trustor's (borrower's) signature to be acknowledged in front of
a notary public, and must be recorded with the County Recorder.
24 Documentation
Disclosures and Notices
Various laws and regulations govern real estate-secured loans and require that lenders
provide applicants with certain information. These requirements are 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. A Truth in
Lending document is provided to the borrower disclosing the credit terms required by
Regulation Z.
• Lead-Based Paint Hazard Warning
Applicants for rehabilitation assistance (and tenants in a property being rehabilitated)
must be provided with information regarding Lead-Based Paint. Evidence of the
receipt of this information must be clearly documented in the loan file.
Notice of Opportunity to Rescind Transaction
Regulation Z allows consumers the right to cancel a loan transaction when a security interest
is taken in their personal residence. 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. The city may, however, perfect its security interest and record the deed of trust
prior to the expiration of this time period.
Safeguarding Documents
Original loan documents (i.e. note and property deed of trust or mobile home title) are to be
maintained in a secure and fire resistant location in the Economic Development Department
or another location selected by the Economic Development Department. When a loan is
paid in full or about to be paid in full, these documents will be released to a licensed escrow
company, or in certain circumstances, they will be reconveyed directly to the borrower by the
City.
Documentation 25
Chapter • Loan Maintenance andAccounting
General
During the life of a loan several issues can arise which cause the City to revisit the loan file.
Some of those issues may involve defaults, partial payments, full repayment, or property
insurance cancellation. This chapter addresses those situations that may occur between the
time the loan has been funded and the point of full repayment of the loan.
File Organization
Loan file organization is an important aspect of loan portfolio management. Rehabilitation
Loan files will be organized according to a basic credit file format. The objectives of this
procedure are:
• To ensure that all files contain the documentation necessary to support sound credit
decisions
• To ensure that files are organized in a way that is efficient and clearly understood by
individuals requiring access to the files
There are six sections to the loan file and they are as follows:
1. Correspondence (letters, documentation and/or an accounting of events, etc.).
2. Application (in this order: signed loan approval form, completed loan qualification
sheet, original loan application, required signed disclosures, income and asset
information and verification, mortgage and rent documentation, insurance
documentation, federal tax forms).
3. Title Information/Appraisal (property profiles, appraisals, property comparable
information, preliminary title reports and information, preliminary mobile-home title
and registration documents and information, completed environmental review, lead
base paint inspection report, revised insurance declarations with the City as loss
payee and credit report).
4. Fund Disbursement (record of all loan funding and disbursements, copies of all
construction invoices, lien releases, disbursement authorizations, checks issued and
associated back up documentation).
5. Loan Documents: (COPIES of signed loan documents, including promissory note,
deed of trust, Regulation Z (or Truth in Lending Statement), Statement of Lien forms,
Power of Attorney forms, and Right of Rescission forms, final title report, final Lead
Base Paint Clearance if needed, Declaration of CC&R's if applicable, and any loan
agreements).
6. Construction Contract/Bids/Work Write-Up (signed accepted work write-up with
insurance and license information for each accepted contractor, copy of original,
unexecuted work write-up/inspection report).
26 Loan Maintenance and Accounting
Accounting for Deferred Repayment Loans
Deferred Payment Rehabilitation Loans (DPL) do not require principal or interest payments
to be made during the term of the loan. For that reason, the loan accounting system
employed by the City uses a personal computer based database program. The database
keeps track of each loan by amount, borrower name, address, and date.
Loan Servicing of Amortized Loans
The City currently employs WestStar Loan Servicing, Inc. to service those
rehabilitation loans that require repayment during the term of the loan. After a loan is
fully disbursed to a borrower, a copy of the loan application packet is delivered to
WestStar for loan servicing at.
WestStar Loan Servicing
P.O. Box 7015
Pasadena, CA 91109
Charge-Offs
A loan is considered a charge-off if it has been deemed uncollectable. These may be loans
that have been approved for partial repayment or no repayment according to this chapter, or
they may be loans deemed uncollectable because of the borrower's bankruptcy or death. In
any event,_the loan must be indicated as such in the database monitoring system and
removed from the outstanding loan balance figures. Notice of a loan charge-off will be given
to the Treasury Department and to the Accounting Department, with a copy to the City
Attorney's Office.
Partial Repayment Upon Sale or 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 the Director of Economic Development. Notice of a
partial repayment will be given to the Treasury Department and Accounting Department with
a copy to the City Attorney's Office.
Loan Payoffs
From time to time rehabilitation loans will be repaid in full. The City will generally receive a
request for a payoff amount when repayment occurs as part of a property sale or mortgage
refinance. The request will usually come in the form of a Request for Beneficiary's Demand
from an escrow company, title insurance company, or financial institution.
Due to potential errors and misunderstandings when discussing payoffs verbally, the City will
provide a payoff demand only upon receipt of a written request. The City will communicate a
payoff demand to the requester only in writing. A fee will be charged for any requested
payoff demand. The fee is established by City ordinance.
Loan Maintenance and Accounting 27
Responding to a Request for Beneficiary's Demand
The following steps should be taken when the City has received a written request for a loan
payoff demand:
• Upon receipt of the payoff demand and the fee, retrieve the loan file and review the
loan agreement for repayment requirements.
• Prepare a demand letter describing the principal balance, interest rate, date of loan,
current date, calculation of interest to the current date, and a per day interest amount
for the estimated payoff date.
• Attach a copy of the request for beneficiary's demand to the demand letter and send
to the requesting party.
• Place a copy of the demand letter and the original request for beneficiary's demand in
the loan file at the top of the right side.
If the request for a demand is from a licensed escrow and/or title company, staff may
respond by sending the reconveyance of the note and deed of trust together with the
demand letter. The reconveyance should be accompanied with a letter clearly instructing
the escrow company to not-record the document until the City's loan is fully satisfied and the
Note and Deed of Trust returned if no payoff occurs. If the request is from any other
representative of the borrower, the City may hold the reconveyance until payment is
received in full and the payment check has been cleared.
The title for a mobile home and a signed conditional lien release form should be sent to a
licensed escrow company or title company, together with a payoff demand, provided that
these documents were requested and are necessary to complete a pending sale transaction.
Reconveying the Trust Deed
After the City has received payment in full of "good" funds, the deed of trust will be released
as a lien against the property. ("Good" means funds that are drawn on a title company,
escrow company, or financial institution. Funds drawn on a personal account should be
cleared first before reconveying the deed of trust.) A reconveyance of trust deed will be
prepared by City staff to be recorded and then sent to the borrower after recording (the
document should note the borrower's name and current address). The document may be
sent directly to the county recorder or to the entity that provided the payoff funds, such as
the title or escrow company. A copy of the recorded reconveyance should be maintained in
the closed loan file.
Defaults
A borrower may default on the terms of the loan if he or she violates conditions of the loan
agreement. These default issues can include the following:
• Nonpayment.
• Renting the property (homeowner loan programs).
28 Loan Maintenance and Accounting
• Allowing the rents or incomes of the tenants in the units to exceed the affordability
requirements established by this program, as adjusted annually (multi family housing
loan programs).
• Allowing the number of tenants occupying a unit to exceed the standard limits
established by HUD.
• Allowing the rehabilitated building (interior and/or exterior) to fall into disrepair or be
kept unclean, unsafe, or out of compliance with current building codes.
• Selling or transferring the property by any means without prior approval of the City.
• Nonpayment of other mortgages, taxes, insurance, or homeowner association dues.
• Or any other terms in the Agreement, Note or Deed of Trust.
Because of the time required to monitor these issues, the City will generally enforce only
those defaults that 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. In
such situations, at the discretion of the Loan Review Committee, the property owner will be
given 30 days to remedy a default before filing a notice of default and proceeding with
foreclosure.
Closing the Loan File
After a loan has been paid in full and the corresponding deed of trust or mobile home title
has been reconveyed, the loan file will be closed. The Economic Development Department
will indicate, "Paid in Full" (or another notation if appropriate) on the exterior of the file folder,
and the file will be stored in a separate area. Closed files should be maintained for a period
not less than three years.
Loan Maintenance and Accounting 29
Terms for Single Family Owner Occupied
Housing Rehabilitation Loan Program
Deferred Repayment Loans Amortized Repayment Loans
• Single Family Mobile Home, Single Family Mobile Home,
House Townhome, House Townhome,
Condominium Condominium
• Low-Income Low-Income Moderate—Income Moderate—Income
(<50%Median) (<50%Median) (51%-80%Median) (51%-80%Median)
• •• Must be owner Must be owner Must be owner Must be owner
• occupied. Limit of 1 occupied. Limit of 1 occupied. Limit of 1 occupied. Limit of 1
household per household per household per household per
home. Owner must home. Owner must home. Owner must home. Owner must
live in home not live in home not live in home not live in home not
less than 2 years less than 2 years less than 2 years less than 2 years
after work is after work is after work is after work is
completed. completed. completed. completed.
•• $25,000 $15,000 $25,000 $15,000
3% below current 3% below current 2% below current 2% below current
Fannie Mae 30- Fannie Mae 30- Fannie Mae 30- Fannie Mae 30-
year mortgage year mortgage year mortgage year mortgage
commitment rate. commitment rate. commitment rate. commitment rate.
• • Deferred until Deferred until Loan is amortized Loan is amortized
property is sold or property is sold or for 15 year term for 15 year term
transferred when transferred when with monthly with monthly
principal and principal and payments. payments.
accrued interest accrued interest Prepayment penalty Prepayment penalty
becomes due. becomes due. for loans repaid for loans repaid
Prepayment penalty Prepayment penalty within 2 years. within 2 years.
for loans repaid for loans repaid
within 2 years. within 2 years.
Principal and Principal and All outstanding All outstanding
• accrued interest accrued interest principal and principal and
becomes becomes accrued interest accrued interest
immediately due. immediately due. becomes becomes
immediately due. immediately due.
• . No No No No
• • No No No restriction No Restriction
Exhibit 1 31
Terms for Multi Family Rental Housing
Rehabilitation Loan Program
Multi Family Rental Housing
• Up to 7 Residential Units 8 or More Residential Units
• Priority is given to Oakview Target Area. Priority is given to Oakview Target Area.
• Low Income Low Income
(<50%Median) (<50%Median)
• • • Limit of 1 household per residential unit. Limit of 1 household per residential unit.
• Prior to rehabilitation, the property must Prior to rehabilitation, the property must
• have one or more substandard conditions have one or more substandard conditions
under City, State, or Federal housing under City, State, or Federal housing
quality standards. quality standards.
• • After rehabilitation, the property must After rehabilitation, the property must
• . meet HUD Housing Quality Standards. meet HUD Housing Quality Standards.
• Ensures tenancy of income eligible Ensures tenancy of income eligible
households, maintenance of affordable households, maintenance of affordable
rents, compliance with occupancy rents, compliance with occupancy
restrictions, and maintenance of property. restrictions, and maintenance of property.
• • $600 per unit minimum/$15,000 per unit Negotiable
• maximum
2% below current Fannie Mae 30-year Negotiable
mortgage commitment rate rounded
down to the nearest half point.
• Minimum 20% pre-rehabilitation equity Minimum 20% pre-rehabilitation equity
investment required. investment required.
15 years Negotiable
• • Amortized Negotiable
• . Loan is amortized for 15 year-term with Negotiable
monthly payments.
Principal and accrued interest becomes Principal and accrued interest becomes
due. due.
• . No No
32 Exhibit 2
Terms for Health and Safety
Emerqencv Grant Program
• Single Family Homes, Mobile Homes, Condominiums, and Townhomes.
• Low-Income.
• • • Property must be owner occupied. Limit of 1 household per home. Owner
must reside in home for not less than 2 years after work is completed.
• Must be health or safety-related, such as plumbing, heating, and electrical
systems.
• Property must be inspected before and after work is completed.
• $1, 000
• No
• . An applicant is ineligible for a grant if a City Rehabilitation Loan was funded
within 2 years.
None
Exhibit 3 33
List of Eligible Home Improvements
Improvements Eligible Under the Single Family
Owner Occupied Housing Rehabilitation Loan Programs:
• Bathrooms — Equip bathroom with working toilet, permanently installed working wash
basin with hot and cold running water, working tub/shower with hot and cold running
water, and adequate ventilation provided by an operable window or ventilation system.
Repair or replace leaking/damaged pipes, fixtures, or floors.
• Electrical — Correct electrical hazards that present an immediate safety risk.
• Exits and Access — Each home should have least 2 accessible doors.
• Exterior Paining/Stucco/Siding — Eligible for house and garage to provide weather
protection (includes repairs or patching and filling of cracks and holes).
• Fencing/Blockwall—To address a safety risk to the residents.
• Heating - Repair and replace unsafe, inadequate, or inoperative heating systems.
• Insulation — Permanent weatherization of a home to conserve or reduce energy use.
• Interior Painting — To correct peeling/damaged paint caused by water leaks, plumbing or
structural problems that have been corrected.
• Kitchen — Equip kitchen with a working stove and oven with proper ventilation, a
refrigerator that maintains a temperature appropriately low, a sink with hot and cold
running water and with proper drainage, and space for food preparation and storage.
• Plumbing — Provide proper drainage and hot/cold running water free from contamination.
• Roofing and Roof Drainage — Repair or replace (with like material) to eliminate hazards
or leaks.
• Security— Equip windows and doors accessible from the outside with locks.
• Smoke Detectors — Install detectors appropriate to the design and size of the structure.
• Stairs/Rails/Porches — Correct broken or missing stairs, rails, or porches.
• Structure/Foundation — Framed structures must be secured to the foundation.
Foundation should be sound and free from hazards.
• Termite or pest control — Inspection, abatement, and required structural repairs.
• Water Heater— Unit should be functioning and located/secured appropriately.
• Windows/Doors — Repair or replace broken glass, rotted frames, inoperable windows,
doors, or locks.
• Other Code enforcement violations —The home should be free from other hazards inside
and outside that may be identified by inspection
• Modifications for elderly and disabled individuals
Improvements Eligible Under the Multi Family Rental Housing
Rehabilitation Loan Programs:
• All eligible costs listed above for single family loan programs
• Modifications for the Disabled
• Fees for approved professional services related to the rehabilitation
• Loan or permit processing fees related to the rehabilitation
• Refinancing fees as necessary
• Tenant relocation costs assistance as necessary
• Lead Base Paint abatement
40 Exhibit 5
Resolution of the City
Council Approving the
Rehabilitation Loan Policies
and Procedures
ATTACHMENT #2
RESOLUTION NO. 2003-2
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH APPROVING THAT CERTAIN DOCUMENT
ENTITLED `.`REVISED HOUSING REHABILITATION LOAN .
PROGRAM POLICIES AND PROCEDURES —EFFECTIVE
JANUARY 6, 2003."
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000"; and
The Housing Rehabilitation Loan Policies serves as an internal resource to Economic
Development staff to enable them to understand important program administrative matters
and to maintain better administrative control over the various loan and grant programs
offered by the City; and
Market conditions and rehabilitation financing needs of homeowners in the City of
Huntington Beach have changed since 2000; and
The current Housing Rehabilitation Loan Policies have been revised by the City's
Department of Economic Development to reflect these changes,
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Revised Housing Rehabilitation Loan
Program Policies and Procedures—Effective January-6, 2003," is hereby adopted and
approved.
2. Authorization is hereby given to City staff to administer the various loan and
grant programs described in the Revised Housing Rehabilitation Loan Policies. Any type of
loan or grant, the amount of which exceeds the maximum amount for such loan or grant as
described in Chapter 2 of the Revised Housing Rehabilitation Loan Policies, shall require
approval by the City Council.
3. The Revised Housing Rehabilitation Loan Policies shall become effective
January 6, 2003; shall supercede any existing housing rehabilitation loan policies utilized by
City staff, and shall apply to all loans or grants approved or made by the City on or after
January 6, 2003.
02reso/housing rehab/12/6/02 1
PASSED AND ADOPTED by the City of Huntington Beach at a regular meeting
thereof held on the 6th day of January , 2003 .
ATTEST: ►
City er Mayor
REVIEWED AND APPROVED: APPROVED AS TO FORM:
27 C
City Adminis or �CitAttorney
INITIATED AND APPROVED:
Dir for of tconomic Development
02reso/housing rehab/12/6/02 2
Res. No. 2003-2
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 regular meeting thereof held on the
6th day of January 2003 by the following vote:
AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy
NOES: None
ABSENT: None
ABSTAIN: None
City'Clerk and ex-officio CI rk of the
City Council of the City of
Huntington Beach, California
Resolution of the
Redevelopment Agency
Approving the
Rehabilitation Loan Policies
and Procedures
ATTACHMENT #3
RESOLUTION NO. 343
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH APPROVING THAT CERTAIN DOCUMENT ENTITLED
"REVISED HOUSING REHABILITATION LOAN PROGRAM POLICIES AND
PROCEDURES—EFFECTIVE JANUARY 6, 2003."
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000"; and
The Housing Rehabilitation Loan Policies serves as an internal resource to
Economic Development staff to enable them to understand important program
administrative matters and to maintain better administrative control over the various loan
and grant programs offered by the Agency; and
Market conditions and rehabilitation financing needs of homeowners in the City
of Huntington Beach have changed since 2000; and
The current Housing Rehabilitation Loan Policies have been revised by the City's
Department of Economic Development to reflect these changes,
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Revised Housing Rehabilitation Loan
Program Policies and Procedures—Effective January 6, 2003," is hereby adopted and
approved.
2. Authorization is hereby given to Agency staff to administer the various
loan and grant programs described in the Revised Housing Rehabilitation Loan Policies.
Any type of loan or grant, the amount of which exceeds the maximum amount for such
loan or grant as described in Chapter 2 of the Revised Housing Rehabilitation Loan
Policies, shall require approval by the Agency's governing board.
3. The Revised Housing.Rehabilitation Loan Policies shall become effective
January 6, 2003; shall supercede any existing housing rehabilitation loan policies utilized
by Agency staff; and shall apply to all loans or grants approved or made by the Agency
on or after January 6,2003.
