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HomeMy WebLinkAboutMINUTES - 07201999 - C186 Contra TO: BOARD OF SUPERVISORS Costa FROM: CARLOS BALTODANO, DIRECTOR County BUILDING INSPECTION DEPARTMENT DATE: JUNE 17, '1999 SUBJECT: LOAN PARTICIPATION AGREEMENT BETWEEN THE COUNTY AND WASHINGTON MUTUAL BANK FOR THE HOUSING REHABILITATION LOAN PROGRAM SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECQMLE-NDATIQN Approve Loan Participation Agreement between the County and Washington Mutual Bank, a Federal Savings Bank, and au4-'-'--Lorize the C'-air to execute said Agreement for housing rehabilitation financial services . BACXGR Contra Costa County has implemented a housing rehabilitation program and seeks the financial participation and servicing capabilities of Washington Mutual- Bank. Contra Costa County has previously executed loan participation agreements with Washington Mutual Bank for said participation and services . FISCAL IMPACT This agreement involves no general fund monies . CONTINUED ON ATTACHMENT YES SIGNATURE RECOMMEMIDATION OF COUNTY ADMINISTRATOR RECOMMENDATION Olt BOARD COM14ITTEE APPROVE OTHER SIGNATURE(S) - morn". ACTION OF BOARD ON 771:77, VJV2� APPROVED AS RECOMMENDED = OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS {ABSENT -i-�'� ) AND CORRECT COPY OF AN ACTION TAKEN AYES : NOES: AND ENTERED ON THE MINUTES OF THE ABSENT: ABSTAIN: BOARD OF SUPERVISORS ON THE DATE SHOWN. ATTESTED cc : Building inspection Department PHIL BATCHELOR, CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR BY DEPUTY LOANPARTICTP.Ci T-.i3ON AGREEMENT . THIS AGREEMENT between Washington Mutual Bank, ( IWMII) and th-e County of Contra Costa ( ''County" ) is entered into with respect to the following facts : RECITALS A. County has adopted a Community Development Housing Rehabilitation Program as a component of its Neighborhood Preservation Program, to implement residential rehabilitation through financial assistance as authorized by Sect-ion 105, Title I of the ®lousing and Community Development Act of 1974 , as amended, as is more specifically set forth in Exhibit A attached hereto and incorporated herein by this reference ("the program") . The program sets forth in Table form certain income limits by household size for rehabilitation financial assistance. These income -requirements are adjusted from time to time, and County proposes to amend its income requirements to reflect these changes . The parties agree that County may h-erea-fter change its income requirements as set forth - r. exh-Lb--- -- A to reflect such changes by HJD and make such other minor changes in the program as are necessary to conform to current =D and County requirements without the necessity of formal amendment to this Agreement . B. County proposes to implement the program by making -i o sousing re'-h-abil- itati n -loans, both at bellow-market interest and !?zero" Lnterest . C. WM is prepared to assist County in achieving the objectives of the program by participating with County in the proposed loan program. GW and 'Cou.nty have entered into previous loan participation agreements . The previous agreements govern loans made by County with funds made available through the program implemented pursuant to those agreements . To that end, the parties agree as follows : It Rarticipation WM agrees to assist County in implementing the program by entering ng into a loan participation program under the following terms and conditions : a. WM will initially originate loans which qualify under the program to eligible applicants as certified by County who are in the opinion of WM acceptable credit risks for the proposed loans . b. County will agree in advance, at the time each loan package is submitted as outlined below, to purchase from WM upon recording, without recourse, a participation interest in the proposed loan, the percentage of which (to the total loan) being determined by a formula taking into account the fact that County will receive no interest on its funds advanced to purchase the participating interest and that WM will receive a yield of the interest rate for the current market, which for this Agreement L� shall be the agreed upon yield for current fiscal year on its net funds advanced on each 'Loan funded from July 1, 1-997 through June 30, 2000 . The formula for calculating the respective participation interest is designed to result in an interest cost to each borrower as predetermined by County. Without limitation on the generality of the --Foregoing, the following are examples illustrating this formula using the current yield: 4 County predetermines to require an interest cost of 5% to the proposed borrower for a loan of $8 , 000 . 00 for a term of 15 years . County would purchase a 43 .26% participation ($3 , 460 . 80) on which there would be no interest return. WMIs yield of 8 . 75% on its retained participation ($4 , 539 .20) would result in the desired interest cost to the borrower of 5% on the entire loan. ii . County predetermines to require an interest rate of 3% to the pro-posed borrower for a loan of $3 , 000 . 00 for a term of seven years . County would purchase a 65 . 62% participation ($1, 968 . 60) on which there would he no interest -return. WMIs yield of 8 , 75% on its retained participation ($1, 031 .40) would result in the desired interest cost to the borrower of 3% on the entire ,: oan. The various percentages of participation by WM and County for loans with ` interest rates varying from 3% to 8 . 75% and from 5 ;_ years to 15 years in term are set forth in the charts attached hereto as Exhibit B and incorporated herein by this reference. The parties further agree that the required yield to WM may hereafter be changed by mutual agreement of both County and WM as evidenced by an executed amendment to this contract to be amended on an annual basis to reflect current market interest rates . C . With respect to "zero"' interest and "deferred payment" loans to qualified borrowers under the program, as well as those which County elects to make althouan the borrower or the loan has been resected by WM ( "forced loans" ) , WM will not retain any ,;oart - c-patIon interest, County agreeing to purchase the whole loan in each case . As to these three categories of loans ( "Note Collection Loans" ) , WM agrees to originate these loans in the same manner as those eligible for participation, if so requested by County, i .e . , complete necessary documentation of such 'Loans . 