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HomeMy WebLinkAboutItem 8.1 CaRuralHomeFinanceAuth I .. :. . ~. CITY CLERK File # D[f]fjl~-@]@] .. AGENDA STATEMENT CITY COUNCIL MEETING DATE: November 4, 1996 SUBJECT: Consideration of Participation As Associate Member In The California ,.J'I "' Rural Home Finance Authority - Rural California Gold Lease - Purchase ~~v Program (Prepared By: Paul S. Rankin Assistant City Manager) EXHIBITS ATTACHED: /1. Letter from Matt Koart, Kaufman & Broad, requesting consideration of program. / 2. Summary of the Program RECOMMENDATION: / 3. Program By-Laws / 4. Resolution Approving Participation In Joint Powers ,.. / Authority (JP A) .~ Receive Staff Report and if appropriate, authorize participation as an '.: Associate Member of the JP A for the Lease Purchase Program. FINANCIAL STATEMENT: No direct Financial Cost to the City beyond minor Staff costs associated with preparing the report and monitoring activities of the JPA. DESCRIPTION: Kaufman & Broad has been selected by the California Rural Home Mortgage Finance Authority to offer a special Lease-Purchase arrangement. This is a pilot program, which is able to offer certain benefits since it is partially financed with tax exempt proceeds. In order to offer the program at any projects developed by Kaufman & Broad (K&B) in the City of Dublin, the City would need to become a member of the JP A. K&B is currently developing two projects in the City. Goal of Lease Purchase Provam The goal of the program is to create home ownership opportunities for families and individuals who qualify at market loan rates, but may have limited financial resources to afford the down payment and closing costs. The transaction becomes a Lease-Purchase, whereby the "buyer" builds up equity and makes lease payments over time in order to exercise the purchase option. The Finance Authority considers the program unique in that they are offering competitive lease terms and a market rate mortgage and purchase price is locked in at the time the lease is signed. ------------------------------------------------------------------- COPIES TO:Matt Koart, K&B Tasha Huston, Associate Planner 6> 1 ITEM NO. 0 t> H: AdminSvcs\KBLOAN.doc Impact on Developer's ObIil:ation Under the Inelusionary Zoning Ordinance · The City Council has adopted an Inclusionary Housing Ordinance which has established a goal to increase the supply of affordable housing in the City. The ordinance is designed to specifically address housing opportunities for persons with "very low", "low", and "moderate" incomes. It is not anticipated that this program will directly affect the obligation of the Developer to meet the requirements of the Inclusionary Zoning Ordinance. First, K&B has stated that they foresee the greatest opportunity for this program to be at their California Highlands project. This project was processed under a tentative map approved prior to the adoption of the IncIusionary Ordinance. The second major factor is that the Lease-Purchase financing program, does not affect the sales price of the unit. Under the Inclusionary Housing Ordinance, the detennination as to whether a unit qualifies towards meeting the inclusionary requirement is based upon the sales price. .'::: ..' Pursuant to the Development Agreement approved for the K&B California Creekside Project (Santa Rita Property), the fmn will be subject to the Inclusionary Housing Ordinance. In order to comply with Section 8.24.070 of the Inclusionary Housing Ordinance, the Developer is required to enter into an Affordable Housing Agreement. The Agreement will specify how Kaufman & Broad will meet the Inclusionary Housing requirements. Kaufman & Broad Interest In Prol:ram Staff have met with K&B representatives to discuss the program and its potential utilization. K&B foresees a limited use of the program, given some of the restrictive elements in the lease I purchase transaction. The Program restricts the actual use to no more than 25% of the units in a particular project. It is anticipated that the actual use will be well below this figure. The firm believes that.this program represents one additional financing method, which may make a difference to some individuals contemplating a home purchase. Therefore, they have requested that the City pursue participation. K&B anticipates its use primarily at the California Highlands Project (West Dublin) due to restrictions on the sales price. "However, upon approval of the participation by the City of Dublin, K&B would be able to use the financing package on any project which meets the program criteria. .... ..,-::...:., .JP A Program Background The California Rural Home Mortgage Authori,ty (Authority) is a non-profit Joint Powers Authority, which was formed under the auspices of the Regional Council of Rural Counties (RCRC). The primary purpose and focus is financing home mortgages within the boundaries of the member counties and with other participating agencies. The Authority has made provisions