HomeMy WebLinkAboutResolutions - No. 87-164RESOLUTION NO. 87-164
RESOLUTION ADOPTING THE PROPERTY REHABILITATION LOAN AGREEMENT
CITY OF LODI HOUSING REHABILITATION PROGRAM
BE IT RESOLVED that the City Council of the City of Lodi does hereby approve
the Property Rehabilitation Loan Agreement, dated December 2, 1987, between the
City of Lodi, and the Bank of America, to facilitate the use of Community
Development Grant funds for purposes of implementing the City of Lodi Housing
Rehabilitation Program, a copy of said Loan Agreement is marked Exhibit A, and
hereby made a part hereof.
Dated: December 2, 1987
I hereby certify that Resolution No. 87-164 was passed and adopted by the
City Council of the City of Lodi in a regular meeting held December 2, 1987
by the following vote:
Ayes: Councilmembers - Hinchman, Pinkerton, Reid, Snider and
Olson (Mayor)
Noes: Councilmembers - None
Absent: Councilmembers - None
&�'
Alice M. Amc�he
City Clerk
87-164
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AMENDMENT TO
PROPERTY REHABILITATION LOAN AGREEMENT
THIS AMENDMENT is made by the CITY OF LODI (herein called "City") and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association (herein called "Bank").
RECITALS
City and Bank on Decenber 10 1987, entered into a
Property Rehabilitation Loan Agreement. City and Bank modify said
Agreement as follows:
1. Paragraph B of "RECITALS". Omit the phrase "certain owners or".
The City's program allows only for loans to owner -occupants.
2. Paragraph 33 of "Deferred Payment Loans." Amend paragraph to
include the following: "Bank agrees to disburse funds on behalf of
City for Deferred Payment Loans. Said funds will be debited from
City's Warehouse Account and paid in the form of a cashier's check
to applicant and contractor. City, or its agents, will conduct
progress inspections of the property to be rehabilitated and direct
Bank to disburse checks accordingly. Bank will maintain a general
ledger card to track disbursements on each Deferred Payment Loan
during the construction period and report on the status of each loan
to City on a monthly basis."
3. Paragraph 49 of "General Provisions". Omit entire Paragraph.
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IN WITNESS WHEREOF, this Amendment is executed by City acting by and
through its City Council , pursuant to
Resolution No. 87-164 authorizing such execution, and by Bank.
Dated this 10th
CITY OF LODI
BY
Evelyn M. Olson
Mayor
ATTEST
Alice -M. eimche
City Clerk
APPROVED AS TO FORM:
Ron stein
City Attorney
01103P/12/04/87
day of December, 1987.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
a
BY ,l G� ^ i U
ristine P. Southgate
Assistant Vice President
Corporate Community
Development #3246
Concurred by:
ame 1,Age e
N4a-4retident
Corporate Community
Development #3246
Attached is a true and correct
Copy of the original Resolution
PROPERTY REHABILITATION LOAN AGREEMENT
THIS AGREEMENT is made by the City of Lodi, a municipal or political
subdivision in the State of California (herein called "City"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association
(herein called "Bank").
RECITALS
A. City has authorized a Housing Preservation Program as part of an
adopted Community Development Block Grant Program (as may be amended and
modified from time to time) hereinafter collectively called "Program".
B. As part of City's implementation of Program, City has requested
Bank make below-market interest rate property rehabilitation Loans ("Loans" or
"Program Loans") to certain owners or owner -occupants of residential real
property (of 1-4 units) within City and approved by City as recipients of
Loans ("Applicant" or "Applicants"). The purpose of the Loans will be the
rehabilitation of said real property in accordance with Program. In addition,
City may have requested a choice of several types of Loans be made available
to Applicants.
C. To support these objectives, and based on an initial deposit of
Community Development Block Grant funds, Bank is willing to provide City and
Applicants with Collateralized Loans, Interest Subsidy Loans, Deferred Payment
Loans, and other services at rates and terms not available to the general
public or to City independent of this Agreement.
D. The 'terms and conditions of this Agreement are subject to the
provisions governing lump -sum drawdowns for property rehabilitation in HUD
Regulations as defined in Community Development Block Grant Regulations CFR
570.513.
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual agreements made herein, and for other good and valuable
consideration, City and Bank agree as follows:
DEPOSIT OF COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS
1. Within ten (10) business days of execution of this agreement, City
shall deposit $133,658.00 in Community Development Block Grant
Rehabilitation funds available to City under the Housing and Community
Development Acts of 1974 and 1977, as amended, as part of this
Agreement.