2 } WM wil.l not have any responsibility for delinquent servicing of such loans, but will carry then as collection accounts and report any activities on each loan to County as it occurs. The fees for all loan origination, servicing and reporting are set forth in Paragraph 7 of the agreement. dm County agrees that WM shall have no responsibility for or participation in emergency grants under the program. 2e l ective_ Li.abilities It is understood and agreed by the parties that Will's participating interest shall be and remain prior and superior to County's participation interest to the end that in the event of any ultimate net loss arising out of any loan, such loss shall first be borne by County up to the full extent of its participation interest in the loan in question. It is also understood and agreed that the total liability of County with respect to any loan originated under this Agreement is the amount of its participation interest and County shall not have any liability to reimburse 1671M for any Loss it may sustain with respect to Wt's participation interest after exhaustion of County's shares 30 Loan Limitations Irrespective of any other limitations or provisions of this agreement, no loan in which WM will have or retain a parti.ci,pation, interest shall exceed. 90 of the fair market value of the property securing such loan when added to all other liens on said property prior to the lien of such loan, .nor shall any such loan initially be less than $1, 500o00a The intent of this paragraph is to limit all secured obligations against the security property having priority over the loan, plus the amount of the .loan itself, to 90% of the fair market value of the property after reflecting the increase in value resulting from the contemplated improvements, (presumptively equal to the amount of the improvement loan contemplated, in the absence of contrary evidence) 4. Selection-of -Applicants County agrees to assume sole responsibility for the selection of applicants eligible to participate in the program and to insure that both applicants and the properties involved meet all of the criteria of the program. 5. Processing-of Loan Air ligations a. County agrees to initiate the processing of individual loans by submitting to WM a Loan Application Package ("Package") . The package shall include at least the following: 3 i A 'Letter certifying that the potential borrower is eligible and the property qualifies under the program, and set-ting forth the amount of the 'Loan being sought and the desired interest --ate to be paid by the borrower. L ii . A description of the home improvement work to be done and an estimate of t.,,.e total cost of the work to be performed, conditioned upon granting the 'Loan. iii . A loan application completed on a loan application form prescribed by WM, which shall include the appropriate fair lending information. iv. The fair market value of the property as it is reflected on the most recent assessment role in the records of the County Assessor, or, should County choose to commission an independent appraisal (w'----ich shall be at County' s sole expense) , in said appraisal report . At its sole option, WM may accept this as the fair market value for the purpose of underwriting the proposed loan and determin-ing whether the loan is within the loan limitations set forth above . If it so elects, WM may require a separate appraisal by one of its own qualified appraisers and S-,-. s+-_, �U�I-e the llat-terws evaluation as the 'air market value of the b _I.t tl I fair property for the purposes of this agreement . If such appraisal is made, County agrees WM will be reimbursed $100 . 00 by way of an, appraisal fee . This separate appraisal shall not in any event be obtained until after the credit evaluation provided for in subparagraph b. has been completed. b . Upon receipt of the Package, WIM will investigate the applicant ' s credit and within seven days of receipt advise County that the applicant does not qualify for the loan being sought or will issue a conditional approval letter, approving the applicant subject to receipt of additional documentation as set forth in the conditional approval letter, including, if required a -preliminary title renort or other title search document satisfactory to WM and issued by a -title company licensed to do business in California, an appraisal-, a firm contractor' s bid and work breakdown, and income and mortgage verification ( "the additional loan information!,) . If such be the case, WM will also advise County if the applicant is considered to be qualified for an equivalent loan on WMis conventional terms and conditions for such loans . If the applicant is deemed unqualified for the loan being sought, WM will furnish County with a detailed basis for the rejection, which shall be ken- t confidential . At the option of County, even though found unqualified by WM, County may elect to make the applicant a loan upon terms and conditions County specifies, but shall advance 11-00% of all funds necessary to make the loan. C . Upon receipt of the additional loan information WM agrees to ascertain the extent and amount of liens prior and su,O=_� 4 -, or to that of the proposed loan in order to ascertain whether 4 the proposed loan is within the prescribed loan limitations. wMi s evaluation of such prior liens will be final d. Within ten days after receipt of a written request by County and final approval of the loam application, WM will prepare all necessary loan documents in final form for execution