for Associate Membership status, to allow a local agency who is not a member of RCRC to participate in specified programs. The Rural California Gold Lease - Purchase Program is eligible to accept Associate Members. As an Associate Member the City does not have any voting rights and there are no dues assessed. The Authority administers the Program and determines the amount of funds available for allocation. At the present time the program is set up as an exclusive arrangement with K&B as a major home builder throughout California. The program does not rely on tax exempt bond proceeds, to which the City can only receive a limited allocation. In accordance with State and Federal tax laws, municipal governments are limited in the amount of "private activity" bonds which can be issued. The Authority has creatively designed the financing to utilize "government purpose" bonds (Certificates of Participation). Therefore, the bonds issued avoid affecting the allocation of "private activity" bonds allocated to any entity. Ibis program .--' - 2 - f . . " 1.~ , 1 '.,:: does not affect the limit established for the amount of "private activity" bonds, which can be issued by the City. Further, it does not require a State ofCalifomia allocation or authorization. Lease - Purchase Program Design Staffhas attempted to describe key elements of the program in the Staff report. Attached as Exhibit 2 is a Program Summary prepared by the Program Administrators. As structured persons using this special financing arrangement would be entering initially into a lease, with the option to buy the unit at a specified price at the conclusion of the lease. This type of sale would be most attractive to a person who had limited funds for a down payment and anticipates staying in the unit over a long enough time frame to meet all of the criteria of the program. Although it is not a requirement, it is anticipated that this would typically be a frrst time home buyer. Among the program restrictions is a prohibition against Participants having a co-signer on the loan. There are also restrictions on the amount of family income earned by participants: Income limits may not exceed 120% of the State median income for a family of two or less ($58,080) and 140% of the State median income for a family of three or more ($67,760). The "buyer" must qualify based upon industry standards for debt and income ratios, even though the initial transaction is a lease. The pool of money available at the Authority, is used to underwrite a portion of the down payment during the Lease Period. The Authority will actually purchase the home selected by the qualified "buyer". The unit must be owner - occupied and there are on-going maintenance requirements. Obviously in a multi. family condominium project the common area maintenance is more uniform than on a single family residence. The "buyer" is required to contribute 2% of the purchase price plus closing costs. This, is a non- refundable fee in the event that the "buyer' does not complete the purchase. The monies provided by the "buyer" may be funded as a gift or as a developer's concession. For example, K&B could offer to contribute 1 % if the buyer contributed 1 %. The arrangement to be used by K&B is unknown at this time, and would likely be determined by additional review of their marketing needs. The Authority then uses funds from its pool to contribute approximately 7%-8% as a "Subsidy Advance". This combined with the "buyer" funds provides sufficient funds to obtain a FHA insured or FHLMC conventionally insured loan. The program actually locks in the market rate mortgage and the purchase price at the time the "buyer" enters into the lease. The predetermined Fair Market Value (purchase Price) is based upon the original purchase price plus an inflationary factor over the life of the lease period. The Authority structures the "lease payments" to approximate the total payment an individual would typically pay towards a loan payment. This would include amounts which approximate the monthly principal and interest, taxes, Private Mortgage Insurance, and Hazard Insurance. The program is structured on a three year lease, which would allow the Authority to recover their "Subsidy Advance". The Authority is capable of recovering the "Subsidy Advance" because it has fmanced the advance with tax exempt COP proceeds. These funds are borrowed at a rate less than the current market lending rate offered by most financial institutions. During the lease period the "buyer" would not achieve any tax benefit related to mortgage interest, since they are a lessee and not an owner. They must also pay a $25.00 per month lease servicing fee. At the end of the lease period the "buyer" has the option to purchase the home. The buyer must again qualify as a mortgagor in accordance with FHA/FHLMC qualifying requirements. - 3 - The transaction also imposes a 4% fee which is payable only if there is a sale or refinancing within 3..5 years from the date of purchase. lbis