2. City's deposits of Community Development Block Grant funds shall
be made in one or a combination of the following forms:
(a) A deposit to the Warehouse Account, the funds in which are
unallocated to Loans but may be allocated to grants. The
Bank shall pay to City interest on the Warehouse Account at
the Bank's usual Public Agency interest rate (for savings
deposits of similar type, maturity, and size), at the time
of deposit.
(b) The purchase from Bank of time certificate(s) of deposit or
other Bank instruments from which all proceeds will be
allocated to future Program Loans. Bank, at its option,
may charge City a service charge for the purchase of
certain instruments and/or for the early withdrawal of
funds from a time certificate.
3. City retains full access to all deposits which are unallocated to
Program Loans. City agrees all interest earnings will be paid to
accounts not allocated to Program Loans in accordance with HUD
Regulations.
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4. At the time of individual Loan funding, Bank shall have authority
to transfer funds from either of the accounts described in (a) or (b)
above into a Collateral Account(s) which will be non-interest bearing.
City relinquishes the use of and control over the Collateral
Account(s). The Collateral Account(s) will be used only for the Loan
purpose described in this Agreement.
APPLICATION PROCEDURES
S. At the request of City, Bank shall consider making Loans to
qualified Applicants directed to Bank by City. City shall notify the
respective Applicant(s) in writing of any such request it makes to the
Bank. The notification shall contain the following statement: "The
City of Lodi has requested Bank of America National Trust and Savings
Association, to consider making a specific extension of credit to you."
6. A qualified Applicant shall be identified by City or its agents,
using City's established standards, which must consider, without
limitation:
(a) Applicant is "the owner of record" of the property subject
to rehabilitation (if Applicant is a non -owner, Applicant
must have a lease on the property which extends six months
beyond the term of the Loan);
(b) Applicant has verifiable incomes) which can be used to
repay the proposed Loan;
(c) City has determined that the proposed Loan, given Program
options available, will best serve the rehabilitation needs
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of Applicant and the Program objectives;
(d) Refinancing is not available under this program;
(e) The balance of all liens against the property to be
rehabilitated shall not exceed 90% of Bank's loan value of
the property.
7. With respect to each Loan application, City shall furnish to Bank:
(a) an introductory letter stating that City desires Bank to
consider making a Loan to Applicant;
(b) a breakdown of the costs involved in the rehabilitation
work to be performed on Applicant's real property;
(c) a preliminary working drawing of the rehabilitation work;
(d) an estimate of the value of the real property offered as
security for the Loan;
(e) a copy of any contractor bid accepted by Applicant;
(f) a statement that City has satisfied itself with respect to
the competence and reliability of the particular contractor
who will perform the rehabilitation work;
(g) a consent to release loan information.
8. For each loan, Applicant shall furnish to Bank;
(a) a copy of signed personal Federal Income Tax Returns for
the past two years including all attached schedules;
(b) applicant's personal financial statements dated not more
than 60 days prior to application date;
(c) a signed Fair Lending Notice;
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(d) a legal description of the Real Estate to be rehabilitated;
(e) all information required on Bank's standard loan
application form.
(f) if applicant is a non-owner/leaseholder on the property to
be rehabilitated, a copy of the lease which must extend six
months beyond the term of the Loan.
CREDIT DECISION
9. Bank shall perform its customary credit evaluation with respect to
the Applicant, render its judgment with respect to the creditworthiness
of the Applicant, and furnish to City a recommendation whether to
proceed with the Loan. City's employees shall not express opinions to
Applicants as to whether a loan will be approved. Bank will determine
the appropriate Loan terms on each individual Loan.
COLLATERALIZED LOANS: TERMS AND CONDITIONS
10. If Bank approves a Loan, Bank will indicate to City which of the
following Loans the Bank is willing to originate:
(a) a 100% Collateralized (0% Bank risk) Loan at a 3.001.
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interest rate;
(b)
a 90% Collateralized
(10%
Bank
risk)
Loan
at a
3.75%
interest rate;
(c)
a 70% Collateralized
(30%
Bank
risk)
Loan
at a
5.50%
interest rate;
(d)
a 50% Collateralized
(50%
Bank
risk)
Loan
at a
7.00%
interest rate;
(e)
a 30% Collateralized
(70%
Bank
risk)
Loan
at a
8.75%
interest rate.
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I 1. If Bank does not approve a Loan, City may recommend that the Bank
proceed with the Loan as a Deferred Payment Loan at an interest rate
established by City.