by the applicant. These shall consist of at least the following, and in addition, such other documents to be executed on WM discretion deems necessary, all documents to be executed on WM approved forms (the Promissory Note shall not contain any provisions requiring payment of a fee or other charge in the event all or a portion of the loan is prepaid prig to maturity. ) i., Promissory Note. ii.. Deed of gust iia. "Truth-in-Lending" disclosure statement iv. Notice of Right of Rescission. Upon completion of the loan documents, %M shall forward such documents, with appropriate instructions, to County for the obtaining of execution by the applicant and the recording of the Deed of Trust by County. As of the day of recording the Deed of Trust, County will obtain title insurance policy or other title document satisfactory to YAM which constitutes a date-down of the state of record title of the property securing the loan. In the event that there has been a change in the state of title from that reflected on the previous report, WM may reject the loan or otherwise alter its terms and conditions unless the applicant can remove any such changes from the record. Upon execution and. recordation, County shall return the completed loan documents to WM. 6. Servicing_ cif loans a. Upon receipt of the completed loan documentation, LSM shall, establish a construction loam account applicable to the particular loan. Whereafter, disbursement from such loan account shall be made by WM as follows: Checks representing an amount not to exceed 80% of the total loan as determined by County, shall be made payable to the Contractor, as directed. by County, and mailed to County for delivery to the Contractor. It shall, be County's sole responsibility to determine that the work of improvement has in fact been completed., that a Notice of Completion has been filed and that the completed work complies .in all respects with County's requirements applicable to such work. County shall certify to WM that these conditions have been met at the time the final disbursement to the contractor is authorized. County shall authorize final= disbursement of all remaining funds, by a check made payable to the contractor, as County directs, and mailed. to County for delivery to the Contractor, 35 days after the Notice of Completion is recorded, unless County determines that one or more mechanic's lien claims have been filed against the borrower's 5 property arising out of the work of improvement. It shall be County's sole responsibility to determine the existence or absence of such lien claims and to take such action as it deems necessary to extinguish any existing lien claims before authorizing final payment. b. Tinder this agreement, the existing Washington Mutual Concord branch account which was established through prior agreements will be used to draw upon, in order to expedite payment to contractors. All of County responsibilities as set forth in subparagraph "all must be met. C. Upon completion of the work of improvement and disbursement of all construction loan funds WM shall thereafter service each participation loan in accordance with its regular loan servicing procedures and industry standards. These will specifically include the following: i. WM shall distribute to County monthly its proportionate share of all principal repayments received. ii. In the event of delinquency with respect to any loan, in addition to its normal loan collection procedures, WM agrees to give County 30 days' written notice prior to recording a Notice of Default, and shall also report as delinquent on the next monthly report after it occurs, any loan which becomes 30 days delinquent. d. In the event of the commencement of foreclosure proceedings through recording of a Notice of Default, the following shall apply: i. At any time up to two (2) working days prior to foreclosure sale date, WM agrees to reinstate the delinquent loan upon tender by the borrower of all accrued delinquent payments of principal and interest, late charges and foreclosure costs and fees (hereafter collectively "delinquencies") . ii. At any time up to two (2) working days prior to sale, WM agrees to reinstate the delinquent loan upon tender by County of all delinquencies. In the event of such payment by County, collection of any such sums advanced shall be County's responsibility. iii. At any time up to two (2) working days prior to foreclosure sale, if County elects to forestall such proceedings, W14 shall sell its participation interest to County upon payment by County to WM of the then outstanding amount of WM participation interest plus its share of all existing delinquencies. iv. In the event of foreclosure sale, if the property is sold to an outside bidder at or above the full loan 6 balance including all delinquencies, the respective participation interests of County and WM shall each be paid off in fulld if the property is bid on by WM at or less than the full, loan balance including all delinquencies, tai shall thereafter hold the property in its own name as "real estate owned, " treating it in the same Manner as its own "real estate owned", and shall forthwith dispose of the property by resale as is applied to its own areal estate owned" . The proceeds of such resale shall be distributed in the following order of priority.* first, to WM to reimburse it for holding costs and selling expenses with respect to the property; second, to %'M to reimburse it in full for its participation interest loss as a result of foreclosure; third, to Contra Costa County to reimburse it in full for its participation interest loss as a result of foreclosure; fourth, any surplus thereafter remaining to be divided by WM and County in proportion to their respective former participation interests in the loan. e. Upon completion of the work of improvement and disbursement of all construction loan funds, with regards to "note collection" accounts, County agrees to the following: i. The accounts will be set up with f$s collection department, which is a bill and receipt service for its customers i.i. WM will not have any responsibility with regards to delinquency servicing. a iii_. UM agrees to be available for consultation as to handling of delinquent accounts iv. WM agrees to service forcelosures, as a participation loan, for a fee to be mutually determined by WM and County. 