refers to the period of time, which is beyond the original 3 year lease. The underwriters explained that this helped them with the loan pricing in that they are able to offer a 7.5% loan rate at the time of purchase. The Program has agreements with First Nationwide Mortgage to serve as the Servicer on all lease-purchase loans. The buyer will also incur HAssumption Fees" of e';:, approximately $500 in order to exercise the purchase option. ,,:' , Participation In JP A A~ previously noted, in order for K&B to offer this financing the City Council must adopt the JP A. Staff would recommend participation as an Associate. Member, which does not require anyon-going membership contributions. As a pilot program it is difficult to state up-front the anticipated impact the program will have on new housing sales in the K&B project. Based upon the participants from the financial community underwriting the program, Staff does not foresee any barrier to the City of Dublin participation. However, it is worth noting that to a certain extent the City may be viewed as endorsing the program. As such it will be extremely important that the participants are satisfied with the outcome of the transaction. Given the complexity, it will be imperative that clear explanations of obligations and program requirements are fully discussed with the participants. These intangible elements must be weighed by the City Council and compared with the alternative of not participating. Attached as Exhibit 4 is a Draft Resolution which would authorize the City of Dublin participation in the Joint Powers Authority Rural California Gold Lease. Purchase Program. Staff would recommend that the City Council consider adoption of the Resolution. ..:. t::: , ' - 4 - . e, . 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EXCERPTS ~~~~~~~~~~~~ . ~ ~ ~ ~ ~ CaliforniA Rural HOlDe Mortgage ~ ~ FInADce Authority/ ~ KAufmAn & BroAd Mortgage CompAny ~ ~ RurAl CAliforniA Gold. ~ 1996 Series ~ ~ Lease....Purchase Program ~ ~ ~ :. .::....- ~ Program. SUTn'Jl111ry HandLook ~ ~ ~ ~ ~ ~ C ~ ~ ~ 1020 12th Street, Suite 200A, Sacramento, CA 95814 (916) 447-4806 ~ ~ March 1996 C ~~fM~~~~~~~fi;J~ :. ., -. EXCERPTS EXHIBIT 2 1 :": '.' .... .. . .'. w". " '. ',.1" .e, ',.... :- .~ :,:., .-~ . ... .'. ..' ,::" .-0" . . . .' '. ' ' .. '- ., ," ".. ~. CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY Kaufman and Broad Mortgage Company and the California Rural Home Mortgage Finance Authority are proud to introduce their Rural California Gold Lease~Purchase Program, continuing their tradition of developing unique homeownership opportunities for low and moderate~income homebuyers. The objectives in designing the program were as follows: . Issue the Lease Revenue Obligations as tax.exempt "governmental purpose" bonds (Lease~Purchase Obligations) which do not require State allocation or authorization. Limited supply of State tax-exempt allocation dollars has reduced if not eliminated local mortgage revenue bond/mortgage credit certificate programs. Lenders, Realtors, and mortgage brokers can therefore rely on a consistent source of tax.exempt financing for such a demand.based Lease~Purchase program. . Continue the Authority's tradition of providing assistance to a large but under-served segment of the homebuyer population - those families and individuals who qualify at market loan rates but who have limited financial resources to afford the downpayment and closing costs. . Provide a means by which downpayment assistance may be credited within a reasonable lease period. . Unlike other rent-to-own programs, establish a broad~based Lease-Purchase option that offers competitive lease terms, and locks in a market~rate mortgage and purchase price at the time the lease is executed. How THE PROGRAM WORKS . The Authority uses Obligation proceeds to purchase homes selected by qualified homebuyers; with a minimum investment (a commitment fee of at least 2% ofthe purchase price) from the homebuyer, the Authority will advance from the .1996 Issue B Obligations up to 7% for an FHA.insured loan and 8% for a FHLMC conventionally-insured loan of the mortgage amount (the Subsidy Advance) for dovmpayment and closing cost assistance. The homebuyer's minimum (commitment fee) investment may be funded as a gift or as a developer's concession. LEASE. PuRCHASE PROGRAM 2 k:""""r,\b>< ~ ~ CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY .":'.' How THE PROGRAM WORKS (CONTINUED) . Prior to the purchase, the Authority reviews the application to verify homebuyer eligibility and property condition, and the Homebuyer agrees as a Tenant to a Lease Agreement requiring monthly lease payments comparable to what the Tenant would have had to pay as Mortgagor - mortgage interest and principal, taxes, and insurance (pITI). The Tenant must also qualify as a potential Mortgagor in accordance with FHAlFHLMC loan underwriting guidelines. . At closing, the Corporation on behalf of the Homebuyer executes a Mortgage Note, Deed of Trust and other documents in the name of its corporate agent (the Corporation). These Mortgage Notes, are eligible for pooling into GNMA and FHLMC Certificates, . The Lease Agreement offers the Tenant an option to purchase the home from the Corporation at a predetermined Fair Market Value, which is defined as the original purchase price plus an inflationary factor over the life of the lease period, The predetermined Fair Market Value may not be adjusted to the actual property value at the time of purchase by the homebuyer, . ~.