1
rjw/ldNreso/housing rehab-agency/12/6/02
PASSED AND ADOPTED by the Redevelopment Agency of the City of
Huntington Beach at a regular meeting thereof held on the 6th day of
January 2003 .
ATTEST:
xD
Agency Clerk Chairman
REVIEWED AND APPROVED: APPROVED AS TO FORM:
Executive Wrector gency Attorney
INITIATED AND APPROVED:
Director of Economic Development
2
dw/k/00reso/housing rehab-agency/12/6/02
Res. No. 343
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss
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 a regular
meeting of said Redevelopment Agency held on the 6th day of January,
2003 and that it was so adopted by the following vote:
AYES: Sullivan, Coerper, Green, Boardman, Cook, Houchen, Hardy
NOES: None
ABSENT: None
ABSTAIN: None
Clerk of the Redevelop me Agency
of the City of Huntington Beach, CA
Leaves — Page 1 of 1
Ehring, Liz
To: Runzel, Carol
Cc: CITY CLERK
Subject: RE: CFD Resolutions Approved 1/6/03 -� ca -',
Carol -Acknowledging that the staff person to be assigned the follow up item will inform you of the status and
comply with your request, hopefully to be completed by the end of the week. Liz /
-----Original Message-----
From: Runzel, Carol
Sent: Tuesday, January 07, 2003 11:13 AM
To: Boardman, Connie; Ehring, Liz
Subject: CFD Resolutions Approved 1/6/03
In addition to a complete approved RCA packet on the CFD usually sent to Economic Development,
could you send one extra copy, and two certified copies of both resolutions. The two certified copies will
be sent to our Bond Counsel. We will need the certified copies by the end of this week if possible. As
always, thank you. -Carol
1/7/2003
Council/Agency Meeting Held: 1_00
Deferred/Continued to:
pproved ❑ Conditionally Approved ❑ Den' - ity s Cler Signature
11)
Council Meeting Date: June 19, 2000 Department ID Number: ED 00-29
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
_Z.
F_
SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL '
,.
MEMBERS/REDEVELOPMENT AGENCY MEMBERS C�:
SUBMITTED BY: RAY SILVER, City Administrator/Executive Director 4l�Wf,
U ram:r ,:PREPARED BY: DAVID C. BIGGS, Director of Economic Development
SUBJECT: Approval of Housing Rehabilitation Loan Program Policies inc1_
Procedures
�- Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: The City" and Redevelopment Agency provide loans to low and
moderate-income homeowners and owners of rental property where low-income families live
to assist in the rehabilitation of residential properties. This program is administered by the
Economic Development Department with the objective of providing below-market interest
rate financing to households who would otherwise be unable to pay for the cost of necessary
health and safety-related housing repairs. Such loans have been available to Huntington
Beach residents since 1981, over the course of which period the loan terms and
administrative procedures have evolved to reflect changing market conditions. Economic
Development Department staff recently updated the loan terms and administrative
procedures for the program and herein seeks City Council and Redevelopment Agency
authorization to implement these modifications.
Funding Source: Federal Community Development Block Grant (CDBG) funds, Federal
HOME Investment Partnership Program (HOME) funds, Redevelopment Agency Tax
Increment Housing Set Aside funds.
Recommended Action:
City Action:
1. Adopt Resolution Number 2®oD-6-6 , A Resolution of the City Council of the City
of Huntington Beach Approving that Certain Document Entitled "Housing
Rehabilitation Loan Program Policies and Procedures — Effective June 19, 2000,"
Prepared by the City's Department of Economic Development.
/ j0
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: June 19, 2000 DEPARTMENT ID NUMBER: ED 00-29
2. Adopt Resolution Number EWO - 51 , A Resolution of the City Council of the City
of Huntington Beach Authorizing the City Administrator or the Director of Economic
Development to Execute Loan Documents On Behalf of the City Relating to the
City's First Time Home Buyer and Housing Rehabilitation Loan Programs.
Agency Action:
1. Adopt Resolution Number 301 , A Resolution of the Redevelopment gency
of the City of Huntington Beach ("Agency") Approving that.Certain Documentintitled
"Housing Rehabilitation Loan Program Policies and Procedures — Effective June 19,
2000," Prepared by the City of Huntington Beach's Department of Economic
Development.
2. Adopt Resolution Number 310 , A Resolution of the Redevelopment Agency
of the City of Huntington Beach Authorizing the Executive Director or the Economic
Development Director to Execute Loan Documents On Behalf of the Agency
Relating to the Agency's First Time Home Buyer and Housing Rehabilitation Loan
Programs.
Alternative Action(s): Do not approve revisions to the Housing Rehabilitation Loan
Program and direct staff to retain the existing administrative guidelines.
Analysis:
The City and Redevelopment Agency offer housing rehabilitation loans to low and moderate-
income residents to help maintain the quality and safety of their housing. This program is
consistent with the City's affordable housing strategies as approved by the Council in the
following documents:
• Consolidated Plan (approved May 1995)
• Housing Element (approved February 1999)
• Community Development Block Grant 1999/2000 Action Plan (approved July 1999)
The program is also consistent with affordable housing strategies approved by the
Redevelopment Agency in the following documents:
• Affordable Housing Compliance Plan (approved October 1994)
• Five-Year Affordable Housing Implementation Plan (approved December 1999)
The objective of the housing rehabilitation loan program is to assist households with
necessary health and safety-related housing repairs, which if not promptly corrected could
contribute to further damage and deterioration to the home. After improvements are
completed, properties are brought into compliance with City Codes, HUD Housing Quality
Standards, and HUD Occupancy Standards. These loans are an investment in the
preservation of the community's housing stock available to households of modest means. By
eliminating the deteriorating housing conditions that often give rise to blight, these loans help
sustain the quality of the City's neighborhoods.
RCA to Approve Rehab Guidelines.doc -2- 617/00 11:54 AM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: June 19, 2000 DEPARTMENT ID NUMBER: ED 00-29
Since the program's inception 19 years ago, more than $6.5 million has been loaned to low
and moderate-income homeowners and owners of apartment buildings in Huntington Beach.
Of this total, $2.5 million was invested in single family homes, $1.2 million was loaned for
mobile home repairs, and $2.8 million was used to rehabilitate apartment buildings.
Under the new program guidelines, homeowners will be able to borrow up to $25,000 at
interest rates as low as 3% below the current market rate rounded down to the nearest half-
point (the market rate on June 7, 2000 was 8.35%; therefore, the City's loan rate would be
6%). Owner of mobile homes, condominiums, or townhomes can borrow up to $15,000. On
loans to low-income homeowners, payment can be deferred until the home is sold or
transferred. Moderate-income borrowers will be required to make monthly payments. To
address specific health and safety-related emergency household repairs, low-income
homeowners may be able to receive a one-time grant up to $500.
Owners of apartment buildings may be eligible to borrow up to $15,000 per unit to correct
code deficiencies, repair damage, and make improvements to either the building or grounds.
The residents must be low-income and the amount charged for rent must fall within
affordability guidelines. Refer to Attachment 1, "City of Huntington Beach Summary of
Rehabilitation Loan Program Guidelines" for more details on loan terms.
By approving the recommended action, the Council and Redevelopment Agency authorizes
the Economic Development Department to implement the modified loan terms summarized
above. The recommended action further amends the program's administrative procedures to
include the following:
• Currently only the City Administrator/Executive Director is authorized to execute
certain loan documents such as reconveyances and subordination agreements.
Under the new program procedures, the Director of Economic Development in
addition to the City Administrator/Executive Director will be authorized to execute such
documents.
• The maximum loan amount for single family homes will increase from $15,000 to
$25,000 and loans for apartment buildings will be authorized for up to $15,000 per
unit. Under the new program procedures, these loans will be authorized and may be
funded without individual loan approval by the City Council/Redevelopment Agency as
long as the specific loan qualifying and approval processes delineated in the
program's policies and procedures are followed.
The revised Housing Rehabilitation Loan Program Policies and Procedures were reviewed by
the Council's Economic Development Committee on April 4, 2000. They were additionally
reviewed and approved by the City Attorney's Office on May 25, 2000. The corresponding
City Council/Redevelopment Agency resolutions authorizing implementation of the modified
loan terms and administrative procedures were prepared by the City Attorney's Office for
submission together with the program guidelines. Each of these documents is attached for
your review.
RCA to Approve Rehab Guidelines -3- 6/8/00 9:02 AM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: June 19, 2000 DEPARTMENT ID NUMBER: ED 00-29
Environmental Status: None
Attachment(s):
NumberCity Clerk's
Page • Description
1. Summary of Housing Rehabilitation Loan Program Guidelines.
2. Housing Rehabilitation Loan Program Policies and Procedures —
Effective June 19, 2000.
3. City Council Resolution 2SJ00 approving Policies and
Procedures.
�' ` ` 4. City Council Resolution , authorizing executing Loan
P, ,. dli:
,i3;,;;iiillil i,,,,;u,
Documents.
5. Agency Resolution �`� approving Policies and
Procedures.
6. Agency Resolution 3 authorizing executing Loan
""�;�3�3i?333>j'��> /�1 1 I33 j;ililil))j1,1'>,>,U',I3iliiii�3ill'.'.III�I 3�'> 3, Doc ments.
RCA Author: HOLTZ(5901)
RCA to Approve Rehab Guidelines.doc -4- 6/7100 11:54 AM
City of Huntington Beach Summary of Housing Rehabilitation
Loan Program Guidelines
CITY OF HUNTINGTON BEACH
SUMMARY OF HOUSING
REHABILITATION LOAN PROGRAM GUIDELINES
Loans Available
• Deferred Repayment Loans (DPL)
DPL's are available to low-income homeowners. Under this program, loans do not
require any payment until the home is sold (or otherwise transferred to another owner), at
which time full repayment is required. Loans accrue interest at a fixed rate indexed at
three percentage points below the market rate.
• Below Market Interest Rate Loans (BMIR)
BMIR's are available to moderate-income homeowners. The interest rate is fixed at two
percentage points below the market rate. Monthly payments are made over a maximum
15-year term to Bank of America (the City contracts with Bank of America to bill and
collect on loans that require monthly payments).
• Multi Family Rental Housing Loans (MRH)
MRH's are available to owners of apartments buildings occupied by low-income tenants.
Property owners are required to provide affordable rents, enforce strict unit occupancy
limits, and verify annually that tenants are low-income. The interest rate is fixed at two
percentage points below the market rate, with monthly payments made over a 15-year
term to Bank of America.
• Health and Safety Emergency Grants (EG)
Low-income homeowners may receive a one-time grant up to $500 for health and safety-
related emergency household repairs. Emergency repairs may include restoration or
replacement of inoperable or severely deteriorated plumbing, heating, and electrical
systems. A homeowner is not eligible to receive an EG if a rehabilitation loan has been
funded within the past two years.
Maximum Loan Amounts
• Single Family House ..................................................................................$25,000
• Mobile Home/Condominium/Townhouse....................................................$15,000
• Multi Family Dwelling................................................................................. $15,000 per unit
Project Eligibility Factors
• The property must be located within the City of Huntington Beach (priority will be given to
properties located within the Redevelopment Agency's Project Area or a Neighborhood
Enhancement Area).
• The property must be zoned for appropriate residential use and have been constructed
with all appropriate City permits.
• The property must be in need of repair to meet housing and property maintenance
standards and City codes, and the rehabilitation must bring the property into full
compliance with such standards and codes.
• All contractors must have a current State of California contractor's license and a City of
Huntington Beach business license, and they must carry the City's minimum required
level of general liability and worker's compensation insurance.
Housing Rehabilitation Loan Program Policies and Procedures —
Effective June 19, 2000
Loan Program
Policies and Procedures
Housing Rehabilitation
� a
Economic Development Department
City of Huntington Beach
Huntington Beach Redevelopment Agency
Effective lone 19, 2000
Table of Contents
CHAPTER 1 INTRODUCTION............................................................................................1
General 1
ProgramAdministration ...........................................................................................................1
ProgramFunding Approval......................................................................................................1
IndividualLoan Approval .........................................................................................................1
Program Documentation Approval ..........................................................................................2
LoanReview Committee .........................................................................................................2
Exceptionsto Loan Policy .......................................................................................................2
Approval and Revision of Policies and Procedures.................................................................2
FinancialPrivacy Laws............................................................................................................2
ComplaintProcedures.............................................................................................................3
City Includes Redevelopment Agency.....................................................................................3
CityCouncil Approval ...............................................................................................................3
CHAPTER 2 LOAN PROGRAMS........................................................................................5
General 5
Current Housing Rehabilitation Loan Programs .......................................................................5
Deferred Repayment Loans (DPL) ......................................................................................5
Below Market Interest Rate Loans (BMIR)...........................................................................5
Multi Family Rental Housing Loans (MRH)..........................................................................6
Health and Safety Emergency Grants (EG).........................................................................6
FHA Title 1 Home Improvement Loan Program...................................................................7
CHAPTER 3 PROGRAM REQUIREMENTS .......................................................................9
General....................................................................................................................................9
ProjectEligibility ......................................................................................................................9
Application Consideration Factors...........................................................................................9
PropertyEligibility Factors.......................................................................................................9
ApplicationFee......................................................................................................................10
DeterminingInterest Rates....................................................................................................10
Nondiscrimination..................................................................................................................10
Inspections ............................................................................................................................10
IneligibleContractors.............................................................................................................10
Interestof the Public Body.....................................................................................................11
Bonus, Commission, or Fee ..................................................................................................11
Lead-Based Paint Regulation Compliance............................................................................11
Historic Preservation Compliance .........................................................................................12
ConstructionContract............................................................................................................12
LoanSecurity ........................................................................................................................12
Repayment............................................................................................................................12
PrepaymentPenalty..............................................................................................................12
Subordinations ......................................................................................................................13
Assumptions..........................................................................................................................13
LoanRequirements .................................................................................................. ............13
Make Payments on all Debts .............................................................................................13
PrimaryResidence ............................................................................................................13
Property Maintenance........................................................................................................13
Fire and Hazard Insurance ................................................................................................14
FloodInsurance.................................................................................................................14
Property Taxes and Homeowner Association Dues...........................................................14
Useof Funds .....................................................................................................................14
Timing of Rehabilitation Projects ..................
.......................................................................14
Additional Loan Requirements for Multi Family Dwellings.....................................................15
Income Restricted (Affordable) Rental Units......................................................................15
MaximumRents.................................................................................................................15
MaximumOccupancy ........................................................................................................15
Relocation..........................................................................................................................16
Subordination to City CC&Rs.............................................................................................16
CHAPTER 4 LOAN PROCESSING....................................................................................17
General..................................................................................................................................17
ThePre-Application...............................................................................................................17
TheApplication......................................................................................................................17
Single Family/Mobile Home Loans ....................................................................................17
MultiFamily Loans.............................................................................................................17
EmergencyGrants.............................................................................................................18
ApplicationLog......................................................................................................................18
Underwriting Single Family Loans.........................................................................................18
Low or Moderate Income ...................................................................................................18
QualifyingWorksheet.........................................................................................................19
Debtto Income Ratio .........................................................................................................19
Loanto Value Ratio ...........................................................................................................19
IncomeHistory...................................................................................................................19
Verifications .......................................................................................................................20
Underwriting Multi Family Loans ...........................................................................................20
Underwriting Emergency Grants ......................................................I.....................................20
TitleInsurance.......................................................................................................................20
Preliminary Property Inspection.............................................................................................21
LoanApproval .......................................................................................................................21
Selection of Contractors ........................................................................................................21
AcceptableContracts ............................................................................................................22
ChangeOrders......................................................................................................................22
Construction Progress Inspections........................................................................................22
Fundingthe Loan...................................................................................................................22
Contractor Lien Releases......................................................................................................22
FinalInspection .....................................................................................................................23
Acceptanceof Work ..............................................................................................................23
PostFunding Audit................................................................................................................23
CHAPTER 5 DOCUMENTATION......................................................................................25
General..................................................................................................................................25
DocumentsRequired.............................................................................................................25
PromissoryNote ................................................................................................................25
Deedof Trust.....................................................................................................................25
Disclosures and Notices ....................................................................................................26
Notice of Opportunity to Rescind Transaction....................................................................26
Document Preparation and Approval.....................................................................................26
SafeguardingDocuments......................................................................................................26
CHAPTER 6 LOAN MAINTENANCE AND ACCOUNTING...............................................27
General..................................................................................................................................27
FileOrganization ...................................................................................................................27
Accounting for Deferred Repayment Loans...........................................................................28
Accountingfor Amortized Loans............................................................................................28
Charge-Offs...........................................................................................................................28
Partial Repayment Upon Sale or Refinance..........................................................................28
LoanPayoffs .........................................................................................................................28
Responding to a Request for Beneficiary's Demand .............................................................29
Reconveyingthe Trust Deed .................................................................................................29
Defaults .................................................................................................................................29
Closingthe Loan File.............................................................................................................30
EXHIBITS
Terms for Single Family Owner Occupied Housing Rehabilitation Loan Program................ 31
Terms for Multi Family Rental Housing Rehabilitation Loan Program .................................. 32
Terms for FHA Title 1 Loan Program.................................................................................... 33
Terms for Health and Safety Emergency Grant Program..................................................... 34
List of Eligible Home Improvements..................................................................................... 35
CurrentIncome Schedule..................................................................................................... 36
AffordableRent Limits.......................................................................................................... 37
How to Determine Tenant Household Income...................................................................... 38
Single Family Home/Mobile Home Loan Application............................................................ 39
Multi Family Housing Loan Application................................................................................. 41
EmergencyGrant Application............................................................................................... 44
QualifyingWorksheet ........................................................................................................... 46
LoanApproval Form............................................................................................................. 48
Sample Note for Single Family House Deferred Loan.......................................................... 49
Sample Note for Mobile Home Deferred Loan...................................................................... 50
Sample Note for Single Family House Amortized Loan........................................................ 51
Sample Note for Mobile Home Amortized Loan ................................................................... 52
AuthorizingResolutions........................................................................................................ 53
FutureRevisions................................................................................................................... 59
Chapter • • •
General
The City of Huntington Beach provides loans and grants to low and moderate-income
homeowners and owners of rental property where low-income families live to assist in the
rehabilitation of residential properties. These loan programs are funded through various
sources such as Community Development Block Grant (CDBG) funds, Redevelopment
Agency Housing Set-Aside funds, or HOME Investment Partnership Program funds.