7. Fees a. In return for the services rendered by WM in respect to Loans made under this agreement in which WM has retained a participation interest, County shall pay or cause to be paid a loan application acceptance and processing fee of $50., 00 per loan application. In the event the loan is for any reason not consummated, WIM shall be entitled to this fee in any event.. In the event the loan is consummated and. WM retains a participation interest, no further processing fee shall be charged. The $50.00 fee here provided for shall be paid. by County concurrently with the return to WM of signed loan documents. No fees will be paid from the l.umpsum account b. Delinquent accounts is With respect to loan accounts established pursuant to previous agreements between county and WM, fees for 7 delinquent accounts shall be the amounts set forth in the agreements pursuant to which the loans were made. ii. With respect to loans made under this agreement, County or WM may require the borrower to pay a fee not to exceed 5% of the delinquent months payment. C. With respect to "forced loans" in which WM has no participation interest and is thus receiving no yield on funds advanced, County agrees to set up "note collection" accounts and pay the following fees: i. A loan acceptance and processing fee of $50.00 for reviewing each package as submitted and processing the loan up to its consummation, this fee to be paid by County concurrently with the return to WM of signed loan documents. ii. A loan service fee, payable monthly by County, of $4 .00 per payment received for each such loan being serviced. d. With respect to "zero interest deferred payment loans" , County agrees to set up "note collection" accounts and pay the following' fees: i® A loan acceptance and processing fee of $50.00 for reviewing each package, as submitted, and processing the loan up to its consummation, this fee to be paid by County concurrently with the return to WM of signed loan documents. ii. A loan service fee of $4.00 per month for each month there is a payment on the loan in question. e. In connection with the payoff of any loan, regardless of character, WM shall , be responsible for the reconveyance and recording of the reconveyance. A reconveyance fee of $74.00 or the fee schedule in effect at the time of payoff shall be paid by County, which includes a recording fee of $5.00. if recording fees are increased by Recorders Office, the recording fee shall be increased without amending this agreement. When a demand on any loans in connection with a payoff from an outside lender, WM shall be paid a fee of $60.00 for preparing the demand (Statement of Condition) . 8. Insurance It shall be WM's responsibility to notify any holders of prior liens of the existence of each loan generated under this agreement, to record the appropriate request for Notice of Default, and after ascertaining from the holder of any first deed of trust, (or the borrower, if none) , the name and address of the agent or broker responsible for obtaining any existing fire insurance, to obtain a loss payable endorsement to such policy naming WM (or 8 y. County in the case of Note Collection Accounts) as additional insured under each policy. 9. Termination and Amendment This agreement may be terminated by either County or WM by providing 60 days' written notice of termination to the other party. This agreement may be amended any time by written agreement of the parties. Any termination or amendment of this agreement shall not affect its operation as to loans and subsidy obligations outstanding at the time of said termination or amendment 10. Miscellaneous All written notices required by this agreement shall be deemed given when deposited by party responsible for giving notice, postage prepaid, in the United States Dail addressed, as follows: If to County: Contra Costa County Neighborhood Preservation Program 651 Pine Street, 4th Floor Martinez, CA 94553 If to Washington Mutual Bank, FA Attn: Special Loans Department 9451. Corbin Avenue Northridge, CA 91.328 Per federal regulation 570. 51.3 (b) (7) , Contra, Costa County reserves ,the right to withdraw any unobligated deposited funds if required by HUD in the exercise of corrective or remedial actions under 570.910(b) , 570.911, 570,31.2, or 570.913 11. Prior Agreements County and WM have executed ten prior agreements. The first was executed on July 23, 1977 and amended on March 21, 1978. The second agreement was executed on November 6, 1985 for a. term of two years. The third agreement was executed on July 15, 1986 for a term of two years. In certain respects, the second agreement expressly superseded provisions of the first. Except as expressly superseded by the second agreement, the first agreement is in full force and effect as to loans made pursuant to it. The third agreement expressly superseded provisions of the second. Except as expressly superseded by the third agreement, the second agreement is in full force and ef'f'ect as to loans made pursuant to it. The third agreement is hereby terminated, except that it remains in full force and effect as to loans made pursuant to it and prior to it. The fourth agreement was executed on January 27, 1988, for a term of 1 year. In certain respects, the fourth agreement expressly superseded provisions of the third. Except as expressly superseded by the fourth agreement, the third agreement is in full 9 force and effect as to loans made pursuant to it. The fourth agreement is hereby terminated, except that it remains in full force and effect as to loans made pursuant to it and prior to it The fifth was executed. on October 21., 1988 