~ . The difference between the lease payments and the tax-exempt interest and principal due on the obligations (the Subsidy) is the means by which the Corporation is reimbursed for its Subsidy Advance up to 7% of the FHA loan amount; 8% for a FHLMC conventionally insured loan, The Authority will detennine the lease period required to reimburse itself for the amount of the subsidy advanced at the time of purchase together with finance charges and issuance costs, The expected lease period required to reimburse the Subsidy Advance is approximately 3 years, ". .......:.: . . .... - . .....-. , , ,.' . If the homebuyer decides to exercise hislher option to purchase the home (90 days prior to the purchase date) the homebuyer must satisfy the following conditions: i) timeliness of lease payments for the full lease period; ii) compliance with the terms and conditions specified in the Lease Agreement; iii) confirmation from the LenderlServicer that the homebuyer remains qualified as a potential Mortgagor according to FHAlFHLMC underwriting guidelines, . Pursuant to a Resolution adopted by the Corporation's Board of Directors, the difference between the Fair Market Value and the remaining Mortgage Note balance would be forgiven (or .'gifted" for FHA purposes) for any qualified homebuyer who assumes the existing Mortgage Note from the Corporation. Once assumed, ownership of the propel1Y is transferred to the homebuyer. .: -'-. -. .", '. LEASE-PuRCHASE PROGRAM : \.<_::' 3 lL:dNntc,,-,bl: . e. x . ,:::.' ! .C .' '. ' . -.., '- CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY BENEFITS TO THE HOMEBUYER . There are no federally-imposed income limits, no federally-imposed purchase price limits, no first-time homebuyer requirement. The program is only restricted by loan limits established by FHA, V A, and FHLMC. Income and other restrictions as described below are at the discretion of the Authority. . The homebuyer's lease payments are comparable to what the Tenant would have to pay as a Mortgagor - at the same time the Subsidy portion of the lease payment is reimbursing the Corporation for its Subsidy Advance, 7% for a FHA-insured loan; and 8% for a FID..MC conventionally-insured loan, Once the Tenant assumes the existing Mortgage Note, the Subsidy Advance is not taxed as gross income, nor is the forgiveness ofthe unfunded Fair Market Value at the time of the assumption treated as a capital gain. . The principal portion of the lease payment is being used to pay down the outstanding Mortgage Note balance owed by the Corporation, creating more equity for the homebuyer once the mortgage is assumed and providing some protection against property depreciation, Assuming an original $95,000 mortgage (a S100,OOO purchase price) a homebuyer would therefore assume a $93,000 mortgage in 3 years. . The homebuyer may shorten the lease period or accelerate the purchase date if the Corporation is reimbursed for its Subsidy Advance from other sources (e.g., seller's concessions, monthly deposits, tax refunds, etc.) subject to program conditions and Corporation approval. . The Authority will provide for standard homeowner's all risk insurance coverage in its own name for each property and will pay the full deductible for any damage or repair covered under such a policy. . In the first three,and one-halfyeafs (42 months) after the tenan(purchases the home from the Corporation;' the homebuyer is subject to a fee to reimburse an lnvestor shared equity subsidy. After the first three and one-half years , there are no other recapture or subsidy reimbursements, and the Mortgage Note may be refinanced, or the property sold. The Mortgage Note may be assumed by another qualified homebuyer, with Authority approval, in the first three and one-half years without penalty to the original homebuyer. LEASE-PuRCHASE PROGR..o\M 4 ",_(,_1>1: " :. ;~': :;.; ::";:.' .... ". .' '. . '. ". . .... Ow . o. '. -" . : ':.. &.