Funding for these programs is authorized by the City Council. The Economic Development
Department administers deferred repayment loans, low interest amortized loans, and
emergency grants for single family homeowners and mobile home owners depending on the
borrower's income. Loans are also available for multi family property owners. All housing
rehabilitation loans comprise the City of Huntington Beach Rehabilitation Loan Program.
The primary objective of this program is to provide financing to households who would
otherwise have difficulty paying for the cost of necessary health and safety-related housing
repairs, which if not promptly corrected could contribute to further damage and deterioration
to the home. Loans are evaluated by the City and approved after thorough review by the
Loan Review Committee. The review process is intended to give the City some assurance
that the borrower is credit worthy, has the ability to repay the debt, and has collateral that is
acceptable.
At any one time, the City may have several loan programs available, all with slightly different
underwriting and repayment requirements. Property owners may contact the Economic
Development Department to obtain current program information.
Program Administration
Loan programs are authorized by the City Council, are under the direction of the City
Administrator, and are administered by the Department of Economic Development.
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 Economic Development.
Individual Loan Approval
Individual loans are evaluated, underwritten, and recommended for approval by staff
members or an authorized representative of the Economic Development Department, with
final approval by the Loan Review Committee.
Introduction 1
Program Documentation Approval
Loan documents are prepared by the Economic Development Department according to
master documents approved by the City Attorney's Office. These documents include
Promissory Notes, Deeds of Trust, Truth in Lending Statements, and Notices of Right to
Rescind Transaction.
Loan Review Committee
There will be a standing Loan Review Committee comprised of two Economic Development
Department employees appointed by the Department Director. This committee will have
approval authority for all loans and grants that are recommended by staff. Both members of
the Loan Review Committee must unanimously approve a loan before the loan may be
funded.
Exceptions to Loan Policy
Exceptions may include such things as acceptance of minor derogatory credit and income
documentation variances. Exceptions should be rare. In the event an exception to policy is
warranted, the exception must be clearly documented and approved by the Loan Review
Committee.
Approval and Revision of Policies and Procedures
The policies and procedures contained in this manual are authorized by the City Council.
Any substantive additions or policy revisions require the approval of the Council. Minor
corrections or expansion of existing procedures may be made, as necessary, upon the
approval of the Director of Economic Development.
Financial Privacy Laws
Several different laws govern financial privacy rights. These include the California Right to
Financial Privacy Act and the Federal Right to Financial Privacy Act, both of which govern
the process of releasing a borrower's financial information. Essentially, these regulations
allow a lender to disclose a borrower's financial records only upon the receipt of legal
process or with the borrower's written authorization. The lender is then required to notify the
borrower of the receipt of legal process, unless ordered by the court not to do so.
Because credit and application information is not subject to public disclosure to anyone other
than the borrower, any request for such information 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 loan file.
2 Introduction
Complaint Procedures
Complaints concerning the Rehabilitation Loan Program should be in writing and addressed
to the program administrator. Complaints will be accepted only if they are in writing and are
received within 30 days from the date of the problem. The program administrator will contact
the complainant and attempt to resolve the problem. A written response will be made to the
complainant within 10 business days.
If a complainant is not satisfied with the written response, a request for an appeal may be
filed with the Housing and Redevelopment Manager. The written request must set forth the
reasons for the appeal and must be received by the Housing and Redevelopment Manager
within 15 days from the date of the program administrator's written response. In the event
the request does not meet these requirements, the complainant will be notified that the
request is denied; otherwise, the complainant will be invited to appear before the Loan
Review Committee and advocate his/her position. The response of the committee will be
made in writing within 10 business days. The decision of the Loan Review Committee will
be final.
City Includes Redevelopment Agency
These policies shall apply equally to loans or grants made or approved by the
Redevelopment Agency of the City of Huntington Beach (`Agency'). As used in these
policies, the word 'City' means and includes the Agency; and the term `City Council' means
and includes the Agency's governing body. The only exception is under Chapter 4
('Preliminary Property Inspection'), on page 21 of these policies, where the term 'City Code
violations' refers only to the City of Huntington Beach.
City Council Approval
Any type of loan or grant, the amount of which exceeds the maximum amount for such loan
or grant as described in Chapter 2 of these policies, shall require approval of the City
Council.
Introduction 3
(Intentionally Blank)
4 Introduction
.Chapter • • •
General
Loan programs are developed as funds are available and as the need arises. The City has
provided various loan programs suited for specific purposes such as assisting
redevelopment of a certain area of the City or providing financing targeted to a specific
population.
Current Housing Rehabilitation Loan Programs
The City currently offers four kinds of Housing Rehabilitation Loans and Grants. These
include Single Family Owner Occupied Housing Rehabilitation Loans with deferred
repayment, Single Family Owner Occupied Housing Rehabilitation Loans with an amortized
repayment schedule, Multi Family Rental Housing Rehabilitation Loans, and Health and
Safety Emergency Grants. Details for each of these programs, along with information about
FHA Title 1 Housing Rehabilitation Loans are provided below.
Deferred Repayment Loans (DPL)
Low-Income homeowners and owners of mobile homes are eligible for the City's Deferred
Repayment Loan Program (DPL). The US Department of Housing and Urban Development
(HUD) defines low-income households as those with gross income from all sources totaling
less than 80% of the area's median income (Refer to Exhibit 6 for information on current
income guidelines). Homeowners can qualify for a maximum loan of $25,000 and owners of
mobile homes, townhomes, or condominiums may borrow up to $15,000. The annual
interest rate for these loans is currently indexed at 3% below the current Fannie Mae 30-year
mortgage commitment rate, rounded down to the nearest half-point. For example, if the
Fannie Mae rate were currently 8.65%, the corresponding annual interest rate available for
low-income borrowers would be 5.5%. (The interest rate index and amount may be adjusted
at the discretion of the Director of Economic Development in order to address current market
conditions.) Repayment of the principal and accrued interest is deferred until the property is
sold, transferred, or refinanced. A homeowner is not eligible for a DPL if an Emergency
Grant has been funded within one year.
Below Market Interest Rate Loans (BMIR)
Moderate-Income homeowners and owners of mobile homes are eligible for the City's Below
Market Interest Rate Loans (BMIR). Moderate-income households are those with income
from all sources totaling between 80% and 120% of the area's median income (Refer to
Exhibit 6 for information on current income guidelines). Homeowners can qualify for a
maximum loan of $25,000 and owners of mobile homes, townhomes, or condominiums may
borrow up to $15,000. The annual interest rate for these loans is indexed at 2% below the
current Fannie Mae 30-year mortgage commitment rate, rounded down to the nearest half-
point. For example, if the Fannie Mae rate were currently 8.65%, the corresponding annual
interest rate available for moderate-income borrowers would be 6.5%. (The interest rate
Loan Programs 5
index and amount may be adjusted at the discretion of the Director of Economic
Development in order to address current market conditions.) These loans are amortized
over a 15-year term with monthly payments beginning one month following loan closing. All
remaining principal and accrued interest becomes due if the property is sold, transferred, or
refinanced during the term of the loan.
Multi Family Rental Housing Loans (MRH)
Owners of multi family rental housing buildings with seven or fewer residential units may be
eligible for rehabilitation assistance. It is a requirement of this program that during the term
of the loan, all residents in the building must meet the low-income standard as described in
Exhibit 6 and no more than one household may occupy a single residential unit.
Property owners are expected to have a minimum 20% pre-rehabilitation equity investment
in the property and must accept covenants on the property that ensure tenancy of low-
income households, maintenance of affordable rents, compliance with occupancy
restrictions, and maintenance of the property. These covenants are described in more detail
in Chapter 3.
There is a minimum loan amount of $600 per unit and a maximum of $15,000 per unit; the
interest rate is indexed at two percentage points below the current Fannie Mae 30-year
mortgage commitment rate, rounded down to the nearest half-point. For example, if the
Fannie Mae Rate were currently 8.65%, the corresponding annual interest rate available for
owners of qualifying rental property would be 6.5%. (The interest rate index and amount
may be adjusted at the discretion of the Director of Economic Development in order to
address current market conditions.) The total debt is amortized over a 15-year term with
monthly payments beginning one month following loan closing. All remaining principal and
accrued interest becomes due if the property is sold, transferred, or refinanced during the
term of the loan.
Qualified nonprofit owners of properties with more than seven residential units may submit a
written proposal to the Department of Economic Development that includes specific details
of the proposed rehabilitation and financing requirements for consideration on a case-by-
case basis.
Health and Safety Emergency Grants (EG)
The City offers a one-time grant not to exceed $500 to homeowners for health and safety-
related emergency household repairs. Emergency household repairs may include
restoration or replacement of inoperable or severely deteriorated plumbing, heating, and
electrical systems. These grants are available only to low-income property owners who live
in single family homes, mobile homes, condominiums, or townhomes (Refer to Exhibit 6 for
information on current income guidelines). A homeowner is not eligible to receive an EG if a
rehabilitation loan has been funded within the past two years.
As with the City's Single Family Rehabilitation Loan Program, the Loan Review Committee
must approve the proposed grant and scope of work. With this approval, the grant recipient
6 Loan Programs
may proceed with the authorized rehabilitation. After work is completed and inspected, the
homeowner may submit to the City either an original receipt or invoice for payment.
FHA Title 1 Home Improvement Loan Program
The City may partner with private lending institutions to offer market rate financing for home
improvements and repairs through a special program established under Title 1 of the
National Housing Act. If available, the program will be made available to homeowners and
owners of apartment buildings who do not qualify for the above rehabilitation loan programs.
Under the FHA Title 1 Program, loan approval is primarily based on the applicant's ability to
repay; borrowers do not have to qualify as low or moderate income; and there is no owner
equity threshold requirement.
The current limits for loan packages under this program are as follows: loans up to $25,000
are available for single family homes; $7,500 may be borrowed for manufactured homes;
and multi family properties are eligible for $60,000, or an average of $12,000 per dwelling
unit. These amounts may be adjusted from time to time by the federal government. Loans
are made at fixed interest rates with up to 20-year terms. The actual rate is based on the
prevailing market rate at the time the loan is made.
Loan Programs 7
(Intentionally Blank)
8 Loan Programs
Chapter • • Requirements
General
There are a number of regulatory requirements associated with federally funded municipal
housing rehabilitation loan programs. In addition to these, the City has elected to impose
certain additional restrictions in order to assure that the Rehabilitation Loan Program will be
utilized in a manner that best serves the community. Details on how the program is
administered in order to comply with these standards are provided below.
Project Eligibility
The City will only consider loan applications for properties that are located within the City of
Huntington Beach. Properties must be in need of repair in order to meet housing and
property maintenance standards and applicable codes of the City. Actual eligibility and
approval will be determined in accordance with individual loan program qualification criteria.
Application Consideration Factors
Loan applicants will be considered on a first-come-first-serve basis and approved as funding
permits. The following factors should be analyzed when approving projects:
• Availability and source of City funds for the program
• Remaining economic life of the proposed improvements on the property
• Location of the project — preference will be granted to those units located within the
Redevelopment Agency's Project Area or a Neighborhood Enhancement Area
• Extent of rehabilitation required to meet health and safety codes and to meet building
requirements such as architectural compatibility with the neighborhood
• The degree of economic/fiscal health of the project
• The degree of impact the project will have on the neighborhood
• Equity position of the borrower — under no circumstances may the total of all liens on
the property (including the new rehabilitation loan) exceed 100% of the property value
• Amount of relocation involved — for rental rehabilitation projects, the City will make
every effort to avoid dislocating families, however, each project will be evaluated on
its own merits and in some circumstances, some relocation may be considered
• The owner of rental property agrees to restrict his rental units to low-income tenants
with affordable rental rates
Property Eligibility Factors
Any property for which a loan is made must satisfy the following minimum requirements:
• The property must be located within the City of Huntington Beach
• The property must be zoned for appropriate residential use
• The property must have been constructed with appropriate City permits
Program Requirements 9
• The City's Municipal Code must allow the proposed improvements
• The rehabilitation must bring the property (including all units within the property) into
compliance with existing City building and zoning codes and HUD Housing Quality
Standards
Application Fee
Borrowers will pay a loan-processing fee for title search, title update, appraisal, credit report,
and recording as needed. The fee for Single Family Loans is $200, and it may be included
in the loan. The fee for Multi Family Loans is $500, and it must submitted with the loan
application. These fees may be adjusted to reflect current market conditions at the
discretion of the Director of Economic Development.
Determining Interest Rates
The City's Single Family and Multi Family Loan Programs charge an interest rate indexed to
the Fannie Mae 30-year mortgage commitment rate. This rate is published in newspapers
such as the Los Angeles Times and the Wall Street Journal. The rate that is published on
the day when the Loan Review Committee approves a loan will be used to set the interest
rate for that loan. Should the Director of Economic Development determine that the Fannie
Mae rate no longer best reflects current market conditions, at his/her discretion, another
index rate may be adopted.
Nondiscrimination
Applicants will not be discriminated against on the basis of income, sex, age, sexual
orientation, race, creed, color, class, national origin, religion, or ancestry. In addition,
applicants may not discriminate in the lease, rental, use, occupancy, and awarding of
contracts with respect to the property to be rehabilitated with the assistance of a
Rehabilitation Program Loan.
Inspections
The applicant shall agree that inspections of the property to be rehabilitated may be
conducted at any time during the rehabilitation process to assure compliance with City and
State Building Codes and HUD Housing Quality Standards pertaining to the rehabilitation of
single and multi family dwelling units. The applicant must also permit all other inspections
deemed necessary regarding the property such as the rehabilitation work, materials,
equipment, payrolls, and conditions of employment pertaining to the work.
Ineligible Contractors
The applicant may not award any contract for rehabilitation work with any contractor who, at
the time of bid acceptance, does not have a current and valid State of California contractor's
license and a City of Huntington Beach business license. A contract may not be awarded to
a contractor who has been disqualified by the City of Huntington Beach, State Department of
10 Program Requirements
Housing and Community Development, or Federal Department of Housing and Urban
Development or who does not carry the City's minimum required amounts of general liability
and worker's compensation insurance. The City reserves the right to disqualify any
contractor it deems unqualified to carry out the work to be performed.
Interest of the Public Body
The applicant shall allow no member of the governing body of the City, and no employee of
the City of Huntington Beach to have any interest, direct or indirect, in the proceeds of the
loan or in any contract entered into by the applicant for the performance of work financed.
Bonus, Commission, or Fee
The applicant may not pay a bonus, commission, or fee to any individual or business for the
purpose of obtaining approval of the loan application or for any other approval to complete
the rehabilitation work financed.
Lead-Based Paint Regulation Compliance
The 1992 Housing and Community Development Act includes regulations requiring that
federally funded housing rehabilitation programs assess lead paint risks and abate hazards
in specific circumstances. This act was amended in 1999 by adding additional requirements.
For more complete details regarding lead-based paint regulation requirements, refer to Title
X of the HCD Act (a copy of this regulation is maintained in the Economic Development
Department). In summary, the City's level of commitment regarding lead-based paint is
determined by the amount of funding the City provides per residential unit, as described in
the following chart:
Required Activities to Address Lead-Based Paint
<$5,000 $5,000 -$25,000 >$25,000
Approach to Lead Do no harm Identify and control Identify and abate
Hazard Evaluation lead hazards lead hazards
and Reduction
Notification Yes Yes Yes
Lead Hazard 1. Paint Testing of 1. Paint Testing of 1. Paint Testing of
Evaluation surfaces to be surfaces to be surfaces to be
disturbed by disturbed by disturbed by
rehabilitation rehabilitation rehabilitation
2. Risk assessment 2. Risk assessment
Lead Hazard 1. Repair surfaces 1. Interim controls 1. Abatement
Reduction disturbed during 2. Safe work 2. Safe work
rehabilitation practices practices
2. Safe work 3. Clearance of unit 3. Clearance of unit
practices
3. Clearance of work
site
Program Requirements 11
Historic Preservation Compliance
Any property listed on the City, County, or State historic survey must obtain approval from
the Planning Department for any exterior improvements planned in order to assure that the
improvements are compatible with the style and architecture of the building and that they
maintain or enhance the character of the property.
Construction Contract
The City of Huntington Beach is not a party to a construction contract. Through its loan
programs, the City provides financing to projects and is charged with the responsibility of
ensuring that work is completed according to the approved scope of work.
Loan Security
As security for the City's loans on Real Estate, the borrower is required to sign a promissory
note secured by a deed of trust. The deed of trust will be recorded with the County
Recorder's Office. This document protects the City's investment should the borrower
attempt to sell the property or incur additional debt against the property before their loan with
the City has been repaid. For a loan on a Mobile Home, the borrower is required to place
the City as a lien holder on the mobile home certificate of title.
Repayment
Loans generally require repayment in one of the following three methods depending on the
type of loan and the borrower's compliance with loan terms:
• Repayment is deferred until the property is sold, transferred, or refinanced
• Repayment begins one month following loan closing with monthly payments over a
15-year term
• Immediate repayment of principal and accrued interest is triggered by the borrower's
default of the loan agreement or upon the sale or transfer of the property
Loans must follow the individual program guidelines as described below in this chapter.
Prepayment Penalty
If a loan is paid within two years of the date of the loan agreement, there will be a
prepayment penalty of 25% of the original principal balance. This penalty may be waived at
the discretion of the Loan Review Committee. If a prepayment penalty is waived, the
circumstances and justification must be clearly documented in the loan file. A loan may be
paid in full with no penalties assessed at any time after two years.
12 Program Requirements
Subordinations
In the event a borrower decides to refinance the property without fully repaying the
rehabilitation loan, the City may agree to subordinate its loan to a refinanced first lien only in
the event that the borrower refinances an amount equal to or less than the original first lien.
This will usually be desirable for the borrower when they can obtain a lower interest rate or a
lower monthly payment on their first mortgage. The City will not subordinate should the new
mortgage include any increased property equity. The City has the right to decline a request
to subordinate should it determine that its loan might be jeopardized.