for a tern of one year and amended on June 6, 1989. The sixth was executed on September 26, 1989 for a term of 1 year. The seventh was executed can May 16, 1990 for a term of 1 year. The eighth was executed. on Maar 6, 1992 for the term 1991/92 . The ninth was executed. August 21, 1992 for the term 1992/93. `;C`he tenth was executed. April 25, 1994 for the period of three (3) years for the terms 1993/94, 1.994/95 and. 1.995/96 and amended on June 15, 1995. This present agreement does not supersede either of the ten prior agreements. IN WITNESS WHEREOF, the parties have executed this agreement as of the day of WASHINGTON MUTUAL BANK, PA By: ice President - By: 'Senior vice President 10 COUNTY 0-1�-' ONTRA,., tA. of Supervisors ATTESTED Phil Batchelor, Clerk of the Board of Supervisors and County Administrator Deputy APPROVED AS TO FORM Victor J. Westman, County Counsel By: kA A - il,lian -FiYjii, D, uty RECOMMENDED BY DEPARTMENT Ey; Carlos Baltm ano Director of Building Inspection Bqga d a K�n Dennis Ma Barry, AI-CP Interim Director Qommunity Development C ONW COSTA COUNTY Community Development Neighborhood Preservation Program Housing Rehabilitation Program Policies (Adopted by the Board of Supervisors can July 17, 1984) i. INTRCrDUC71ON The fol€owing sets forth policies for residential rehabilitation financial assistance In the forts of low- Interest loans, and zero-interest loans, as authorized by Section 105, We I of the Housing and C.ommunity Development Act of 1974 as amended. The program Is available throughout the Urban County, (with the exception of the following es. Plttsbu�g, San Pablo, Richmond, Concord, Walnut Creeds and Antioch), however, several Mousing Rehabilitation Target ureas have been established In the County for purposes of Implementing a marketing pian for this programa and its components. Agreements with financial institutions are In effect to Implement and service the loan components of this program. IL €BJECT€"VES I'r'rna.r Uective The primary objective of the Neighborfrood Preservation Programa, and In particular the housing rehabilitation components,is to assist In the development of viable communities by providing decent housing and a suitable Irving environment In the community mmuniity m principally for per persons of low and moderate Income-consistent with provisions of Federal assistano provided In the Housing and Community DevelopmeAt Acts of 1974 as amended. c Iectives 1. The elimination of slums, blight, and the prevention of blighting Influences causing the deterioration of property and neighborhoods. z The elimination of conditions which are detrimental to health,safety and public welfare, by re on, demolition, or removal. . The stabIlLzation and enhancement of older neighborhoods in carder to encourage future Investment from the private sector,and ether public Bands and programs.. 4< The development of economically Integrated communities, parts ally as It relates to the e4ayment of the beneft of the revttalLzation process by low and moderate Income residents. 5. The r of residential structures of ow ners part€elpating In the voluntary Housing Code Enforcement Programa for tweed of rehabilitation. In order to attain these objectives,a voluntary code enforcement program has been combined with a financial assistance program consisting of two components: f) lour interest loans, and 2) zero- Interest Ions. The criteria for each programa are geared to the households Income and ability to service an additional monthly housing payment, The intent Is to'rbAch the m urn number of households while ensuring a maximum return of the money for the purpose of making future assistance available to other households. The guidelines for each program component are outlined below. HOUSING REHABILITATION LOAN ELEMENT ntroductLon The Loam Bemard of this Programa is designed to provide financial assistance for the housing stock of households with less than the County median incorrme� who can afford a moderate increase in monthly housing payments hitt cannot he served by prate financial Institutions under existing programs. R. ftiglbllit�irenaents This section sets forth the eligibility criteria and requirements for receiving a rehabilitation Loan. These criteria assess both the structure and the applicant from the standpoint of need and eligibility. I. enerall Requirements Owner-000upled single family structures and duptexee will be eligible for rehabilitation loan assistance, if the property(1) Is In meed of repair to eliminate hazardous conditions and jor other code violations and (2) is owned by a household which has a,qualtfying income as defined in the following sections and which has been in permanent legal possession of the property owner for at least sic months prior to applying for financial assistance. Elicible Costs Mork and items of repair eligible under the programa are to be completed as available fonds allow, in the following order of priority. a. To take repairs and improvements necessary to the structure to correct health and safetyhazards; b. To nuke other necessary repalm and Improvements,including exterior painting and physical modifications designed to Improve the mobility of handicapped or elderly persons, in order to conform to code standards applicable to existing residential structure to erasure sde,decent,and sanitary horsing;to enhance the appearance of the structure and of the neighborhood exterior palating will be Included as an Item of repair unless determined unnecessaiy CL To correct any plena:deficiencies whiff would mice it Impossible for a structure to be brought to and readily maintained at code standards,, " d. To replace bullt4n €ooldng appliances when required for safety reasons; e. To provide for or enlarge a room or finish an attic or basement in order to alleviate a condition of overcrowding,as specified in Chapter 5 of the Uniform blousing Code; 'See Apperift A for current table of income by household size which meet these criteria. For the financial purposes of this program, duplex is defined as one structure with two living units or two single family structures on one parcel. 