12. Rehabilitation Loans on mobile homes must be 100% collateralized
at all times.
13. All Loans shall be documented using the Bank's standard forms.
14. In addition to the cash collateral as described above, the
installment note shall be secured by a deed of trust covering the real
property that is the subject for the rehabilitation for which the
proceeds of the Loan are to be used.
15. The term of each Loan shall be determined by Bank but shall not
exceed fifteen years (15) years, and the installment note shall be
amortized in equal monthly installments over its term. Interest will
be calculated on a simple interest basis for the installment note and
payable to the Bank.
16. Each Loan shall be supported by a deposit to the Collateral
Account in the amount equal to the collateral requirement for that
Loan. Once the note and deed of trust are signed by the Applicant and
the non -recission form is returned, the Bank will transfer the
collateral for that Loan from the Warehouse Account to the Collateral
Account. Within ten (10) business days after the end of each quarter,
Bank shall remit to City the amount by which the Collateral Account
exceeds the collateral requirements for each Loan based upon the
outstanding balance of each Loan. Funds that Bank thus remits to
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Cite shall be deemed funds that have been on deposit in the Collateral
'ccount for at least 30 days. If, due to defaulted Loans, the
collateral account balance is less than the collateral requirements of
outstanding Loans, Bank may transfer from the Warehouse account to the
Collateral Account, sufficient funds to cover the deficit. If funds in
Lre ;•larehouse Account are insufficient to cover the def ict, Citv :•rill
remit the amount due to Bank in the form of a cashier's check within 30
working days.
17. if progress payments are requested by City, Bank may, at its
option, disburse entire Loan proceeds to an escrow account, to be
established with an agency, named or appointed by City. Any fee for
services rendered may be part of Loan proceeds.
16. If a Loan remains in default for a continuous period of ninety
(90) days on account of nonpayment of any sum of money due pursuant to
the terms thereof or of any instrument or document related thereto,
Bank may withdraw from the Collateral Account and pay to itself an
amount equal to the then outstanding principal balance of the Loan
multiplied by the same percentage as the percentage of the Loan amount
that was deposited to the Collateral Account, plus 100% of accrued
unpaid interest on the Loan through the 90th day of default. Bank
shall have no recourse against City or the Collateral Account for any
amounts in excess of those permitted under this paragraph. During any
ninety (90) day default period, Bank shall perform its customary
collection procedures with respect to the Loan. After a withdravial
from the Collateral Account, in the case of a Loan for which the
deposit to the Collateral Account was less than 1007 of the Loan amount:
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(a) Bank need not assign the deed of trust to City upon
completion of the withdrawal but may, for its own account,
exercise rights under the deed of trust to recover the
remaining outstanding and unpaid principal of the Loan plus
accrued unpaid interest thereon after the 90th day of
default.
(b) At City's election, if Bank does not exercise its rights
under the deed of trust, Bank shall assign to City such
rights as may be necessary for City to attempt to recoup
any funds withdrawn from the Collateral Account in
connection with any Loan default. City agrees to recoup
funds, as much as possible, for the benefit of Bank as well
as itself. Funds recovered shall be credited as follows:
(1) to withdrawals from the Collateral Account;
(2) to the costs of recovery;
(3) to Bank's Loan charge-off.
19. If Bank subsequently recovers funds with respect to a defaulted
Loan (as, for example, but without limitation, if a voluntary sale of
the property takes place), Bank shall, after deducting the previously
unreimbursed percentage of Loan loss to which Bank is entitled plus
Bank's cost of recovery, return and pay over to City all surplus
amounts.
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INTEREST SUBSIDY LOANS
20. Interest Subsidy Loans will be made only to applicants deemed
creditworthy by Bank. Applicants will be subject to standard Bank
credit criteria governing conventional home equity loans. Bank will
bear all of the credit risk for such Loans, which will be and remain
assets of Bank.
21. The term of an Interest Subsidy Loan, and the Loan terms other
than interest rate, will be the same as those applicable to Bank's
conventional home equity loans, and will be documented using Bank's
standard forms. The Loans will contain due -on -sale clauses, and, to
the extent permitted by law, Bank will not permit a Loan to be
assumed. The Loans will not contain provisions for a prepayment
charge.
22. The interest rate for an Interest Subsidy Loan will be designated
by City.
23. At origination of a Loan, Bank will transfer an interest subsidy
payment from the Warehouse Account into an account designated the
Interest Subsidy Account. Funds transferred to the Interest Subsidy
Account are irrevocably committed to interest subsidy payments for
Interest -Subsidy Loans. City relinquishes all use and control of funds
in the account.