Assumptions
Unless loan documents specifically allow an existing loan to be assumed by a new owner
upon the sale or transfer of the property, the City will require that the loan be repaid
according to the terms of the Promissory Note and Loan Agreement when a property is sold
or transferred.
Loan Requirements
The Rehabilitation Loan Program is intended to help homeowners and owners of rental
property make needed repairs for health and safety purposes. It is not intended to help
owners profit from increased equity resulting from improvements to the property. It is
additionally not intended for the City to make loans that are unreasonable risky thus
jeopardizing its investment. The requirements discussed below are designed to address
these matters.
Make Payments on all Debts
Borrowers must agree to remain current on their payments for all debts recorded against the
property. Should a borrower default any debt recorded against the property, thus triggering
foreclosure proceedings, the City would be at risk of losing its investment. Failure to remain
in good standing with all creditors who have a claim against the property is a cause of
default and would make the loan immediately due.
Primary Residence
Under the Single Family Housing Rehabilitation Loan Program, the borrower is required to
own and reside in the property being financed and have a likelihood of continuing to reside in
the property for a minimum of two years. There is a prohibition of renting the property during
the term of the loan and doing so is an event of default.
Property Maintenance
The borrower is required to maintain the property in good condition during the term of the
rehabilitation loan (15 years) and in compliance with applicable City and State laws and
Program Requirements 13
codes. The applicant will further agree to comply with HUD Housing Quality Standards for
the duration of the loan.
Fire and Hazard Insurance
All real property taken as collateral must have adequate insurance coverage to protect the
City from loss due to fire or other hazards. Property 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. Borrowers are required to provide evidence of
insurance during the term of the loan. The City must be designated on such insurance as an
additional loss payee. Nonpayment of insurance is an event of default and will make the full
loan due and payable.
The borrower must certify the details of the coverage before a loan is disbursed by providing
the City with the original policy or binder. Policies must show an inception date prior to, or
corresponding with, the date of loan funding.
Flood Insurance
The City will determine if the property is located in a special flood hazard area early in the
credit evaluation process by reviewing flood maps located at the Building Department. If the
property is found to be located within a 100 year flood hazard area, the borrower will be
required to obtain flood insurance. Evidence of such insurance must be received prior to
loan funding.
Property Taxes and Homeowner Association Dues
Borrowers are required to pay all property taxes and homeowner's association dues during
the term of the loan. Nonpayment is an event of default and will make the full loan due and
payable
Use of Funds
Rehabilitation loan funds are for the sole purpose of financing construction activities as
identified in the approved scope of work. In the event the City determines that a borrower
misused loan funds, the loan will become immediately due and payable.
Timing of Rehabilitation Projects
After the loan has been approved and loan documents have been signed, the borrower will
have 30 days to commence construction work. All work must be completed within a period
not to exceed 180 days.
14 Program Requirements
O
Additional Loan Requirements for Multi Family Dwellings
Covenants, Conditions, and Restrictions (CC&Rs) will be recorded against multi family
properties rehabilitated with loan funds. The CC&Rs will reiterate the requirements of the
Promissory Note including a nondiscrimination clause among other California Health and
Safety Code requirements. Additional elements of the CC&Rs are described below.
Income Restricted(Affordable) Rental Units
For rental properties rehabilitated with City assistance (excluding the FHA Title 1 Program),
the owner and all successors/assigns must restrict residency to low-income households (see
Exhibit 6 for income guidelines) for the term of the City loan. The owner shall maintain
records of income verification for all tenants. For the purposes of determining household
income, all adult household members must be considered (see Exhibit 8 for more
information on calculating household income). Income must be verified at least annually.
If a tenant household's gross income increases from low-income and thus the household no
longer qualifies for residency in the project, that family will be given 90 days to relocate to a
non-restricted unit. Should a tenant face extraordinary hardship satisfying this requirement,
a written appeal may be submitted to the City. Upon receipt of a written appeal and at the
sole discretion of the Director of Economic Development, this period may be extended for a
period not to exceed 90 additional days.
Maximum Rents
The maximum allowable rents for assisted units will be determined by applying the most
restrictive rent limits established on an annual basis by: 1) California Redevelopment Law, 2)
Section 8 Fair Market Rents, or 3) HOME Program Guidelines. The current rents are
identified in Exhibit 7. Rent includes the tenant monthly rent payment and utilities (i.e.,
electricity, water, gas, trash, etc.) but does not include telephone. All tenant paid utilities
must be subtracted from the rent figures in Exhibit 7. Rent restrictions do not apply to the
FHA Title 1 Program.
Maximum Occupancy
The maximum number of persons in a household that may occupy an assisted unit of a
specified number of bedrooms will be based on the Section 8 limits established by the
Orange County Housing Authority. The allowable number is determined, in part, by the sex,
age, and relationship of the tenants and the total amount of living space. It is generally
accepted by the Housing Authority to be two persons per living space plus one, as follows:
Program Requirements 15
Occupancy Standards
Unit Size Maximum Occupancy
Studio 2 Persons
1 Bedroom 3 Persons
2 Bedrooms 5 Persons
3 Bedrooms 7 Persons
4 Bedrooms 9 Persons
Relocation
Applicants must be advised that State and Federal regulations require that persons
displaced either temporarily or permanently, as a direct result of rehabilitation work must be
offered relocation assistance. Relocation costs may be included in the cost of the project.
Subordination to City CC&Rs
The holder(s) of any prior liens on a property to receive rehabilitation assistance shall be
required to subordinate to the City's CC&Rs ("Affordability Restrictions"). This subordination
shall pertain solely to those units required to remain affordable to low-income tenants under
the terms of the Rehabilitation Loan Program.
16 Program Requirements
Chapter Loan Processing
General
The process of handling a loan from the acceptance of an application through funding is
called loan processing. The following is a step-by-step outline of the loan processing
procedures for the Rehabilitation Loan Program.
The Pre-Application
At the point where a potential applicant makes an inquiry into the Housing Rehabilitation
Loan Program, a pre-application form will be mailed to the individual. This form provides
basic program information such as program eligibility criteria. If the individual remains
interested in applying for financial assistance under one of the loan programs, the form
should be completed and returned to the Department of Economic Development. City staff
will use this completed pre-application form to perform an initial review to determine if the
applicant appears to be eligible for assistance. Based on this review, a full application
package may be mailed to the individual. If the individual does not appear to qualify for any
existing loan program, City staff will send such notification to the applicant.
The Application
The City's Housing Rehabilitation Program has the following three application packages:
Single Family/Mobile Home Loans
The application for single family home loans and loans for mobile homes was developed by
the Economic Development Department specifically for this program. The applicant is
requested to provide information in the following subject categories:
• Property information and purpose of loan
• Applicant information
• Employment information
• Income and expense information
• Assets and liabilities information
• Declarations (credit history, citizenship, ethnicity)
All submitted applications are reviewed for completeness and program eligibility. When an
applicant is determined eligible based on the information in the application, a preliminary
property inspection is scheduled.
Multi Family Loans
The application for multi family home loans was developed by the Economic Development
Department specifically for this program. Applicants are requested to provide information in
the following subject categories:
Loan Processing 17
• Property information
• Applicant information
• Schedule of real estate owned
• Schedule of rents (including proposed repairs for each unit)
• Declarations (credit history, citizenship, ethnicity)
All submitted applications are reviewed for completeness and program eligibility. When an
applicant is determined eligible based on the information in the application, a preliminary
property inspection is scheduled.
Emergency Grants
The application for the Emergency Grant Program was developed by the Economic
Development Department specifically for this program. Each applicant is requested to
provide information in the following subject categories:
• Property information and purpose of grant
• Applicant information
• Employment information
• Income and expense information
• Assets and liabilities information
• Declarations (credit history, citizenship, ethnicity)
All submitted applications are reviewed for completeness and program eligibility. When an
applicant is determined eligible based on the information in the application, a preliminary
property inspection is scheduled.
Application Log
As the City receives each application, it is recorded in an application log. This procedure
assists City staff in tracking individual applications and allows for management oversight of
the loan origination process.
Underwriting Single Family Loans
Upon receipt of a completed application package, Economic Development staff will verify the
applicant's eligibility. The applicant's financial information is reviewed for compliance with
the particular loan program's parameters. Issues such as debt to income ratio, loan to value
ratio, and credit history are evaluated using the Qualifying Worksheet (Exhibit 12).
Low or Moderate Income
Income is classified as Low or Moderate as a result of household size and gross income of
all adult individuals who reside within the household. Low income households earn less than
80% of Orange County median income and moderate income households earn between
81% and 120% of median income. The Federal Department of Housing and Urban
18 Loan Processing
Development (HUD) publishes updated income guidelines annually for Orange County. The
current income schedule is identified in Exhibit 6.
Qualifying Worksheet
The Qualifying Worksheet (Exhibit 12) is completed by the City or its representative upon
receipt of an application package. This form is designed to lead the staff member through
the general approval criteria of the loan program.
The first section on page one of the form lists all income for the applicant(s). Income
includes base employment earnings, overtime, bonuses, commissions, dividends, interest,
net rental proceeds, Social Security, pensions, and retirement earnings. The following
section lists housing expenses for the applicant(s). These expenses include payment on
any existing mortgages, mobile home space rent, hazard insurance, real estate taxes,
mortgage insurance, and homeowner association dues.
The first section on page two of the Qualifying Worksheet lists the applicant(s) non-housing
liabilities such as auto loans, revolving charge accounts, alimony, and child support. Since
housing related expenses were listed on page one, this section should exclude housing
liabilities. The applicant's debt to income ratio is then calculated using the sum of housing
expenses and liabilities divided by gross income.
The bottom of page two lists all existing and proposed encumbrances on the property, and
compares this sum to the estimated after rehabilitation value of the property. This is the loan
to value ratio. The final section on this page describes the applicant(s)' credit history.
Debt to Income Ratio
The debt to income ratio is the applicant's total housing expenses and liabilities divided by
gross income. It is one of the basic criteria used to determine if an applicant has the ability
to repay a home mortgage. For the Rehabilitation Loan Program, the applicant's total debt
to income ratio may not be higher than 50%.
Loan to Value Ratio
The total of all liens on the subject property, including the City loan, may not exceed 100% of
the after-rehabilitation appraised value. The Loan Review Committee may set lower Loan to
Value limits, depending on current market conditions.
Income History
To verify that the borrower has the ability to repay the debt, salaried applicants must provide
written verification of two years income. This may be in the form of completed and signed
Federal Tax Returns, W-2 forms, pay stubs, and/or direct employment verification forms.
Self employed applicants or those with sole proprietor businesses must also provide a
minimum of two years income history. Minimum acceptable verification must be in the form
of completed and signed Federal Tax Returns.
Loan Processing 19
Verifications
All income and asset sources must be verified independently of the information provided on
the borrower's application. It is the responsibility of the City to obtain and evaluate
verifications for accuracy.
One method of evaluating accuracy of an applicant's financial information is to compare
items listed on the credit report with the items listed on the application. The applicant must
account for any item not listed in one place or the other.
Any derogatory credit information must be fully explained in writing by the borrower.
Significant derogatory credit information may be reason for denial of the loan.
Underwriting Multi Family Loans
Upon receipt of a completed application package or an acceptable project proposal, the
Economic Development Department will determine initial eligibility and schedule a
preliminary property inspection.
As part of the underwriting review, staff members will verify that all resident tenants of the
property are low income as defined by HUD (current income guidelines are provided in
Exhibit 6). Additionally, staff will review the applicant's management of the property, income
and expense statements, balance sheet, and construction plans.
Underwriting Emergency Grants
Upon receipt of a completed Grant Program application, Economic Development
Department staff will determine initial eligibility. The applicant's financial information will be
reviewed for compliance with program parameters. Issues such as debt to income, loan to
value, and credit history are not considered when underwriting a grant application. Funding
approval is primarily based on the applicant's income (must be low-income as defined in
Exhibit 6) and the applicant's emergency need for rehabilitation assistance. Grant funds
may only be used for health and safety-related emergency repairs. Such repairs may
include work on plumbing, heating, and electrical systems.
Title Insurance
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 secured interest in the property. In order to assure that the borrower has accurately
represented title to real estate, all such loans shall be supported by a preliminary title report
obtained by the City.
Preliminary title reports are prepared by a title underwriter after a search of public records,
maps, and other relevant documents. This report ascertains 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.
20 Loan Processing
A preliminary title report is a signed and dated formal report that sets out in detail the current
conditions to a parcel of land. The following matters should be checked carefully when
reviewing a title report:
• The estate or interest covered
• The recorded owner
• The parcel of land
• Exceptions, liens, and encumbrances
• Conveyances
• Endorsements
The City's general policy is to require that encumbrances be subordinated, reconveyed, or
otherwise removed prior to the recordation of the City's deed of trust.
Preliminary Property Inspection
After an applicant has been determined initially eligible for rehabilitation assistance, a
preliminary property inspection will be scheduled. This inspection will allow the City to verify
the extent of repairs needed to correct City Code violations or to ascertain the existence of
other property deficiencies. The inspection report will be used to prepare the scope of work
that will be approved by the Loan Review Committee. Only items identified in this scope of
work may be funded by the City's loan.
Loan Approval
Upon the receipt and analysis of all required financial information by the City, the Loan
Review Committee will meet to evaluate the borrower's financial position, rehabilitation work
to be done, and credit history and will determine approval of the loan. The application and
other pertinent documentation (cost estimates, income verification, title report, bid amounts,
etc.) will be reviewed. The Loan Approval form (Exhibit 13) summarizes that the borrower
satisfies each approval criteria for a loan. The Loan Review Committee must unanimously
approve a loan before a loan may be funded, at which time each committee representative
will sign the Loan Approval Form to document approval of the loan.
Selection of Contractors
Contracting will be done on a competitive bid basis. After the Loan Review Committee has
approved a loan, the City will prioritize the necessary scope of work, and the borrower will
request bids from construction companies. At least 3 bids will be obtained for the project.
The homeowner will award the contract to the lowest-cost, qualified bidder who meets the
City's licensing and insurance requirements. When a contractor has been approved, the
City will authorize work to begin. In the event a borrower begins construction work before
City approval is given, such work will not be an eligible activity under the rehabilitation loan.
Loan Processing 21
Acceptable Contracts
Three forms of contracting will be allowed under this program as follows:
• Contracts between the homeowner and a general contractor
• Contracts between the City and the homeowner where the homeowner is the
contractor— in this situation, the homeowner cannot be compensated for labor
• Contracts between the homeowner (acting as a contractor) and a subcontractor
Change Orders
All change orders to the contract require the signature of both the contractor and the
borrower. Change orders must be first approved by the City.
Construction Progress Inspections
From time to time during construction, a contractor may request payment for work
completed. Before payment will be approved, the City must inspect the property to
determine that the work has been completed or that an appropriate increment of the work
has been completed.
Funding the Loan
Upon loan approval by the Loan Review Committee and selection of qualified contractors by
the borrower, a staff member will create material requisitions for each contractor (material
requisitions are used to open purchase orders). Separate material requisitions are required
for each individual contractor so that checks will be made payable to the contractor. A
temporary file will be created to organize funding documents. These documents will be
merged into the loan file after loan closing.
When a purchase order is opened, a copy should be placed in the temporary file. Another
copy should be given to the Economic Development Department's finance coordinator. A
final copy should be filed in the department's purchase order notebook.
Before funding preparation is complete, the City's Rehabilitation Loan Database must be
updated to include the new loan. The Economic Development Department's Rehabilitation
Loan Program Coordinator maintains this database in Microsoft Access.
After each phase of work has been completed, a Loan Disbursement Request will be
completed. This form authorizes payment to be made to a contractor. It is submitted to
Accounts Payable to have a check printed and mailed to the contractor. A copy will be
maintained in the temporary file.
Contractor Lien Releases
After a contractor completes the approved rehabilitation work, but before final payment is
made to the contractor, the contractor must release any and all construction and material
liens whether or not recorded against the subject property.
22 Loan Processing
Final Inspection
After all rehabilitation work is finished, the property will be inspected to verify that the
approved scope of work has been competed. This inspection is required before the final
loan disbursement will be approved.
Acceptance of Work
In the event a dispute arises between the homeowner and the contractor concerning the
contracted scope of work, the City will work with both parties to negotiate a satisfactory
solution.
Post Funding Audit
The Economic Development Department is responsible for reviewing all application and loan
documents for accuracy. Proper lien position, proper designation of
Beneficiary/Trustor/Trustee, adherence to program guidelines, and any special issues will
also be reviewed.
Loan Processing 23
(Intentionally Blank)
24 Loan Processing
Documentation
General
Master loan documents for a specific loan program are drafted by the City Attorney's Office.
Subsequently, individual loan documents are prepared by City staff in accordance with the
City Attorney approved master documents.
Documents Required
The following loan documents are required for every Housing Rehabilitation Loan Program
loan secured by real property:
• Promissory Note
• Deed of Trust
• Truth in Lending Statement
• Disclosures (i.e., Fair Lending, Lead Based Paint)
• Notice of Opportunity to Rescind Transaction
Promissory Note
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.
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. There are three parties to a deed of trust: (1) the Trustor (the
borrower), (2) the trustee (for City loans, the Agency will act as trustee/for Agency loans, the
City will act as trustee), and (3) beneficiary (the lender, either the City or Agency). Basic
terms of a trust deed include:
• A description of the promissory note that 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
• Warranties and covenants
• Property insurance
• Events of default
• Remedies
The deed of trust requires the trustor's (borrower's) signature to be signed in front of a notary
public, and it must be recorded with the County Recorder.
Documentation 25
Disclosures and Notices
Various laws and regulations govern real estate-secured loans and require that lenders
provide applicants with certain information. These requirements are 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.
• Lead-Based Paint Hazard Warning
Applicants for rehabilitation assistance (and tenants in a property being rehabilitated)
must be provided with information regarding Lead-Based Paint. Evidence of the
receipt of this information must be clearly document in the loan file.