2 f. To remove unrepalrable secondary buildings, structures, and other btighting Influences located on the property;which may Include the repair or replacements of dilapidated fencing; 9. To make other general property repairs If funds are available and when the amount spent does not exceed 40%of the loan amount lalbift of the„ lit In addition to being the owner of a single family unit or the owner pant of a duplex, In need of the above repairs, to qualify for a rehabilitatlon loan the applicant must: a. Be a household with an adjusted gross Income' less than the median Income for the County as established by HUD for the Oakland Primary Standard Metropolitan Statistical Area (PMSA, Exhibit C);and b. Have assets which,for elderly households,(age 62 or over)do not exceed$20,000, and for mors-elderly households,have assets which do not exceed$10,0W. Assets would Include bank accounts, stocks,bonds,Investments,and real estate holdings but not Including the principal residence. c. Be designated as not eligible for a conventional home improvements loan; and d. Have a credit record evidencing Willingness and ability to meet and service the debt Incurred; and e. In the case of the second unit In a:-duplex which Is a rental property,conform with Federal non-discriadnation regulations and agree that. upon recelpt of aloan from the County-1)rents mid other charges sh-all not be Increased beyond the total cost of the loan,actual Increases In taxes,and the percentage Increase In the Bay Area cost of living Index Issued by the U.S.Department of Commerce,or 2)the units to be rehabilitated will be rented to tow and moderate Income families utilizing the Federal Section 6 Existing Unit Rental Subsidy Program. C. Priorities for Award of Loans Applications will evaluated and processed as received,based on the eligibility criteria and requirements stated In Section b of these guldellne& The evaluation will consist of an Initial �detenWnatlon of the eligibility of the applicant followed by a determination of the needed repairs of the structure. Financial assis-tanoe will be awarded to appticants In the order In which their application materials are compiled for ellgIblitty determination "Income will be based on the applicants Income for the 12 months prior to Its application for financial assistance and reflect Increases or decreases anticipated during the next 12 months. Adjusted gross Income Is defined as a household's annual gross Income less: 1) Uncompensated or uncovered medical expenses which exceed 3% of gross Income. 3 # . f ars AmoL!nts, Term arm ecur't�a For purposes of this ran-4 Rehabilitation Loans are defined as loans-requiting monthly Payments of both principal and interest based on the amount of money borrowed. No prepayment penalties will be charged. 1. Loam e$moUnts a. The maximum amount for a Rehabilitation Loan shall not ex $20,000 for a single4amily dwelling with an additional$3,000 allowed for the second unit in a duplex b• The loan maximum specified In(a) alcove my be exceeded subject to the following limMtions: 1) General property improvements as allowed under Section III B (2) (g) cannot exceed 40% of the loan maximum specified in Section ill D (1) (a). 2-)The maximum amount by which the maximum loan amount specified in Section IV D (1) (a) above may be exceeded is the lessor of: a) ,000; or b) an amount derived by subtracting$12,000 (60%of the maximum loan amount specified In Section III D(1) (a)above from the costs of completing required code Improvements(as speolfied In Semon Iii B(2) (A-Q afire), For;purposes of the alae calculation not allocable directly to Improvernents(profit overhead,etc.) shall be Included on a pro-ratio his In a ratio reflecting the code general property Improvement ratio. C) The Rehabilitation Loan plus existing Indebtedness against the property shall not ex W%of the appraised after4mprovement Mtge of the property at the time the loan Is approved, interest Fate The Interest rate will be mow the existing market rate,varying from 3 toJD percent,based on the household's ability to pay as defined In D.3 below. Liman` rr seed ;r"tv t rlrerraerats The terra of the Rehabilitation inn shall not exceed 15 years tailored together with the Interest rate to the borrowers needs with the goal being that total debt Including the loan commitment does not ex %of the Household's Income. The Intent is to urge the highest interest rate while adjusting the tears of the loan:in order to maximize the amount of work to be completed within the Households ability to pay. The Rehabilitation bra Is, due and payable upon sale or transfer of the property and must be secured by a Deed of Trust„ which secures the Promissory Neste. 4 €OUSINGI REHABIUTATION ZERO-INTEREST LOAN ELEMENT A. LntrQdMpta The zero-Interest loan element of this Program Is designed to provide financial assistance for the housing stock of households with very tzar incomd'who otherwise cannot afford any Increased monthly housing costs. B. iigaft BpqUlWm nts This section sets forth the eligibility criteria and requirements for receiving zero-Interest loan. These criteria assess both the structure and the applicant from the standpoint of tweed and elfglbltrty. +f ji �} �( 9 4> l3enerall 3�e..�..t�..rrtr.r entcY Owner-occupied single family structures and duplexes will be eligible for rehabilitation financial assistance, If the property: t) is in need of repair to eliminate hazardous conditions and/or other code violations,and 2)is owned by a household which has a qualifying Income as defined in the following sections and which has been In permanent legal possession of the property for at least six months prior to applying for financial assistance. 2 Elite Costs Work and items of repair eligible under this program are to be completed as available funds allow, In the following order of priority.