24. The amount of the interest subsidy for a particular Loan will be
determined by Bank using its Community Development Interest Subsidy
.M.t
Formula. This formula calculates the subsidy amount required to
recover the cost to Bank of the difference between Bank's current rate
for a conventional home equity loan at the time the Loan is made, and
the interest rate charged to the applicant.
25. In the event of prepayment of an Interest Subsidy Loan, Bank will
calculate the amount of unused Interest Subsidy for the period that
begins 90 days after the date of prepayment and ends on the maturity
date of the Loan. Bank will remit that amount to the Warehouse
Account.
26. In the event an Interest Subsidy Loan remains in default for a
continuous period of ninety (90) days on account of non-payment of any
sum of money due pursuant to the terms of the Note or the Deed of
Trust, Bank will continue to debit the Interest Subsidy Account for the
monthly interest subsidy payment due through the completion of
foreclosure. Upon completion of the foreclosure, Bank will calculate
the amount of unused Interest Subsidy for the period that begins on the
date of completion of foreclosure and ends on the maturity date of the
Loan. Bank will remit that amount to the Warehouse Account.
DEFERRED PAYMENT LOANS
27. Deferred Payment Loans are Loans funded by the City with no
immediate repayment schedule. At City's request, Bank shall prepare
X11necessary Loan documents for Deferred Payment Loans with City
designated as obligee and return all documents to City.
23. Each Deferred Payment Loan shall be funded in ::hole by City,
evidenced by a promissory note and secured by a Deed of Trust, which
deed will be recorded by Bank.
29. Unless indicated otherwise by City, Deferred Payment Loans shall
be at 0% interest.
30. Prior to the making of the first Deferred Payment Loan under this,
Commission shall furnish to Bank a written description of the
established rates and terms for its Deferred Payment Loans and shall
deliver this information to Bank's Corporate Community Development
Department #3246.
31. Promptly upon assignment to City, City shall pay to Bank a fee of
ONE HUNDRED DOLLARS ($100.00). Bank will collect from Applicant actual
out-of-pocket fees or charges including property appraisal, title
company, and recording fees, as required to originate City's Deferred
Payment Loan; these fees may be included in the Loan proceeds.
32. Upon assignment of the Deferred Payment Loan to City, Bank shall
have no responsibility whatsoever for said Loan, except if requested by
City, Bank will provide installment collection loan servicing for any
Deferred Payment Loan at Bank's prevailing rate for such services.
33. For Deferred Payment Loans, City authorizes Bank to make a lump
sum disbursement by cashier's check to Applicant(s) or, if requested by
City, to City, from the Warehouse Account. If progress payments are
requested by City, Bank may disburse entire Loan proceeds to an escrow
account, to be established with an agency, named or appointed by City.
Any fee for services rendered may be part of Loan proceeds.
GRANTS
34. Upon City's request, Bank will disburse funds from the Warehouse
account by Cashier's checks to Applicant's designated by City as "Grant
Recipient(s)." Bank retains the option of charging a fee for this
service.
OTHER ALLOWABLE FEES AND CHARGES
35. With respect to any Loan, Bank shall, at its option, recover from
the Applicant the following out-of-pocket expenses:
(a) Credit report;
(b) Appraisal reports (required on any Loan involving Bank risk);
(c) Title report and title insurance, if required by the Bank;
(d) Recording of deed and other lien costs;
(e) Tax and lien service.
36. Out of pocket expenses charged to applicants may be financed as
part of the Loan proceeds, or at City's option, may be paid by City.
31. :applicant will pay a late fee at the Bank's prevailing rate for
late payments (currently minimum charge of $5.00 and a maximum charge
of $15.00 for any payment not received by Bank within 10 days of when
it is due).
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GENERAL PROVISIONS
38. On City's request, Bank shall, for its customary fees, accept for
collection purposes, pursuant to Bank's then current installment
collection procedures, a Program Loan that has been transferred to City.
39. Bank covenants and agrees that nothing in this Agreement or any
agreement made pursuant hereto shall be deemed or construed by Bank to
make City a surety or guarantor of any Loan, and that Bank's rights
with respect to a Collateralized Loan shall be limited to those set
forth in this Agreement.
40. City and Bank shall comply with all applicable statutes and
regulations, including without limitation, where applicable, the
Federal Truth in Lending Act and Regulation Z thereto, the Consumer
Credit Reporting Act, and the Equal Credit Opportunity Act and
Regulation B.