Notice of Opportunity to Rescind Transaction
Regulation Z allows consumers the right to cancel a loan transaction when a security interest
is taken in their personal residence. 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. The city may, however, perfect its security interest and record the deed of trust
prior to the expiration of this time period.
Document Preparation and Approval
The Economic Development Department is responsible for preparing appropriate documents
to fit each particular loan program. Master documents will be approved as to form by the
City Attorney's Office.
Safeguarding Documents
Original loan documents (i.e. note, loan agreement, and property deed of trust/mobile home
title) are to be maintained in a secure and fire resistant location in the Economic
Development Department or another location selected by the Economic Development
Department. When a loan is paid in full or about to be paid in full, these documents will be
released to a licensed escrow company, or in certain circumstances, they will be reconveyed
directly to the borrower.
26 Documentation
-Chapter • Loan Maintenance and Accounting
General
During the life of a loan several issues can arise which cause the City to revisit the loan file.
Some of those issues may involve defaults, partial payments, full repayment, or property
insurance cancellation. This chapter addresses those situations that may occur after the
loan has been funded up to the point of full repayment.
File Organization
Loan file organization is an important aspect of loan portfolio management. Rehabilitation
Loan files will be organized according to a basic credit file format. The objectives of this
procedure are:
• To ensure that all files contain the documentation necessary to support sound credit
decisions
• To ensure that files are organized in a way that is efficient and clearly understood by
individuals requiring access to the files
Legal documents and credit underwriting documents are maintained in two separate files in
two different locations. Materials relating to the credit decision, such as applications,
verifications, copies of title reports, etc. are maintained in the loan file located in the offices
of the Economic Development Department. Original loan documents, such as the
promissory note, recorded deed of trust, loan agreement, etc. are maintained in a secure
and fireproof location. The Economic Development Department is charged with selecting an
appropriately secure location for maintaining loan documents.
The loan file is organized with two sections located on the left and right sides of a folder.
With the file folder open, documents are stacked one on top of the other. Refer to the
following File Organization summary for document order, with the first document on the list
on top, the second underneath, and so on.
Loan File Organization
Left Side Right Side
File Summary Sheet Loan Agreement(copy)
Copy of Appraisal Truth in Lending Statement
Inspection Report—Work Write Up Promissory Note (copy)
Bid from Selected Contractor Deed of Trust(copy)
Declarations of CC&Rs
Disclosures
Notice of Opportunity to Rescind Transaction
Primary lender loan documents
Loan application
Income qualification documents
Credit Report
Borrower ethnicity classification
Loan Maintenance and Accounting 27
Accounting for Deferred Repayment Loans
Deferred Payment Rehabilitation Loans do not require principal or interest payments to be
made during the term of the loan. For that reason, the loan accounting system employed by
the City uses a personal computer based database program. The database keeps track of
each loan by amount, borrower name, address, and date.
Accounting for Amortized Loans
The City currently employs Bank of America to service those rehabilitation loans that require
repayment during the term of the loan. After a loan is fully disbursed to a borrower, a copy
of the loan application packet is delivered to Bank of America for loan servicing at:
Bank of America Loan Processing Center
11060 White Rock Road, #120
Rancho Cordova, CA 95670
(Mail Code #7371)
Charge-Offs
A loan is considered a charge-off if it has been deemed uncollectable. These may be loans
that have been approved for partial repayment or no repayment according to this chapter, or
they may be loans deemed uncollectable because of the borrower's bankruptcy or death. In
any event, the loan must be indicated as such in the database monitoring system and
removed from the outstanding loan balance figures. Notice of a loan charge-off will be given
to the Accounting Department with a copy to the City Attorney's Office.
Partial Repayment Upon Sale or 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 the Director of Economic Development. Notice of a
partial repayment will be given to the Accounting Department with a copy to the City
Attorney's Office.
Loan Payoffs
From time to time rehabilitation loans will be repaid in full. The City will generally receive a
request for a payoff amount when repayment occurs as part of a property sale or mortgage
refinance. The request will usually come in the form of a Request for Beneficiary's Demand
from an escrow company, title insurance company, or financial institution.
Due to potential errors and misunderstandings when discussing payoffs verbally, the City will
provide a payoff demand only upon receipt of a written request. The City will communicate a
payoff demand to the requester only in writing.
28 Loan Maintenance and Accounting
Responding to a Request for Beneficiary's Demand
The following steps should be taken when the City has received a written request for a loan
payoff demand:
• Retrieve the loan file and review the loan agreement for repayment requirements
• Prepare a demand letter describing the principal balance, interest rate, date of loan,
current date, calculation of interest to the current date, and a per day interest amount
for the estimated payoff date
• Attach a copy of the request for beneficiary's demand to the demand letter and send
to the requesting party
• Place a copy of the demand letter and the original request for beneficiary's demand in
the loan file at the top of the right side
If the request for a demand is from a licensed escrow and/or title company, staff may
respond by sending the reconveyance of the note and deed of trust together with the
demand letter. The reconveyance should be accompanied with a letter clearly instructing
the escrow company to not-record the document until the City's loan is fully satisfied. If the
request is from any other representative of the borrower, the City may hold the
reconveyance until payment is received in full and the payment check has been cleared.
The title for a mobile home and a signed conditional lien release form should be sent to a
licensed escrow company or title company, together with a payoff demand, provided that
these documents were requested and are necessary to complete a pending sale transaction.
Reconveying the Trust Deed
After the City has received payment in full of "good" funds, the deed of trust will be released
as a lien against the property. ("Good" means funds that are drawn on a title company,
escrow company, or financial institution. Funds drawn on a personal account should be
cleared first before reconveying the deed of trust.) A reconveyance of trust deed will be
prepared by City staff to be recorded and then sent to the borrower after recording (the
document should note the borrower's name and current address). The document may be
sent directly to the county recorder or to the entity that provided the payoff funds, such as
the title or escrow company. A copy of the reconveyance should be maintained in the closed
loan file.
Defaults
A borrower may default on the terms of the loan if he or she violates conditions of the loan
agreement. These default issues can include the following:
• Nonpayment
• Renting the property (homeowner loan programs)
• Allowing the rents or incomes of the tenants in the units to exceed the affordability
requirements established by this program, as adjusted annually (multi family housing
loan programs)
Loan Maintenance and Accounting 29
• Allowing the number of tenants occupying a unit to exceed the standard limits
established by HUD
• Allowing the rehabilitated building (interior and/or exterior) to fall into disrepair or be
kept unclean, unsafe, or out of compliance with current building codes
• Selling or transferring the property by any means without prior approval of the City
• Nonpayment of other mortgages, taxes, insurance, or homeowner association dues
Because of the time required to monitor these issues, the City will generally enforce only
those defaults that 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. In
such situations, at the discretion of the Loan Review Committee, the property owner will be
given 30 days to remedy a default before filing a notice of default and proceeding with
foreclosure.
Closing the Loan File
After a loan has been paid in full and the corresponding deed of trust or mobile home title
has been reconveyed, the loan file will be closed. The Economic Development Department
will indicate, "Paid in Full" (or another notation if appropriate) on the exterior of the file folder,
and the file will be stored in a separate area. Closed files should be maintained for a period
not less than three years.
30 Loan Maintenance and Accounting
Terms for Single Family Owner Occupied
Housing Rehabilitation Loan Program
l - . - . . . . I • . .
• Single Family Mobile Home, Single Family Mobile Home,
House Townhome, House Townhome,
Condominium Condominium
• Low-Income Low-Income Moderate—Income Moderate—Income
(<80%Median) (<80%Median) (80%-120%Median) (80%-120%Median)
• • • Must be owner Must be owner Must be owner Must be owner
• occupied. Limit of 1 occupied. Limit of 1 occupied. Limit of 1 occupied. Limit of 1.
household per household per household per household per
home. Owner must home. Owner must home. Owner must home. Owner must
live in home not live in home not live in home not live in home not
less than 2 years less than 2 years less than 2 years less than 2 years
after work is after work is after work is after work is
completed. completed. completed. completed.
• • $25,000 $15,000 $25,000 $15,000
3% below current 3% below current 2% below current 2% below current
Fannie Mae 30- Fannie Mae 30- Fannie Mae 30- Fannie Mae 30-
year mortgage year mortgage year mortgage year mortgage
commitment rate. commitment rate. commitment rate. commitment rate.
• • Deferred until Deferred until Loan is amortized Loan is amortized
property is sold or property is sold or for 15 year term for 15 year term
transferred when transferred when with monthly with monthly
principal and principal and payments. payments.
accrued interest accrued interest Prepayment penalty Prepayment penalty
becomes due. becomes due. for loans repaid for loans repaid
Prepayment penalty Prepayment penalty within 2 years. within 2 years.
for loans repaid for loans repaid
within 2 years. within 2 years.
Principal and Principal and All outstanding All outstanding
• accrued interest accrued interest principal and principal and
becomes becomes accrued interest accrued interest
immediately due. immediately due. becomes becomes
immediately due. immediately due.
• . No No No No
• • Grant may be Grant may be No restriction No Restriction
• included in loan if included in loan if
funded in last 1 funded in last 1
year. Otherwise, year. Otherwise,
loan is not allowed. loan is not allowed.
Exhibit 1 31
Terms for Multi Family Rental Housing
Rehabilitation Loan Program
• Up to 7 Residential Units 8 or More Residential Units
• Priority is given to Oakview Target Area. Priority is given to Oakview Target Area.
• Low Income Low Income
(<80%Median) (<80%Median)
• • • Limit of 1 household per residential unit. Limit of 1 household per residential unit.
• Prior to rehabilitation, the property must Prior to rehabilitation, the property must
• have one or more substandard conditions have one or more substandard conditions
under City, State, or Federal housing under City, State, or Federal housing
quality standards. quality standards.
• After rehabilitation, the property must After rehabilitation, the property must
• • meet HUD Housing Quality Standards. meet HUD Housing Quality Standards.
• Ensures tenancy of income eligible Ensures tenancy of income eligible
households, maintenance of affordable households, maintenance of affordable
rents, compliance with occupancy rents, compliance with occupancy
restrictions, and maintenance of property. restrictions, and maintenance of property.
• . $600 per unit minimum/$15,000 per unit Negotiable
• maximum
2% below current Fannie Mae 30-year Negotiable
mortgage commitment rate rounded
down to the nearest half point.
• Minimum 20% pre-rehabilitation equity Minimum 20% pre-rehabilitation equity
investment required. investment required.
15 years Negotiable
• • Amortized Negotiable
• • Loan is amortized for 15 year-term with Negotiable
monthly payments.
Principal and accrued interest becomes Principal and accrued interest becomes
due. due.
• • No No
32 , Exhibit 2
Terms for FHA Title 1 Loan Program
• Citywide Citywide Citywide
• No Restriction No Restriction No Restriction
• • • No Restriction No Restriction No Restriction
• No Restriction No Restriction No Restriction
•
• • Does not apply Does not apply Does not apply
• None None None
• • None None None
• • $25,000 $7,500 $60,000 (up to$12,000
per unit)
Prevailing local market Prevailing local market Prevailing local market
rate rate rate
• No Restriction No Restriction No Restriction
Not less than 6 months; Not less than 6 months; Not less than 6 months;
Up to 20 years Up to 12 years Up to 20 years
• • Any loan over$7,500 None Any loan over$7,500
requires Deed of Trust requires Deed of Trust
Exhibit 3 33
Terms for Health and Safety
Emergency Grant Program
• Single Family Homes, Mobile Homes, Condominiums, and Townhomes.
• Low-Income.
• • • Property must be owner occupied. Limit of 1 household per home. Owner
must reside in home for not less than 2 years after work is completed.
• Must be health or safety-related, such as plumbing, heating, and electrical
systems.
• Property must be inspected before and after work is completed.
• $500
• No
• . An applicant is ineligible for a grant if a City Rehabilitation Loan was funded
within 2 years.
None
34 Exhibit 4
List of Eligible Home Improvements
Improvements Eligible Under the Single Family
Owner Occupied Housing Rehabilitation Loan Programs:
• Bathrooms — Equip bathroom with working toilet, permanently installed working wash
basin with hot and cold running water, working tub/shower with hot and cold running
water, and adequate ventilation provided by an operable window or ventilation system.
Repair or replace leaking/damaged pipes, fixtures, or floors.
• Electrical — Correct electrical hazards that present an immediate safety risk.
• Exits and Access — Each home should have least 2 accessible doors.
• Exterior Paining/Stucco/Siding — Eligible for house and garage to provide weather
protection (includes repairs or patching and filling of cracks and holes).
• Fencing — To address a safety risk to the residents.
• Heating — Repair and replace unsafe, inadequate, or inoperative heating systems.
• Insulation — Permanent weatherization of a home to conserve or reduce energy use.
• Interior Painting — To correct peeling/damaged paint caused by water leaks, plumbing or
structural problems that have been corrected.
• Kitchen — Equip kitchen with a working stove and oven with proper ventilation, a
refrigerator that maintains a temperature appropriately low, a sink with hot and cold
running water and with proper drainage, and space for food preparation and storage.
• Plumbing — Provide proper drainage and hot/cold running water free from contamination.
• Roofing and Roof Drainage — Repair or replace (with like material) to eliminate hazards
or leaks.
• Security— Equip windows and doors accessible from the outside with locks.
• Smoke Detectors — Install detectors appropriate to the design and size of the structure.
• Stairs/Rails/Porches — Correct broken or missing stairs, rails, or porches.
• Structure/Foundation — Framed structures must be secured to the foundation.
Foundation should be sound and free from hazards.
• Termite or pest control — Inspection, abatement, and required structural repairs.
• Water Heater— Unit should be functioning and located/secured appropriately.
• Windows/Doors — Repair or replace broken glass, rotted frames, inoperable windows,
doors, or locks.
• Other Code enforcement violations — The home should be free from other hazards inside
and outside that may be identified by inspection
Improvements Eligible Under the Multi Family Rental Housing
Rehabilitation Loan Programs:
• All eligible costs listed above for single family loan programs
• Modifications for the Disabled
• Fees for approved professional services related to the rehabilitation
• Loan or permit processing fees related to the rehabilitation
• Refinancing fees as necessary
• Tenant relocation costs assistance as necessary
Exhibit 5 35
Current Income Schedule
2000/2001 HUD Income Guidelines for Orange County
Gross Annual Income Levels by Household Size*
Household Orange County Low Income Moderate Income
Size Median Income <80% Median) 80%-120% Median)
1 $48,700 $35,150 $58,450
2 $55,700 $40,150 $66,850
3 $62,600 $45,200 $75,100
4 $69,600 $50,200 $83,500
5 $75,200 $54,200 $90,250
6 $80,700 $58,250 $96,850
7 $86,300 $62,250 $103,550
8 $91,900 $66,250 $110,300
Effective 3/9/00
* This schedule is updated by the Federal Department of Housing and Urban Development
each year in March.
36 Exhibit 6
Affordable Rent Limits
Current Maximum Rents
for Low-Income Households
in Orange County
2000/2001
Studio $731
1 Bedroom $836
2 Bedroom $939
3 Bedroom $1,044
4 Bedroom $1,127
5 Bedroom $1,211
Effective 3/9/00
Notes:
1. Tenant paid utilities must be subtracted from these figures.
2. This schedule is updated by the Federal Department of Housing and Urban
Development each year in March.
Exhibit 7 37
How to Determine Tenant Household Income
In calculating ANNUAL gross income, all of the income of the applicant and other household
members 18 years of age or older who will share the same dwelling unit, whether in cash or
kind, shall be considered, as described below:
• The full amount, before any payroll deductions of wages and salaries, overtime pay,
commissions, fees, tips, bonuses, and other compensation for personal services,
provided they are normal and consistent of the application.
• Self-employed income is defined as the higher of either
o Current year-to-date net income or
o The highest net income shown on any one of the applicant's last three years
signed federal income tax forms.
Net Income is defined as gross income plus depreciation plus amortization plus rent
deductions for use of a home.
• Interest, dividends, and other net income of any kind from real or personal property.
• The full amount of periodic payments received from Social Security, annuities, insurance
policies, retirement funds, pensions, disability or death benefits, and other similar types of
periodic receipts including a lump sum payment for the delayed start of periodic
payments.
• Payments in lieu of earnings, such as unemployment, worker's compensation, severance
pay, welfare assistance (note: such payments may be excluded by the lending institution
providing the first mortgage for purposes of underwriting, but will be included in eligibility
determinations for this program).
• Periodic and determinable allowances, such as alimony and child support payments and
regular contributions/gifts received from persons not residing in the dwelling to the extent
that such payments are reasonable expected to continue.
• All regular pay, special pay, and allowances of a member of the Armed Forces (whether
or not living in the dwelling) who is the head of the family, spouse, or other person whose
dependents are residing in the unit.
• Any earned income tax credit to the extent it exceeds income tax liability.
• Any other income that must be reported for federal and state income tax purposes.
38 Exhibit 8
Single Family Home/Mobile Home Loan Application
CITY OF HUNTINGTON BEACH
HOUSING REHABILITATION LOAN PROGRAM
SINGLE FAMILY LOAN APPLICATION
This application is designed to be completed by the app:icant(s)with the Lender's assistance.App:icants should complete tnis form as"Borrower"or"Co-Bonower"as applicable, Co- }
Borrower irformalion must be provided for all adult household members andfor individuals designated on the property title- In such cases,Co-Borrower's income and credit history may
be used as a basis for loan quaVicauon. _
Subject Property Address No.of Persons Living No.of Bedrooms Year Built
in Household i
Namie(s)on Tiife Type of Structure Year Acquired Current Value i
k
First Mortgage Holier Mortgage No. Current Balance Monthly Payment '
Seconc Mortgage Holier Mortgage No Current Balance Monthly Payment ?
Describe mprovements Planned
Borrower's Name Co-Borrower's Name
1
Social Security Number Marital Status Binh Date Social Security Number tJ.antal Sixtus Birth Date
Or.License Nc. Nc,of Dependents Dr,License No. No of Dependents
(include ages) (incude ages}
CunentAadress _Own _Rent Current Address _Own _Ran!