- a. a., T'o make repairs and Improvements necessary to the structure to correct health and safetyhazards; b. To make other necessary repairs and Improvements, Including exterior painting and modifications design to Improve the mobility of handicapped or elderly personas, In order to confirm to code standards Applicable to existing residential structures to ensure safe,downt,and sanitary housing; to enhAnce the appearance of the structure and of the ndghborhood exterior painting will be Included as an Item of repair artless determined unnecessary, _ ca To correct any Incipient deficiencies which would make it Impossible for a structure to be brought to readily, and maintained at code arils; d. To replace built-In cooking appliances when required for safety reasons, e. To provide for or enlarge a roomy or finish an attic or basement In order to alleviate a condition of overcrowding as specified In Chapter 4 of the Uniform mousing Code. f. To remove unrepalrable second buildings, structures, and other blighting Influences located on the property,which may Include repair or replacement of di€apidat6d fencing; g• To make other general repairs If funds are available and when the amount spent cines not exceed 40% of the loan amount, 'See Appendix A for current table of Income by household size which meets these criteria. s For the financial purpose=s of this programs, duplex is defined as one structure with two living units or two single family structures on one parcel. 5 Elicibilltv of the Applicant In addition to being the owner-occcupant of a single family unit or duplex In need for the above repairs, to quality for a zero4nterest loan the applicant must: & Meet the definition of a very low Income household with an adjusted gross IncomO of 50% or less of the median Income for the County, and have assets which, for elderly households, (age 62 or oved do not exceed $20.000, and for roan-elderly households,have assets which do not exceed$10,000. Assets would Include bank' accounts,stocks bonds,Investments,and real estate holdings but not Including the principal residence; and b. Have not have been the recipient of a prior zero4nteree, loan for the property in question within the past five years-, and 0 C. In the case of the second unit In a duplex which Is a rental property, conform with Federal non-discrimination regulations and agree that, upon receipt of a Loan or Grant from the County- 1) rents and other charges shall not be Increased beyond actual Increases in taxes,and the percentage increase in the Bay Area cost of living index Issued by the U.S. Department of Commerce; or 2) the units to be rehabilitated will be rented to low and moderate Income families utilizing the Federal Section 8 Existing Unit Rental Subsidy Program. C. Priorities for Award of Zero-Interest Loans Applications will be evaluated and processed as received, based on the eligibility requirements stated in Section 8 of these guidelines. The evaluation will consist of an initial determination of the eligibility of the applicant followed by a determination of the needed repairs of the structure. Financial assistance will be awarded to appRoants In the order In which their application materials are completed for eligibility determination. The determination of whether a zero4nterest loan will be awarded shall be based on the following criterla. I The County will consider providing zero-Interest loans for households with Incomes between 51 'and 80%of area median-income(moderate Income households)In the following circumstances: & Total Indebtedness on the property Including the affiount of the County loan will not exceed 90%of the atter-rehab appraised value of the property,and b. A zero4nterest loan"Is necessary to prevent the applicants monthly debt ratio Including the Countys loan from exceeding 35% of the applicants monthly gross Income. D. Erato rats. lnernas grad Security forercattterest I_caans -Amounts a. The maximum amount for a zero-Interest loan shall not exceed$20,000 for a single-family dwelling, with an additional $3,000 allowed for the second unit In a duplex. eincome will be based on the applicants Income for the 12 months prior to Its application for financial assistance and reflect increases and decreases anticipated during the next 12 months. Adjusted gross income is defined as a household's annual gross income less: 1) Uncompensated or uncovered medical expense which exceed 30/o of gross Income: 6 b. A loran of up to 125% of the maximum specified in (a) above may be originated subject to the foallowing: t) General property Improvements as allowed under Section€V 8( ) (I) cannot exceed sof the loan maximum specified in Section 2) The rraazdrnurn amount by which the n aAmurn loan amount specified In Section IV D (t) (a) above may be exceeded is the lessor of: bj an amount derived'by subtracting $12,000 (60% of the maximum loan amount specified in Section IV D (a) (a) above) from the cost of completing required code improvements(as specified in Section IV 6(2)(a-f)above). For purposes of the above calculation costs not aiiocable directly to improvements (profits, overhead, etc.) shall be lnc uded on a pro-ratio basis In a ratio reflecting the codefgenerai property improvement ratios. cj The existing indebtedness against the property plass the amount of the zeros-interest, shall not exceed 90% of the appraised after-improvement value of the proper at the time the financial assistance is approved. 