41. Except as specifically required by this Agreement, City waives any
right it may have to require Bank to:
(a) proceed against any Applicant or other person;
(b) proceed against or exhaust any collateral for the relevant
Loan; or
(r_) pursue any other remedy in Bank's power.
42. City waives any defense arising by reason of any disability or
other defense of Applicant or any other person, or by reason of the
cessation from any cause whatsoever, other than full payment, of the
liability of an Applicant or any other person.
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43. Bank and City acknowledge the "Special Purpose" nature of the
Program and Program Loans. To serve this "Special Purpose," a Loan
shall be considered in default after the date of a transfer of the
property covered by deed of trust executed under this agreement; which,
according to the provisions of the note, make the entire principal and
interest of the note due and payablo, regardless of Bank's ability or
inability to enforce those provisions of the note.
44. This Agreement shall terminate one year from the date of
execution. This Agreement may be terminated by either of the parties
hereto, provided written notice of intent is given to the other party
at least sixty (60) days prior to the termination date.
45. Any termination of this Agreement shall not affect Program Loans
outstanding at the time of termination.
46. At termination, Bank shall retain the Collateral Account including
funds sufficient to cover 90 days accrued interest on outstanding
Loans; once outstanding Loans are fully paid, the residual funds in the
Collateral Account will be refunded to City. If, at the time of
termination, the Collateral Account funds exceed the specified
percentages of the unpaid balances of Collateralized Loans, Bank will
remit those funds to City within five (5) business days of the
termination date.
47. Any co+imunications between the parties hereto may be given by
mailing the same, postage prepaid, to Bank at its Corporate Community
Development Department, #3246, P.O. Box 37000, San Francisco,
California, 94137, and to City at City Hall, 221 West Pine Street, Call
Box 3006, Lodi, CA 95241-1910.
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48. This Agreement and any agreement, document, or instrument attached
hereto or referred to herein embody all terms and conditions mentioned
herein or incidental hereto, and supersede all oral negotiations and
prior writing in respect to the subject matter hereof. In the event of
conflict between the terms, conditions, and provisions of this
Agreement and any prior agreement, document, or instrument, in respect
to the subject matter hereof, the terms, conditions, and provisions of
this Agreement shall prevail.
49. City shall indemnify and hold harmless Bank against all claims and
damages, alleged or otherwise, of whatsoever nature arising out of or
in any way connected with the acts or omissions of any contractor
performing rehabilitation work in connection with this Agreement;
provided, however, that City's obligations under this paragraph shall
not extend to negligent or wilful acts or omissions by Bank. All
contractors shall operate as independent contractors and nothing herein
is intended to affect such independent contractor status.
50. Bank, at its option, may decline to make additional Loans from and
after the date if and when the principal balance of all Loans
outstanding has exceeded THREE HUNDRED TWENTY THOUSAND DOLLARS
($320,000.00).
51. Each Applicant shall be required to maintain a standard policy of
hazard insurance covering the real property upon which the
rehabilitation work is io be performed, in effect while any part of the
Loan remains outstanding and which names Bank and City as loss payee.
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52. The Collateralized Loans described in this Agreement, are priced
on an average Loan size of $10,000.00 which provides City favorable
rates and terms based on this average Loan amount. Since operating
costs associated with a smaller average loan size are significantly
greater, if the average Loan size is not maintained, Bank may make
adjustments affecting the pricing of future activity as follows:
(a) increase borrower interest rates for new Loans;
(b) increase collateral requirements for new Loans; or
(c) assess an origination fee for new Loans.
These options are to be negotiated and mutually accepted by Bank and
City.
53. This Agreement may be executed in as many counterparts as may be
deemed convenient, each of which, when executed, shall be deemed an
original.
54. The terms and operating aspects of this Agreement may be altered
from time to time through a letter of understanding, accepted mutually
by City and the Bank through its Corporate Community Development
Department.
!WIE
IN WITNESS WHEREOF, this Agreement is executed by City acting by and
through its City Council I pursuant to
Resolution No. 87-164 authorizing such execution, and by Bank.
Dated this 10th _ day of December 1987,
CITY OF LODI BATIK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
BY 6Y
L.
Evelyn M. Olson Christine P. Southgate /
Mayor Assistant Vice Preside -ft
Corporate Community
Development #3246
ATTEST Concurred by:
Alice M. Reimche
City Clerk
James S. le
Vice rest t
orate Community
Development #3246
APPROVED AS TO FORM: Attached is a true and correct
Copy of the original Resolution
Ron Stein
City Attorney
FINAL/01b3P/11/25/87/CP:GI
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