No.of Years at Current Address Daytime Phone No.of Years at Current Address "Daytime Phone
I
t
If residing at current address for less than two years.complete the folio:vinl
Prior Address _Own _Rent Prior Address _Own _Rent
S
Name of Relative not Living with You Reia:ionslup Address of Relative Phone of Relative i
i,
Name&Address of Borrower's Employer Yrs,on this Job Name&Address of Co-Borrower's Employer Yrs.on this Job
t
Yrs,Employed in this line Yrs.Employed in this I'ne
of work'profession of workiproression
PositionfTitlerfype of Business Business Phcne PositienrTrtlerfype of Business Business Phone
If employed in current position for less than two years or If currently employed Jr.more than one position,complete the following,
Name&Address of Employer Yrs.on this Job Name&Address of Employer Yrs,on this Job
Reason for Leaving Reason for Leaving
PositionrrdlerType of Business Business Phone PosdionlTitierrype of Business Business Phone 1
Gioss Monthly Income. Borrower Co-Borrower Total Total Monthly Housing Expense: Total
Base Employment Income Mortgage(s)
Ovar!ime Mobile Home Space Rent
Bonuses Hazard Insurance
Commissions Real Estate Taxes
Dividenos'hterest Mcitgage Insurance
Net Renal Income Homeowner Assn,Dues
Other Other
Total c S S Total S
Page 1
Exhibit 9 39
List chcccing and savings accounts below.This schedule may be completed jointly or List liabilities below for all Borrowers. Include creditor's name,address,and account
separately ci Co Borrowers. It the Co�Borrower section of this application was completed, number for all outstanding debts,inoludmg auto loans,revolving charge accounts,real
inis schedule must be completed for both borrowers. estate loans,alimony,child supper,,at,. Use additional sheets if necessary.
Name and address of Bank,S&L.or Credit Union Name and address of Company
Acct No Acct.Type Acct.No. Monthly Payment
Name on Aoct. Balance Name on Acct. Unpaid Balance
Name and address of Bank,S&L,or Credit Union Name and address of Company
Axt.No. Acct Type Aril.No. Monthly Payment
Name on Acc". Balance Name on Acct. Unpaid Balance
Name and address of Bank.S&L.or Credd Union Name and address of Company
Accl.No Acct Type Acct.No. Monthly Payment
Name on Acct. Balance Name on Aat. Unpaid Balance
Name and address of Bank.S&L,or Credit Union Name and address of Company
Acct.No Add.Type Acct.No, Monthly Payment
Naas on ii= Balance Name or Acct. Unpaid Balance
Other Assets: Name and address of Company
Value of real estate owned S Acct.No. fetonthly Payment
Automobiles owned(make&year) s
Name on AccL Unpaid Balance
Other Assets S
Total Value of Assets 5 Total Balance of Liabilities S
If you answer-yes"to any question below, Borrower Co-Borrower Please select the appropriate Race
please explain on a separate sheet. Yes No Yes No classification below: Borrower Co-Borroymr
a.Are there any outstanding judgments against you? Write
b Ha.,e you,cen declared banKrupt mmm the past 7 years? ❑ El 0 Hispanic
c. Have you had property foreclosed upon in the last 7 years? El 0 Black El El
d.At,,you currently a party to a laasu0 El Q ❑ 0 American Indian
e.Are you presenJy delincuent or in default on any debt? E] 0 0 El Asian El
J.VhIl the subject property be you,primary residence for the next 12 months? 0 South Pacific Islander 0
g. Are you a US Citizen? ❑ Other Race El
r � r •
the urders.gwc1 speciheally ackr*v,I.dge(s)and egree(sj that (1)the loan regllestac by this application will be secured oy a dead of trust on the property or title to the plopeny dosaited hL em;(2)the
property wil,not be used for any illegal or prohibited pu peso or use,(3)all statements made in this application are made for the purpose of oblai ing the loan indicated herein;(4)occupation of.the propery w,ll
be as indicated above;(5)va,,ication or revanficatian of any information contained in the application may be made at arty time by the Landof.its agents,succesoc s and assigns,either crectiy or through a
pin aedit rag agency,from any source named in this applicotion,and the original copy of ibis application will be rowtac!by the Lender,e,en itthe ban is not oporo-:ed;(6)the Lender,its agens,successors
arse assigns win rely on iho Infor-t—cantamed in the apolica:ior and Ir-have a ccntiruing obligation to amend and!ar supplement ilia information provided in this application k ony of the material fats winch
P.va have represented heroin should cFanpe Crirr to dosirg;(7)in the evenl my!our poymor.ts en tie loan indicated in this application become delinquent,the Lender its agents.successors and assigns,may,in
aadnian m as then other ngnls ana remad as,i noon my;nur namosj and acccun(mfemaf on to a aatld rooan;ng agan_ry,la)ownorshp of the roan may bo;randamad to a successor G assign d tna Lander
,,, r.fi:e fie i-e and;er the adrtm.saalicn ci;he Iran d^.ctNc^d n;ay ba fransfrnred W an,:gang,su;.possar or assgn of the l antler wtr,prier nnace to me,(Sj ilia Lendpr,its agents,successors and assigns
rmko cr niphc[,to me eovowegsi rega•cing!no pwpeny,the condcwcn of:ne Vopony,c,ire valuo of the proper,
renificati : I,VJe cerufy that the information provided inthis application is true and correct as of the date set forth opposite myfour signatura(s)an this application and actrawfodge myfour
undem-wing that any intennonal or negligent misrepresentation(s)of the information contained in this application may result in civil liability and/or criminal penalties including,but not limited to,
line or imprisonment or both undor the provisions of Title 18.United Sit--Code.Section 1001,at saq,and liability for monetary damages to the Lender.its agents,successors and assigns,
insurers and any outer person who may suite,any loss due to reliance upon any misrepresentation which Irwe have m,do on this application.
Borrower's Signature Dale Co-Borrower's Signature Date
X X
Page 2
40 Exhibit 9
Multi Family Housing Loan Application
CITY OF HUNTINGTON BEACH
HOUSING REHABILITATION LOAN PROGRAM
io MULTI FAMILY RENTAL PROPERTY LOAN APPLICATION
"iN$appucaaion is designed to oe completed by the applican:(s). Assis:ance Is available from the Lenders by request. Applicants should complete this form as"Borrower'or"Co-
Borroaser'as applicable. Co-Borrower information must be provided for all i-vividuals designated on the property tide.
11111 El MIMI N 10 INe- e
Subject Property Address No.of.Buildings No.of Units Year Built
Namefs)on Title Type of Structure No.of Parking Site/Lot Size Year Acquired
Spaces
List Wines Included No of Vacant Units Purchase Price Curfent Value
in Roni
First Mortgage Holder Mortgage No Current Balance Monthly Payment
Sexed Mortgage Holder -Mortgage No. Current Balance Monthly Payment
Borrc.,.ers)will be: Individual(s) Partnership Corporation Other'
Part,ersh:p Tyoer El General Limited Joint Venture (Attach partnership agreement)
Prinapa,Business of Partnership Date of Incorporation State of Incorporation
Pan�ershiprCprporation Address Years at this Location Phone
Borrower's Name Co-Borrower's Name
Home Address _Own _Rent No.of Years at Home Address Own Rent No.of Years at
Current Address Current Address
Ownarship of 1 Ownership of
Subject Property Sub;ect Property
Social Securiy Number Mar tal Status Birth Date Social Security Number Marital Status BrIn Date
Cr.License No. No.of Dependents Dr,License No. No.of Dependents
(include ages) (include ages)
Name&Address of Borrower's Employer Home Phone Name&Address of Borrower's Employer Home Phone
Business Phone Business Phone
Type of Business Yrs.Employed in this line Type of Business
" Yrs.Employed in this line
of work/profession of wcrk/profession
Posaloarritle Yrs.on this Job Position/Title Yrs.on This Job
Co-Borrower's Name Co-Borrower's Name
Home Address _Own _Rent No.of Years at Home Address Own Rent No.of Years at
Current Address Cunert Address
Ownership of %Ownership of
Subject Property Subject Property
Sxal Security Number Marital S:atus Birth Date Social Security Number Man Status Birth Date
Dr.License No. No of Dependents Dr.License No. No.of Dependents
(include ages) (include ages)
Name&Address of Borrower's Employer Home Phone Name&Address of Borrower's Employer dome Pnone
Business Phone Business Phone
Type or Business Yrs.Employed in this fine Type of Business Yrs Employed in this line
ofwciklprofession etvrorkfprofession
Postticr.Mtie Yrs,on this Job Peshion/Title Yrs en this Job
Page 1
Exhibit 10 41
Please list other properties owned within the last two years by any of the above borrowers. Those properties currently owned should be included in your financial statement attached to
this application. If your percentage of ownership is less than 100%,indicate your percentage of ownership.Attach additional sheets if necessary,
�. 2. 3. 4.
Owner Name(s)
Address of Property
Ownership Status
Proper;Description
Year Acquired
No.of Units
Current Value
Amount of Mortgages E Liens
Uenhcider(s)Name/Address
Gross Monthly Rental Income
Monthly Mortgage Payment
Other Momhly Expenses
• •
Please provide the following unitilenant information for the subject property.Attach additional sheets fnecessary.
1. Unit 2. Unit 3, Unit 4. Unit 5,Unit 6. Unit 7. Unit
No.Of Bedrooms -
Household Head Name
Names of all Household
Members
Gross Household Income
Monthly Rent
Harsmg Authority Tenant?
Bretty describe proposed repairs
to this unit
If you answer yes"to any questions below, Borrower Co-Borrower Co-Borrower Co-Borrower
please explam on a separate sheet.
Yes No Yes No Yes No Yes No
a.Are there any outstanding judgments against you?
to, Have you been declared bankrupt wirnn the past 7 years? El El El 1 1 El El
c Have you had property foreclosec upon in the last 7 years?
c.Are you currently a party to a lawsuit?
e. Are you presently delinquent or in default on any debt?
f.Are you a foreign resident of the US? 0. 0
Please attach file following to this appl.caticn:
Property sales agreement(if purchased) Breakdown&description of construc0on plans,specs.8 costs
GrounC lease(if leased) ❑ Property income S expense statements for pre,,fous 2 years(pro•formas
may be submitted it newly owned)
Partnership Agreement(it oartnersmp) Current income S expense statement for subject properly
Recorded plat or survey Current balance sheet for subject property
Area map with arrow to site e ElStatement of borrower's experience in owning,managing or bu,lding
multi family buildings
Statement of management plan
Page 2
42 Exhibit 10
The undersigned speciroally acknodedge(s)and agree(s)that: (1)the loan requested by this application will be secured by a deed of trust on the property or title to the property
described herein, (2)the property will not be used for any illegal or prohibited purpose or use; (3)all statements made in this application are made for the purpose of obtaining the loan
indicated herein; (4)occupation of the property wil be as indicated above; (5)verification or reverifieation of any information contained to the application may be made at any time by
the Lender,its agents,successors and assigns,either directly or through a credit reporting agency,from any source named in this application.and the original copy of this application
wdl be retained by ine Lender,even if the loan is not approved. (6)the Lender,its agents,successors and assigns will rely on the information contained in the application and INre nave
a continuing obligation to amend and/or supplement the information provided in this application if any of the ma:enai facts which Mwe have represented herein should should change
prior to closing; (J)it the event my/our payments on the loan indicated in this application become delinc'uent,the Lender,its agents,successors and assigns,may,in addition to all
their other rights and remedies,report my/our name(s)and account information to a credit reporting agency;(8)ownership of the loan may be transferred to a successor or assign of
the Lender without notice to me andlor the administration of the loan account may be transferred to an agent,successor or assign of the Lender withprior notice to me;(9)the Lender,
its agents,successors and assigns make no warranties,express or implied,to he Borrower(s)regarding the property,the condition of the property,or the value of the property.
Certification: INVe certify that the Information provided in this application is true and correct as of the date set forth opposite myiour signatures)on this application and
acknowledge mylour understanding that any intentional or negligent misreprosematlon(s)of the information contained in this application may result in civil liability andior
criminal penalties including,but not limited to,fine or imprisonment or both under the provisions of Title 18,United States Code,Section 1001,at seq.and liability for
monetary damages to the Lender,Its agents,successors and assigns,insurers and any other person who may suffer any loss due to reliance upon any misrepresentation
which llwe have made on this application.
Borrower's Signature Date Co-Borrowers Signature Date
X X
Co-Borrower's Signature Date CaBorrev ers Signalure Date
X X
I
(
Page 3
Exhibit 10 43
Emergency Grant Application
CITY OF HUNTINGTON BEACH
HOUSING REHABILITATION LOAN PROGRAM
-�� EMERGENCY GRANT APPLICATION
This application is cesigned to be cornpleted by the applicants)wish the Lender's assistance.Applicants should ccmpete this form as"Borrower'or"Co-Borrower'as app rcable. Co.
Borrower information must ba proviced for all adult household members and'or indiv.duals designated on the propeny title. In such ca=_es.Co-Borrower's income and credit history may
be used as a basis for loan qualification.
••• •• • • • •• • •
Subject Property Address No.of Persons Living No of Bedrooms Year Built
in Household
Name(s)on T rile Type of Stuc:ure Year Acquired current Value
First Mortgage Helder Mortgage No. Current Balance Mor:hhr Payment
Seccnd Mortgage Holder Mortgage No. Current Balance Mcrthly Payment
Describe tmprovernerts Planned
Borrower's Name Co-Borrower's Name
Social Securav Number Marital Status Birth Dale Social Security Number Marital Status Birth Da'e
Dr,License No. No.of Dependents Or,License No. h'o of Dependents
(include ages) (Include ages)
Current Address Own Ren: Current Address Own Rent
No.of Years at Current Address Daytime Phone No.of Years at Current Aacress Daytime Phcne
If residing at current address fcr less than two years.complete the foltowing:
Prior Address Own Rent Prior Address Own Rent
Name of Relative not Living with You Relationship Address of Relative Phone of Relative
Name&Address o!Borrowers Employer Yrs.on this Job Name&Address of Co-Borrowers Employer Yrs.on this Job
Yrs.Employed in this line Yrs Employed in this hie
of worWprofesslon of work(profession
Positionlritle/Type of Business Business Phone PositiorfTitle/Type of Business Business Phone
If employed in current pos iton fcr less than two years or if cunertly employed in more than one position,complete the ro:lovdng:
Name&Address of Employer Yrs,on this Job Name e.Address of Employer Yrs,on his Job
Reason for Leaving Reason for Leaving
PosnioruTi11e7Type of Bus.ness Business Phone Position!Title/Type of Bus,nass Business Phone
Is
Gross Monthly Income: Borrower Co-Borrower Total Total Monthly Housing Expense: Total
Base Employment Income Mortgage{s)
Overtime Mobile Home Spar,Rent
Bonuses Hazard Insurance
Commissions Real Estate Taxes
Dividends/lmeres: Mortgage Insurance
Net Realal Income Homeowner Assn Dues
Other Other
Total S 3 $ Total 5
Page 1
44 Exhibit 11
List cnecking and savings accounts below. Th s schedule may be completed jointly or List liabilities below for all Borrowers Include creditors name address and account
separately by Co-Borrowers. It file Co-Borrower section of this application was completed, numoer for all outstanding debts,inducing auto loans,revojmr,g charge accounts,real
this schedule must be completed for both borrowers, estate loans,alimony,child support,etc. Use additional sheets if necessary.
Name and address of Bank,S&L,or Credit Union Name and address of Company
Ace,No Acct,Type Acct-No. Monthly Payment
Name on Acct, Balance Name on Acct Unpaid Balance
Name and address of Bank,S&L.or Credit Union Name and address of Company
Acct.No Mot Type Acci,No. Monthly Payment
Name on Acct Balance Name on Acct. Unpaid Balance
Name and address of Bank,S&L.or Crecy,Lilldo Name and address of Company
Acct.No, Aect.Type Acct,No. Monthly Payment
Name on Acc". Balance Name on Acct. Unpaid Ba!acce
Name and address of Bank,S&L,or Credit Union Name and address of Company
Acci No. AccL Type Acct.No. Monthly Payment
Name on Acct Balance Name on Acct. Unpaid Balance
OlherAssets: Name and address of Company
Value of real estate owned S
Acct.No. Monthly Payment
Automobiles owned(make&yearj s
Name on Acct. Unpaid Balance
Other Assets $
Total Value of Assets S Total Balance of Liabilities $
a •
If you answer"yes••to any question below, Borrower Co-Botrower Please select the adpropriate Race
please explain on a separate sheet. Yes No Yes No classification below: Borrower Co-Borrower
a Are there any outstanding judgments against you? White
b. Have you been declared bankrupt within the past 7 years? Hispanic
C. Have you had property foreclosed upon in the last 7 years? Black
d Are you currently a party to a lawsuit? American Indian
a. Are you presently delinquent or in default on any debt? 0 1:1 El 0 Asian El 1:1
I. Will the subject property be your primary residence for the next t 2 months? South Pacllio Islander 0
Fj
�. Are you a US Citizen? El F-1 Other Race El El
;M11MIXI TTINIMI• •
7no uhdersigneo sxalically aci nowtedge(s)and agree(sl that: (1)Lie ban reques!ad by this application will be secured by a deed of trust of the properly o-title to tre property,dasUibed heroin, 0)the
property unit rwi rho used for any illogal w prorubitad rwxposo or use; (3y all sisanhents made in this application are made for the purpose of obta,mng fie loan Indicated herein (A)occupation of the proparty w it
oa as ino-ted at— t5)vonbcalion or rovortrjca:;on of any information contained in the appI canon may be hands at any time by Lots Lando-,its agents,successors and asst;ns,either directly or lnrcugh a
:resit reporting agency ba any source nomad an this application,and the original spy of this application will be retamed by the Lender,even if the loan,is net approved,(6)the Lender,its agents successors
.ud assigns wit fair tin Lie nefom:alion cantmned in Urx applic.1m.and Vwr1 have a c Iindirg obligation to amend andror supraommnl the irforrnatior provided in this appiicaaon d any of the ree:erml fads al—
should change pior!a nosing,(7j in the event mylo.,r paymens on the Isan ind,wmd s5 t-is apphcaticn'decome da:m;u>_nt,the Lender,its agens,successors and assigns may,i
addition to all the r wr' I ghis and remedies,report ntyidl.'r rtama(a)and ac-It imoima!iOn Io a credit reporting,garacy.(a)ownerallip of Lind loar may tie tranSfum id to a successor or anion of the Landes
w.tncut notice to ma an wor Lne administration or Ine loan account may be 1—felled to-agent,successor or anigl of the Lender with prior notice to me,(9)Ine Lords,,its agents,.—nor,and.-q-s
make ho'warranties,axpress or implied,to the Borr—r the property,the condition of the property,or Ina value of the property-
Ceniligalian, bale certify that the information provided In this application is true and comet as of the date sot forth opposite myrour sigrawn(s)on this appliaa!ion and acknowladge mylour
understanding that any intentional or negligent misrepresentalion(s)of the information contained In this application may result in civil liability andror criminal penalties including,but not limited to,
fine or imprisurunent or bout under the previsions of Tide 18,United States Cade,section 1001,at seq.and liability far monetary damages to em Lender,its agents,successes and assigns,
u,sururs and any other person who may suffer any loss due to reliance upon any misrepresentation which Uwe have made on this application.