2- Terga arad e €trite lie glrernents The zero-Interest foam is due and payable after five years or upon sale or transfer of the property, but may be repaid in fall or In part at any time prier to such date. At the end of five years, if the applicant household stili resides In the same house and on demonstrate its continued inability to repay the zero-interest fora,the loan terra may be extended for aro additional five year tensa If, however, at the end of five years the applicant has sufficient Income to be eligible for the interest beating loan component of the programa,"the zero-Interest loam will be converted to aro Interest bearing loran under the there existing guidelines and policies of such program All zero interest loans will be secured by a Creed of Trust,which serves the Promissory Note. Upon transfer of the property In the case sof Inheritance,the financial capabilities of the heir will be considered prior to requiring repayment. V. APPUCABlUTY OF EACH PROGRAM ELEMENT It Is the Intent of this program that each household, as applicant, be evaluated for eligibility under the loan element first and the zeros-interest loan element second to ensure that the use of loans is maximized In order to establish a revolving fund,for future programa years,which realizes Immediate returns of funds. For example, If the household can support payments on a low-Interest lora given its Income and credit history,then it would not be eligible for a zero-interest loan. The origination of a combination interest bearing loan/zero-Interest deferred loam is permissive under these policies. In ail cases, If the household qualified for a conventional market rate logo, it would be eligible for either of these progiarn elements. VI. ADMINISTRATION TRATION Agreements with financial Institutions egoist for Implementation and servicing of the financial aspects of the programa elements. Implementation of the Housing Rehabilitation Program Is the responsibility of the County wilding Inspection Department in chose coordination with the County Community Development Program administered by the County Community Development Department. Forthose elements of the Grogram not contracted to a financial institution,a Review Panel,composed of three 7 Persons knowledgeable in the housing finance field and two citizen representatives has been established to make final decisions concerning the awarding of financial aide. This panel will be provided With staff services by the Building Inspection Department and other County staff as necessary. The Review Panel will perio6cally review the procedures and criteria utilized by the participant financial institutions. VII. GENERAL PROCEDURES The County Building Inspection Department will operate and administer a voluntary residential code enforcement program accompanied with financial assistance. The operation and administration of the Housing Rehabtrdation Program will be guided by the Policies promulgated herein. Such oNratlon and administration shall Include the fdlowing: I. Application Intake and processing. 2. Determination of financial eligibility. 3. Inspection of the structure. 4. Preparation of a last of repair items. 5. Securing contractual services to undertake the repair work7 including: a) preparing bid packages b) noticing the avallability of bid packages c) reviewing bids received d) selecting the contractor with the approval of the homeowner. 6. Preparation of financial documents for submittal to financial Institution with whom County has an agreement. y, Preparation and execution of a contract document 8. Inspecting the work of the rehabilitation contractor with respect to applicable codes, the terms of the contract,and for conformance with accepted standards of quality In completion of the rehabilitation work. 9. In conjunction with the homeowner, accept the work and authorize payments to the contractor. Villa APPEALS Any persons,firm, partnership,or corporation aggrieved by a decision pursuant to the-policies and procedures of the Neighborhood Preservation Program shall be afforded an opportunity for review of that decision by a staff committee composed of representatives from the Building Inspection Department, the Planning Department and the County Administrators Office. Upon review of the Case a final decision will be rendered by the staff committee, subject to appeal to the Board of Supervisors, under the regular appeal procedures provided for In the County Ordinance Code. 7At the option of the homeowner the procedure for securing bids for rehabilitation work may be modified to allow the homeowner to negotiate a contract with an eligible contractor of the homeownees choice. The County Building Inspection Department will review the negotiated contract amount to assure that the market rate for such services has not been exceeded. 4126/93 pc 8 INCOME LIMITS BY HOUSEHOLD SIZE FOR REHABILITATION FINANCIAL ASSISTANCE EFFECTIVE jANUARY 1, 1997 Adjusted Annual Gross Income Persons Very Low Moderate Per Income Income Household Households Households I $21,050 $30,450 24,050 34, 800 3 27, 050 39,1.50 4 30,050 43,500 5 32,450 47 ,000 6 34,850 50,450 7 37,250 53 ,956 8 39,650 57,400 For purposes of Contra Costa County's Neighborhood Preservation Program, 'very-low and lour-income households" are defined as having an adjusted grass income of not more than 50% of the Oakland. PMS. median income, as adjusted for household sizes "Moderate income households", are defined as having an adjusted dross income of not more than 80% of the Oakland PMSA median income, as adjusted for household size. The income figures in this table are taken from the FY 1993 income limits for low and moderated income households published by the U.S. Department of Housing and Urban Development (HUD) for use in federally funded housing programs. The Hud income limits are published annually. Therefore, the County's definitions of lost and moderate income households will he updated annually using the most current data available from HUD. � � rs� � EXHIBIT B W 0 CO to N 0 E C) coo � 'CID, w mo L'3 a. ca m0 co I— � C.) m N C4 ti 1-i us CR ll� re w b� G 0 Cil Cd 2`. L`3 1, 0 ems? CSS gg _ t3 Lie 1LCB {� C �7C5 � t LL 31? rCBC$ I+ C�SQ Lf83fo CD co 3 - Cq 31k C*3 C°F r t~i M co (0 L4, �$ s3) CSB CC5 �8 C!3 CS5 CPS CG C?7 L`.i CL LL UJ S WC 0*) mm0 OA o r" C38 d aY3 a E r GS7 K87 C fl- 8388 LC3 Lt8 ^t #� K*8 LS1 r 0 1.0 Itt ClJ l 24Nrx- r- r T- < - rrr S LL.= LU a_ L'� $e. Ed'8 N Cbt �3 �' Cil C{8 Cil aS7 0 a- U- Lu CS C'8 B C� L'J C7 ca iC. 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