Borrower's Signature Date Co-Borrowers Signature Date
X X
Page 2
Exhibit 11 45
Qualifying Worksheet
, a CITY OF HUNTINGTON BEACH
HOUSING REHABILITATION LOAN PROGRAM
QUALIFYING SHEET
Applicant Name Address Telephone
Loan Type Amount Current Interest Rate
Gross Monthly Income: Borrower Co-Borrower Total
Base Employment Income
Overtime
Bonuses
Commissions
Dividends/Interest
Net Rental Income
Other
Total S 5 $
Total Monthly Housing Expense: Borrower Co-Borrower Total
Mortgage(s)
Mobile Home Space Rent
Hazard Insurance
Real Estate Taxes
Mortgage Insurance
Homeowner Assn.Dues
Other
rT
lal $ g
Page 1
46 Exhibit 12
Description.of Liability: Borrower Co-Borrower Total
TotalIN 5 $ S
_ • .III I 11111111111111, 11
•
Total Hsg Expense(Section 3) Total Liabilities(Section 4) Gross Income(Section 2) Debt to Income Ratio
•I • •
Amount Holder
First Trust Deed
Second Trust Deed
Third Trust Deed
Total Encumbrances S
Current Value Estimated Future Value
Loan to Value Ratio(As-is) Loan to Value Ratio(After Rehabihta:ion)
In iIN
❑Good Comments:
Fair
❑Poor
ElNoce
•
Page 2
Exhibit 12 47
Sample Note for
Single Family House Deferred Loan
CITY OF HUNTINGTON BEACH
DEPARTMENT OF ECONOMIC DEVELOPMENT
HOUSING REHABILITATION LOAN PROGRAM
PROMISSORY NOTE SECURED BY DEED OF TRUST
DEFERRED REPAYMENT HOUSING REHABILITATION LOAN
LOAN NUMBER DPL -
The undersigned hereby promise(s) to pay the City of Huntington Beach, California the principal
sum of dollars with interest from until paid. The interest
rate for this loan will be percent per year. If this debt is repaid in full for any
reason within two years from the date of this note, the holder of this note may, at its option,
assess a prepayment penalty of 25% of the original principal amount. The unpaid principal
balance and accrued interest of this debt will become immediately due at the time the property or
any part of the property described in the Deed of Trust is sold, conveyed, transferred, or assigned
to anyone other than the present recorded owner(s) or in the event the undersigned cause(s)
default on any of the following loan terms: (1) the undersigned agrees to make payments when
due for all debts recorded against the property; (2) the undersigned agrees to live in the property
as their primary residence; (3) the undersigned agrees to maintain the property in good condition
internally and externally and in compliance with applicable housing standards, laws, codes, and
regulations; (4) the undersigned agrees to provide evidence of fire and hazard insurance in an
amount sufficient to cover the City's security in the property during the term of the note and to
designate the City on such insurance as an additional loss payee; (5) if the property is located in a
designated flood zone, the undersigned agrees to provide evidence of flood insurance; (6) the
undersigned agrees to pay all property taxes and homeowner association dues during the term of
the loan: (7) the undersigned agrees that loan funds are for the sole purpose of paying for housing
rehabilitation activities as identified in the approved scope of work; (8) the undersigned agrees
that specified improvements shall commence within 30 days of loan signing and all work must be
completed within a period not to exceed 180 days; and (9) the undersigned agrees to hold the
City harmless from and indemnify the City for and against any and all claims which may be
brought or raised against the City, its officers, representatives, agents, or agencies by any party
pursuant to or in any way associated with or alleged to be associated with the loan or the
administration of the proceeds there from or the activities conducted pursuant thereto. Payment
shall be made in lawful money of the United States. Should default be made in payment when
due and action is instituted on this note, the undersigned agrees to pay all costs of collection,
including reasonable attorney's fees.
The undersigned understand(s) that this promissory note and the accompanying deed of trust
comprise the agreement for a housing rehabilitation loan to be secured by real property. By
signing below, the undersigned acknowledge(s) having read and received a completed copy of the
agreement and agreeing to all the terms and conditions contained therein.
Borrower's Signature Printed Name Date
Co-Borrower's Signature Printed Name Date
Exhibit 14 49
Sample Note for
Mobile Home Deferred Loan
CITY OF HUNTINGTON BEACH
DEPARTMENT OF ECONOMIC DEVELOPMENT
HOUSING REHABILITATION LOAN PROGRAM
PROMISSORY NOTE SECURED BY MOBILE HOME TITLE
DEFERRED REPAYMENT HOUSING REHABILITATION LOAN
LOAN NUMBER DPL -
The undersigned hereby promise(s) to pay the City of Huntington Beach, California the principal
sum of dollars with interest from until paid. The interest
rate for this loan will be percent per year. If this debt is repaid in full for any
reason within two years from the date of this note, the holder of this note may, at its option,
assess a prepayment penalty of 25% of the original principal amount. The unpaid principal
balance and accrued interest of this debt will become immediately due at the time the mobile
home is sold, conveyed, transferred, or assigned to anyone other than the present owner(s) on
title, upon further encumbrance of the property described in the title of the mobile home, or in the
event the undersigned cause(s) default on any of the following loan terms: (1) the undersigned
agrees to make installment payments when due for all debts owed on the property; (2) the
undersigned agrees to live in the mobile home as their primary residence; (3) the undersigned
agrees to maintain the mobile home in good condition internally and externally and in compliance
with applicable housing standards, laws, codes, and regulations; (4) the undersigned agrees to
provide evidence of fire and hazard insurance in an amount sufficient to cover the City's security
in the property during the term of the note and to designate the City on such insurance as an
additional loss payee; (5) if the property is located in a designated flood zone, the undersigned
agrees to provide evidence of flood insurance; (6) the undersigned agrees to pay space rent and
utility assessments when due during the term of the loan: (7) the undersigned agrees that loan
funds are for the sole purpose of paying for housing rehabilitation activities as identified in the
approved scope of work; (8) the undersigned agrees that specified improvements shall commence
within 30 days of loan signing and all work must be completed within a period not to exceed 180
days; and (9) the undersigned agrees to hold the City harmless from and indemnify the City for
and against any and all claims which may be brought or raised against the City, its officers,
representatives, agents, or agencies by any party pursuant to or in any way associated with or
alleged to be associated with the loan or the administration of the proceeds there from or the
activities conducted pursuant thereto. Payment shall be made in lawful money of the United
States. Should default be made in payment when due and action is instituted on this note, the
undersigned agrees to pay all costs of collection, including reasonable attorney's fees.
The undersigned understand(s) that a certificate of title to their mobile home secures this
promissory note. By signing below, the undersigned acknowledge(s) having read and received a
completed copy of the agreement and agreeing to all the terms and conditions contained therein.
Borrower's Signature Printed Name Date
Co-Borrower's Signature Printed Name Date
50 Exhibit 15
Sample Note for
Single Family House Amortized Loan
CITY OF HUNTINGTON BEACH
DEPARTMENT OF ECONOMIC DEVELOPMENT
HOUSING REHABILITATION LOAN PROGRAM
PROMISSORY NOTE SECURED BY DEED OF TRUST
HOUSING REHABILITATION LOAN
LOAN NUMBER BMIR
The undersigned hereby promise(s) to pay the City of Huntington Beach, California the principal
sum of dollars with interest from until paid. The interest
rate for this loan will be percent per year on the unpaid principal balance and
accrued interest. The undersigned will make regular payments at the times indicated in the
payment schedule. On the date of the final payment, the undersigned will pay any remaining
unpaid principal balance and accrued interest. If this debt is repaid in full for any reason within
two years from the date of this note, the holder of this note may, at its option, assess a
prepayment penalty of 25% of the original principal amount. The unpaid principal balance and
accrued interest of this debt will become immediately due at the time the property or any part of
the property described in the Deed of Trust is sold, conveyed, transferred, or assigned to anyone
other than the present recorded owner(s) or in the event the undersigned cause(s) default on any
of the following loan terms: (1) the undersigned agrees to make installment payments when due
for this loan and all other debts recorded against the property; (2) the undersigned agrees to live
in the property as their primary residence; (3) the undersigned agrees to maintain the property in
good condition internally and externally and in compliance with applicable housing standards,
laws, codes, and regulations; (4) the undersigned agrees to provide evidence of fire and hazard
insurance in an amount sufficient to cover the City's security in the property during the term of
the note and to designate the City on such insurance as an additional loss payee; (5) if the
property is located in a designated flood zone, the undersigned agrees to provide evidence of
flood insurance; (6) the undersigned agrees to pay all property taxes and homeowner association
dues during the term of the loan: (7) the undersigned agrees that loan funds are for the sole
purpose of paying for housing rehabilitation activities as identified in the approved scope of work;
(8) the undersigned agrees that specified improvements shall commence within 30 days of loan
signing and all work must be completed within a period not to exceed 180 days; and (9) the
undersigned agrees to hold the City harmless from and indemnify the City for and against any and
all claims which may be brought or raised against the City, its officers, representatives, agents, or
agencies by any party pursuant to or in any way associated with or alleged to be associated with
the loan or the administration of the proceeds there from or the activities conducted pursuant
thereto. Payment shall be made in lawful money of the United States. Should default be made in
payment when due and action is instituted on this note, the undersigned agrees to pay all costs of
collection, including reasonable attorney's fees.
The undersigned understand(s) that this promissory note and the accompanying deed of trust
comprise the agreement for a housing rehabilitation loan to be secured by real property. By
signing below, the undersigned acknowledge(s) having read and received a completed copy of the
agreement and agreeing to all the terms and conditions contained therein.
Borrower's Signature Printed Name Date
Co-Borrower's Signature Printed Name Date
Exhibit 16 51
Sample Note for
Mobile Home Amortized Loan
CITY OF HUNTINGTON BEACH
DEPARTMENT OF ECONOMIC DEVELOPMENT
HOUSING REHABILITATION LOAN PROGRAM
PROMISSORY NOTE SECURED BY MOBILE HOME TITLE
HOUSING REHABILITATION LOAN
LOAN NUMBER BMIR -
The undersigned hereby promise(s) to pay the City of Huntington Beach, California the principal
sum of dollars with interest from until paid. The interest
rate for this loan will be percent per year. The undersigned will make regular
payments at the times indicated in the payment schedule. On the date of the final payment, the
undersigned will pay any remaining unpaid principal balance and accrued interest. If this debt is
repaid in full for any reason within two years from the date of this note, the holder of this note
may, at its option, assess a prepayment penalty of 25% of the original principal amount. The
unpaid principal balance and accrued interest of this debt will become immediately due at the time
the mobile home is sold, conveyed, transferred, or assigned to anyone other than the present
owner(s) on title or in the event the undersigned cause(s) default on any of the following loan
terms: (1) the undersigned agrees to make installment payments when due for this debt and for all
other debts owed on the property; (2) the undersigned agrees to live in the mobile home as their
primary residence; (3) the undersigned agrees to maintain the mobile home in good condition
internally and externally and in compliance with applicable housing standards, laws, codes, and
regulations; (4) the undersigned agrees to provide evidence of fire and hazard insurance in an
amount sufficient to cover the City's security in the property during the term of the note and to
designate the City on such insurance as an additional loss payee; (5) if the property is located in a
designated flood zone, the undersigned agrees to provide evidence of flood insurance; (6) the
undersigned agrees to pay all space rent, utility, and other during the term of the loan: (7) the
undersigned agrees that loan funds are for the sole purpose of paying for housing rehabilitation
activities as identified in the approved scope of work; (8) the undersigned agrees that specified
improvements shall commence within 30 days of loan signing and all work must be completed
within a period not to exceed 180 days; and (9) the undersigned agrees to hold the City harmless
from and indemnify the City for and against any and all claims which may be brought or raised
against the City, its officers, representatives, agents, or agencies by any party pursuant to or in
any way associated with or alleged to be associated with the loan or the administration of the
proceeds there from or the activities conducted pursuant thereto. Payment shall be made in
lawful money of the United States. Should default be made in payment when due and action is
instituted on this note, the undersigned agrees to pay all costs of collection, including reasonable
attorney's fees.
The undersigned understand(s) that a certificate of title to their mobile home secures this
promissory note. By signing below, the undersigned acknowledge(s) having read and received a
completed copy of the agreement and agreeing to all the terms and conditions contained therein.
Borrower's Signature Printed Name Date
Co-Borrower's Signature Printed Name Date
52 Exhibit 17
Authorizing Resolutions
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH APPROVING THAT CERTAIN DOCUMENT ENTITLED "HOUSING
REHABILITATION LOAN PROGRAM POLICIES AND PROCEDURES—
EFFECTIVE JUNE 19, 2000,"PREPARED BY THE CITY'S
DEPARTMENT OF ECONOMIC DEVELOPMENT
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development has prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000" (sometimes "Housing
Rehabilitation Loan Policies");
The intent of the Economic Development Department in preparing the Housing
Rehabilitation Loan Policies,was to create a single document that would serve as an
internal resource to Economic Development staff to enable them to understand important
program administrative matters and to maintain better administrative control over the
various loan and grant programs offered by the City;
The various loan programs described in the Housing Rehabilitation Loan Policies
better reflect evolving market conditions and the rehabilitation financing needs of
homeowners in the City of Huntington Beach; and
NOW,THEREFORE,BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Housing Rehabilitation Loan Program
Policies and Procedures—Effective June 19, 2000," is hereby adopted and approved.
2. Authorization is hereby given to City staff to administer the various loan
and grant programs described in the Housing Rehabilitation Loan Policies. Any type of
loan or grant,the amount of which exceeds the maximum amount for such loan or grant
as described in Chapter 2 of the Housing Rehabilitation Loan Policies, shall require
approval by the City Council.
3. These approved Housing Rehabilitation Loan Policies shall become
effective June 19,2000; shall supercede any existing housing rehabilitation loan policies
utilized by City staff; and shall apply to all loans or grants approved or made by the City
on or after June 19, 2000.
rj w/k/00reso/housing rehab/5/24/00
Exhibit 18 53
PASSED AND ADOPTED by the City Council of the City of Huntington Beach
at a regular meeting thereof held on the day of
2000.
ATTEST: Mayor
City Clerk APPROVED AS TO FORM:
REVIEWED AND APPROVED: City Attorney RSA CUL-s oo
INITIATED AND APPROVED:
City Administrator
Director of Economic Development
2
dw/k/00reso/housing rehab/5/24/00
54 Exhibit 18
RESOLUTION NO.
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH("AGENCY")APPROVING THAT CERTAIN DOCUMENT
ENTITLED "HOUSING REHABILITATION LOAN PROGRAM POLICIES AND
PROCEDURES—EFFECTIVE JUNE 19,2000,"PREPARED BY THE CITY OF
HUNTINGTON BEACH'S
DEPARTMENT OF ECONOMIC DEVELOPMENT
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development has prepared that certain document entitled"Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000" (sometimes "Housing
Rehabilitation Loan Policies");
The intent of the Economic Development Department in preparing the Housing
Rehabilitation Loan Policies,was to create a single document that would serve as an
internal resource to Economic Development staff to enable them to understand important
program administrative matters and to maintain better administrative control over the
various loan and grant programs offered by the Agency;
The various loan programs described in the Housing Rehabilitation Loan Policies
better reflect evolving market conditions and the rehabilitation financing needs of
homeowners in the City of Huntington Beach; and
NOW, THEREFORE,BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled"Housing Rehabilitation Loan Program
Policies and Procedures—Effective June 19, 2000," is hereby adopted and approved.
2. Authorization is hereby given to Agency staff to administer the various
loan and grant programs described in the Housing Rehabilitation Loan Policies. Any
type of loan or grant,the amount of which exceeds the maximum amount for such loan or
grant as described in Chapter 2 of the Housing Rehabilitation Loan Policies, shall require
approval by the Agency's governing board.
3. These approved Housing Rehabilitation Loan Policies shall become
effective June 19, 2000; shall supercede any existing housing rehabilitation loan policies
utilized by Agency staff; and shall apply to all loans or grants approved or made by the
Agency on or after June 19, 2000.
dw/k/00reso/housing rehab-agency/5/24/00
Exhibit 18 55
PASSED AND ADOPTED by the Redevelopment Agency of the City of
Huntington Beach at a regular meeting thereof held on the day of
_, 2000.
ATTES'
Agency Clerk Chairman
REVIEWED AND APPROVED: APPROVED AS TO FORM:
Executive Director Agency Attorney R.,sw S 1 S 00
INITIATED AND APPROVED:
Director of Economic Development
2
dw/k/00reso/housing rehab-agency/5/24/00
56 Exhibit 18
RESOLUTION NO._
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF HUNTINGTON BEACH AUTHORIZING THE CITY ADMINISTRATOR
OR THE DIRECTOR OF ECONOMIC DEVELOPMENT
TO EXECUTE LOAN DOCUMENTS ON BEHALF OF THE CITY
RELATING TO THE CITY'S FIRST TIME HOME BUYER
AND HOUSING REHABILITATION LOAN PROGRAMS
WHEREAS,the City of Huntington Beach administrates a First Time Home Buyer Loan
Program and a Housing Rehabilitation Loan Program; and
During the implementation of these programs,it is often necessary for the City to execute
many loan related documents, such as loan subordinations, loan reconveyances,substitutions of
trustee,and other loan program related documents;and
The City Council desires to authorize the City Administrator and the Director of
Economic Development to execute such loan related documents on behalf of the City,
NOW,THEREFORE,the City Council of the City of Huntington Beach does hereby
resolve as follows:
1. That the City Council hereby authorizes the City Administrator or the Director of
Economic Development to execute on behalf of the City such loan documents as are related to
the administration of the City's First Time Home Buyer Loan Program and Housing
Rehabilitation Loan Program,including but not limited to loan subordinations, loan
reconveyances, substitutions of trustee,and other loan program related documents.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the day of ,2000.
Mayor
ATTEST: APPROVED AS TO FORM:
City Clerk "City Attorney
REVIEWED AND APPROVED: INITIATED AND APPROVED:
City Administrator Director of Economic Development
g:4:2000resolxity-loan signatures
rls 99-676
Exhibit 18 57
RESOLUTION NO.
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH AUTHORIZING THE EXECUTIVE DIRECTOR OR THE ECONOMIC
DEVELOPMENT DIRECTOR TO EXECUTE LOAN DOCUMENTS ON BEHALF OF THE
AGENCY RELATING TO THE AGENCY'S FIRST TIME HOME BUYER AND HOUSING
REHABILITATION LOAN PROGRAMS
WHEREAS,the Redevelopment Agency of the City of Huntington Beach administrates a
First Time Home Buyer Loan Program and a Housing Rehabilitation Loan Program; and
During the implementation of these programs,it is often necessary for the Agency to
execute many loan related documents, such as loan subordinations,loan reconveyances,
substitutions of trustee, and other loan program related documents; and
The Agency desires to authorize the Executive Director City Administrator and the
Economic Development Director to execute such loan related documents on behalf of the
Agency,
NOW,THEREFORE,the Redevelopment Agency of the City of Huntington Beach does
hereby resolve as follows:
1. That the Agency hereby authorizes the Executive Director or the Economic
Development Director to execute on behalf of the Agency such loan documents as are related to
the administration of the Agency's First Time Home Buyer Loan Program and Housing
Rehabilitation Loan Program,including but not limited to loan subordinations, loan
reconveyances, substitutions of trustee, and other loan program related documents.
PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington
Beach at a regular meeting thereof held on the day of 2000.
Chairman
ATTEST: APPROVED AS TO FORM:
P--,� v/3 j?----
Agency Clerk f• Agency General Counsel '
ti
REVIEWED AND APPROVED: INITIATED AND APPROVED:
Executive Director Director of Economic Development
g:4:2000resol:agency loan signatures
rls 99-676
58 Exhibit 18
Future Revisions
This document was last modified on:
June 6, 2000
Exhibit 19 59
Resolution Number �� - Sb , A Resolution of the City Council
of the City of Huntington Beach Approving that Certain
Document Entitled "Housing Rehabilitation Loan Program
Policies and Procedures - Effective June 19, 2000," Prepared by
the City's Department of Economic Development.
RESOLUTION NO. 2000-56
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH APPROVING THAT CERTAIN DOCUMENT ENTITLED "HOUSING
REHABILITATION LOAN PROGRAM POLICIES AND PROCEDURES —
EFFECTIVE JUNE 19, 2000," PREPARED BY THE CITY'S
DEPARTMENT OF ECONOMIC DEVELOPMENT
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development has prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000" (sometimes "Housing
Rehabilitation Loan Policies");
The intent of the Economic Development Department in preparing the Housing
Rehabilitation Loan Policies, was to create a single document that would serve as an
internal resource to Economic Development staff to enable them to understand important
program administrative matters and to maintain better administrative control over the
various loan and grant programs offered by the City;
The various loan programs described in the Housing Rehabilitation Loan Policies
better reflect evolving market conditions and the rehabilitation financing needs of
homeowners in the City of Huntington Beach; and
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Housing Rehabilitation Loan Program
Policies and Procedures—Effective June 19, 2000," is hereby adopted and approved.
2. Authorization is hereby given to City staff to administer the various loan
and grant programs described in the Housing Rehabilitation Loan Policies. Any type of
loan or grant,the amount of which exceeds the maximum amount for such loan or grant
as described in Chapter 2 of the Housing Rehabilitation Loan Policies, shall require
approval by the City Council.
3. These approved Housing Rehabilitation Loan Policies shall become
effective June 19, 2000; shall supercede any existing housing rehabilitation loan policies
utilized by City staff; and shall apply to all loans or grants approved or made by the City
on or after June 19, 2000.
1
dw/k/00reso/housing rehab/5/24/00
Res. No. 2000-56
PASSED AND ADOPTED by the City Council of the City of Huntington Beach
at a regular meeting thereof held on the 19 th day of June
2000.
ATTEST: 1(fCT T e m
dm� � v
City Clerk Oa APPROVED AS TO FORM:
REVIEWED AND APPROVED: City Attorney J�,J S ZS o0
M TED AND APPROVED:
City Admi strator A09
Director of Econom evelopment
2
dw/k/00reso/housing rehab/6/7/00
Res. No. 2000-56
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 a regular meeting thereof held on the 19th
day of June, 2000 by the following vote:
AYES: Julien, Sullivan, Harman, Green, Dettloff, Bauer
NOES: None
ABSENT: Garofalo
ABSTAIN: None
City Clerk and ex-officio derk of the
City Council of the City of
Huntington Beach, California
Resolution Number 2ZOO- 51, A Resolution of the City Council of
the City of Huntington Beach Authorizing the City Administrator
or the Director of Economic Development to Execute Loan
Documents On Behalf of the City Relating to the City's First Time
Home Buyer and Housing Rehabilitation Loan Programs.
RESOLUTION NO. 2 0 0 0-5 7
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF HUNTINGTON BEACH AUTHORIZING THE CITY ADMINISTRATOR
OR THE DIRECTOR OF ECONOMIC DEVELOPMENT
TO EXECUTE LOAN DOCUMENTS ON BEHALF OF THE CITY
RELATING TO THE CITY'S FIRST TIME HOME BUYER
AND HOUSING REHABILITATION LOAN PROGRAMS
WHEREAS, the City of Huntington Beach administrates a First Time Home Buyer Loan
Program and a Housing Rehabilitation Loan Program; and
During the implementation of these programs, it is often necessary for the City to execute
many loan related documents, such as loan subordinations, loan reconveyances, substitutions of
trustee, and other loan program related documents; and
The City Council desires to authorize the.City Administrator and the Director of
Economic Development to execute such loan related documents on behalf of the City,
NOW, THEREFORE,the City Council of the City of Huntington Beach does hereby
resolve as follows:
1. That the City Council hereby authorizes the City Administrator or the Director of
Economic Development to execute on behalf of the City such loan documents as are related to
the administration of the City's First Time Home Buyer Loan Program and Housing
Rehabilitation Loan Program, including but not limited to loan subordinations, loan
reconveyances, substitutions of trustee, and other loan program related documents.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
regular meeting thereof held on the 19 th day of June , 2000.
ayor ro Tem
ATTEST: APPROVED AS TO FORM:
City Clerk 6- City Attorney
REVIEWED AND APPROVED: INITIkTED AND APPROVED:
e24 -n .1P1141C �&d (-A- &
City AdiTinistrator Director of Econom Development
g:4:2000resol:city-loan signatures
rls 99-676
Res. No. 2000-57
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 a regular meeting thereof held on the 19th
day of June, 2000 by the following vote:
AYES: Julien, Sullivan, Harman, Green, Dettloff, Bauer
NOES: None
ABSENT: Garofalo
ABSTAIN: None
City Clerk and ex-officio rk of the
City Council of the City of
Huntington Beach, California
Resolution Number 301 , A Resolution of the
Redevelopment Agency of the City of Huntington Beach
("Agency") Approving that Certain Document Entitled "Housing
Rehabilitation Loan Program Policies and Procedures — Effective
June 19, 2000," Prepared by the City of Huntington Beach's
. Department of Economic Development.
RESOLUTION NO. 3 0 9
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
HUNTINGTON BEACH ("AGENCY")APPROVING THAT CERTAIN DOCUMENT
ENTITLED "HOUSING REHABILITATION LOAN PROGRAM POLICIES AND
PROCEDURES—EFFECTIVE JUNE 19, 2000," PREPARED BY THE CITY OF
HUNTINGTON BEACH'S
DEPARTMENT OF ECONOMIC DEVELOPMENT
WHEREAS, staff of the City of Huntington Beach's Department of Economic
Development has prepared that certain document entitled "Housing Rehabilitation Loan
Program Policies and Procedures—Effective June 19, 2000" (sometimes "Housing
Rehabilitation Loan Policies");
The intent of the Economic Development Department in preparing the Housing
Rehabilitation Loan Policies, was to create a single document that would serve as an
internal resource to Economic Development staff to enable them to understand important
program administrative matters and to maintain better administrative control over the
various loan and grant programs offered by the Agency;
The various loan programs described in the Housing Rehabilitation Loan Policies
better reflect evolving market conditions and the rehabilitation financing needs of
homeowners in the City of Huntington Beach; and
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
1. That certain document entitled "Housing Rehabilitation Loan Program
Policies and Procedures—Effective June 19, 2000," is hereby adopted and approved.
2. Authorization is hereby given to Agency staff to administer the various
loan and grant programs described in the Housing Rehabilitation Loan Policies. Any
type of loan or grant,the amount of which exceeds the maximum amount for such loan or
grant as described in Chapter 2 of the Housing Rehabilitation Loan Policies, shall require
approval by the Agency's governing board.
3. These approved Housing Rehabilitation Loan Policies shall become
effective June 19, 2000; shall supercede any existing housing rehabilitation loan policies
utilized by Agency staff; and shall apply to all loans or grants approved or made by the
Agency on or after June 19, 2000.
1
dw/k/00reso/housing rehab-agency/5/24/00
Res. No. 309
PASSED AND ADOPTED by the Redevelopment Agency of the City of
Huntington Beach at a regular meeting thereof held on the 19 th day of
June , 2000.
ATTEST:
dovw-,�
Agency Clerk -Vice Chairma
REVIEWED AND APPROVED: APPROVED AS TO FORM:
Executiv Director Agency Attorney
INITIATED AND APPROVED:
Di ector of Economic evelopment
2
dw/k/00reso/housing rehab-agency/5/24/00
Res. No. 309
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 a regular
meeting of said Redevelopment Agency held-on the 19th day of June,
2000 and that it was so adopted by the following vote:
AYES: Julien, Sullivan, Harman, Green, Dettloff, Bauer
NOES: None
ABSENT: Garofalo
ABSTAIN: None
Clerk of the Redevelopme Agency
of the City'of Huntington Beach, CA
Resolution Number 310 , A Resolution of the
Redevelopment Agency of the City of Huntington Beach
Authorizing the Executive Director or the Economic Development
Director to Execute Loan Documents On Behalf of the Agency
Relating to the Agency's First Time Home Buyer and Housing
Rehabilitation Loan Programs.
RESOLUTION NO. 310
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF HUNTINGTON
BEACH AUTHORIZING THE EXECUTIVE DIRECTOR OR THE ECONOMIC
DEVELOPMENT DIRECTOR TO EXECUTE LOAN DOCUMENTS ON BEHALF OF THE
AGENCY RELATING TO THE AGENCY'S FIRST TIME HOME BUYER AND HOUSING
REHABILITATION LOAN PROGRAMS
WHEREAS, the Redevelopment Agency of the City of Huntington Beach administrates a
First Time Home Buyer Loan Program and a Housing Rehabilitation Loan Program; and
During the implementation of these programs, it is often necessary for the Agency to
execute many loan related documents, such as loan subordinations, loan reconveyances,
substitutions of trustee, and other loan program related documents; and
The Agency desires to authorize the Executive Director City Administrator and the
Economic Development Director to execute such loan related documents on behalf of the
Agency,
NOW, THEREFORE,the Redevelopment Agency of the City of Huntington Beach does
hereby resolve as follows:
I. That the Agency hereby authorizes the Executive Director or the Economic
Development Director to execute on behalf of the Agency such loan documents as are related to
the administration of the Agency's First Time Home Buyer Loan Program and Housing
Rehabilitation Loan Program, including but not limited to loan subordinations, loan
reconveyances, substitutions of trustee, and other loan program related documents.
PASSED AND ADOPTED by the Redevelopment Agency of the City of Huntington
Beach at a regular meeting thereof held on the 19 th day June , 2000.
Vice Chairman
ATTEST: APPROVED AS TO FORM:
Agency Clerk Agency General Counsel 1 y 3 °
REVIEWED AND APPROVED: INIT TED AND APPROVED:
Execut' e Director Director of Economic bevelopment
g:4:2000resol:agency loan signatures
rls 99-676
Res. No. 310
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 a regular
meeting of said Redevelopment Agency held on the 19th day of June,
2000 and that it was so adopted by the following vote:
AYES: Julien, Sullivan, Harman, Green, Dettloff, Bauer
NOES: None
ABSENT: Garofalo
ABSTAIN: None.
Clerk of the Redevelopmen Agency
of the City of Huntington Beach, CA-
RCA ROUTING SHEET
INITIATING DEPARTMENT: Economic Development
SUBJECT: -pprova o -- --busing- 611-abilitation Loan Progr m Policies'&
Proceduresf
COUNCIL MEETING DATE: June 19, 2000
HMENTS
Ordinance (w/exhibits & legislative draft if applicable) Not Applicable
Resolution (w/exhibits & legislative draft if applicable) Attached
Tract Map, Location Map and/or other Exhibits Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorney) Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney) Not Applicable
Certificates of Insurance (Approved by the City Attorney) Not Applicable
Financial Impact Statement (Unbudget, over $5,000) Not Applicable
Bonds (If applicable) Not Applicable
Staff Report (if applicable) Not Applicable
Commission, Board or Committee Report (If applicable) Not Applicable
Findings/Conditions for Approval and/or Denial Not Applicable
EXPILANi31SSING X7��qlIMENTS'M N F91R�
;REVIE' - RNE ORWARDED
RETU
-AdministraFiv--e--SM1-N0)
Assistant City Admirks-trator (In,itial)
City Administrator (Initial) T
City Clerk
EXPLANATION-11FOR-RET' F-1 EM.:-,K,�r:'�""'
(Below Space For City Clerk's Use Only)
RCA Author: Holtz 5901
CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON BEACH Connie Brockway, City Clerk
Office of the City Clerk
Liz Ehring, Deputy City Clerk II
To:
Date: Meeting Date: _ Agenda item:.—
Proposed City Council Agenda Items: The City Clerk's Office/City Administrator's Office must return your
agenda item due to the following requirements that have not been met. When yaur Agenda Item is ready to
resubmit, please return to: Elaine Kuhnke, Management Assistant, Administration
1. Signature(s)Needed
A On RCA
B On Agreement
C Other
ri 4
2. Attachments
A Missing (�
B Not identified
C Other
3. Exhibits
A Missing
B Not identified
C Other
4. Insurance Certificate(Proyf Of Insurance)
A Not attached
B Not approved by City orney's Office
C Signed form notifying Ity Clerk that department will be responsible for obtaining insurance certificate on this item.(See form attached)
5. Wording On Vquest For Council Action(RCA)Unclear
A Recomme
pd9d Action on A not complete �,,y�,
B Clarificafio needed o C a , � ,� "70a4
C Other Idop
r
�
6. Ci Attorney Appr vat Required
7. Agreement Needs To Be Changed
A Page No.
8. Other /
G:agenda/m isdreaform
[I.j & CITY OF H`JNTING'ION BEACH
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON BEACH Connie Brockway, City Clerk
Office of the City Clerk
Liz Ehring, Deputy City Clerk II
To:
Date:_ (per� Meeting Date: !fD Agenda Item:_ /®
Proposed City Council Agenda Items: The City Clerk's Office/City Administrator's Office must return your
agenda item due to the following requirements that have not been met. When your Agenda Item is ready to
resubmit, please return to: Elaine Kuhnke, Management Assistant, Administration
1. Signature(s)Needed
A On RCA
B On Agreement
C Other
2. Attachments
A Missing
B Not identified YJ
C Other
3. Exhibits
A Missing AV Z
B Not identified
C Other
4. Insurance Certificate(Proof Of Insurance)
A Not attached
B Not approved by City Attorney's Office
C Signed form notifying City Clerk that department wil a responsible for obtaining insurance certificate on this item.(See form attached)
5. Wording On Request For Council Action CA)Unclear
A Recommended Action on RCA not compete
B Clarification needed on RCA
C Other
6. City Attorney Approval Re ired
7. Agreement Needs To J9 Changed
A Page No.
8. Other �Q� , C096
� Ear
G:agenda/m isdreaform
Loan Approval Form
CITY OF HUNTINGTON BEACH
HOUSING REHABILITATION LOAN PROGRAM
LOAN APPROVAL
t
Applicant Name Address Telephone
i
)
Loan Type Amount Interest Rate
Homeownershio Equity Annual Household Income
Debt to Income Ratio Household Size
Credit Histoy Income Level
Lvm or fdoderate Very Lmv
Property Ownership Verification Female Head of Household
No D Yes
Enhancement Area RacetEthnicaty(circle one)
No Yes White Black Hispanic Asian American Indian/Afaskac Other
Redevelopment Pro)ectArea Previous City Rehabilitation Loan or Grant
(It yes,provide details)
By signing be:ow,I cenily that the inform@ contained in this Loan Appraval form has been compiled and verified by Comprehensive Housing Services,41c.
Submitted By(for CHS)
Date
.• • •
First Approval
FAoproved Denied
Economic Development Staff Member
Date
Second Approvat
❑Approved ❑Denied
Housing and Redevelopment Manager
Date
Note Copy of approval goes to CDBG coo•dinator,orgical goes to loan file
48 Exhibit 13