~. ."w ..... ~;':-~:'.' :. ..... . ,.....:.:::-. ~ CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY OBLIGA TIONS OF AND RISKS TO THE HOMEBUYER . The homebuyer as tenant must comply with the tenns and conditions expressed in the Lease Agreement and must maintain the property in good condition and appearance. . . To be eligible, the homebuyer must qualifY for the program as ifhelshe were purchasing the home as Mortgagor. The homebuyer is subject to credit review prior to the Purchase Option Date to reaffinn the homebuyer's creditworthiness. Failure to maintain good credit during the lease period could result in the termination of the lease agreement and the forfeiture of the Subsidy and other benefits. . Since the homebuyer does not own the property, he/she cannot deduct the mortgage interest from their State and Federal Income Tax until after the assumption date. . The Homebuyer Commitment Fee (at least 2%) is nonrefundable, and the downpayment subsidy is forfeited, if the lease is terminated prior to the Purchase Date or if the option to purchase is not exercised. Concessions from sellers or developers are nonrefundable and may be pledged to other eligible homebuyers to purchase the vacated property, "\ . Although other alternative means of mortgage financing may be available to 'the homebuyer at the Purchase Date, it is only by assuming the existing Mortgage Note that the homebuyer is eligible for the forgiveness of the unfunded portion of the Fair Market Value. . The predetermined Fair Market Value will not be adjusted to reflect the actUal property value at the time of purchase by the Tenant. In the event of significant property depreciation, the Authority cannot reduce the mortgage balance to reflect the new appraised value at the time of assumption, but in the case of significant property . appreciation, the Authority cannot increase the predetermined Fair Market Value Purchase Price. . . The Authority is imposing a shared equity subsidy reimbursement fee from the homebuyer if the property is sold or the mortgage refinanced in the first three and one- half years after the Purchase Date. After the three and one-half year period, the homebuyer I1)ay refinance or sell the property without penalty (or recapture). . As owner of the property, the Corporation shall enter into an all.risk insurance policy with a qualified carner to provide coverage in the event of significant damage or repair. Once the Mortgage Note is assumed, the homebuyer will assume the responsibilities as owner and will be required to obtain standard homeowner's hazard insurance coverage at his/her expense. :. LEASE-PuRCHASE PROGRAM 5 ~at.nr._,bl: """ :.::i -... ::.j .:...-..... .' , &. *. :.~ ..' . ., ~. '.' -0+", '. -.., ':j ?:} '.'1 ..' +-:.: ,'. !, . '.' .'Or " . " '. .... e,. ....;-. ~.., ", CALIFORNV. RURAL HOME MORTGAGE FINANCE AUTHORITY ISSUER The California Rural Home Mortgage Finance Authority (the Authority) was established by the Regional Council of Rural Counties (RCRC) in 1993 pursuant to a Joint Powers Agreement and currently represents 28 counties throughout Northefl:l and Central California. Established in 1971 for the purpose of representing the views of rural California counties to the California Legislature, RCRC currently administers several other JP As in addition to the Authority; RCRC's staff is responsible for presenting all Lease Revenue Obligation resolutions, documents, and progress reports to the Authority's Board for final review and approval. The Authority also has provisions to allow other interested Counties and Municipalities to participate in its Lease~Purchase Program as full or associate members subject to terms and conditions imposed by the Authority. The Authority is governed by a Board consisting of County Supervisors and/or representatives from each member county. Current member/associate member counties are: Alpine County Amador County Calaveras County Colusa County Del Norte County EI Dorado County Glenn County Humboldt County Inyo County Lake County Lassen County Madera County Mariposa County Merced County Madoc County Mono County Nevada County Placer County Plumas County San Benito County San Bernardino County Shasta County"' .. Sierra County Siskiyou County Tehama County Trinity County Tuolumne County Yolo County Prospective member counties desiring to be accorded regular membership status must become members ofRCRC; those counties that are not eligible for RCRC membership may participate in the Authority's housing programs as an Associate Member ~ subject to certain terms and conditions. In both cases, a resolution authorizing such a membership, together with the signing of the Joint powers Agreement, must be adopted and authorized by the Board of Supervisors or by the City Council and approved by the Authority's Board of Directors. LEAS~PuRCHASEPROGRAM ) \ 6 lI;""""r<_bl; 1 . ,. . ..., . . ;..... CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORlTY THE CORPORATION Once issued, the Authority will release Lease Revenue Obligation funds for use by its newly- funned non.profit subsidiary, the California Rural Home Mortgage Finance Corporation (the Corporation) to purchase eligible properties as secured by qualified applicants who desire to live in and eventually own the property. The Corporation will actually purchase the property as selected by the bomebuyer and is the owner during the Lease Period.; loan documents are executed in the Corporation's name. The Corporation is responsible as the Mortgagor for making the monthly mortgage payments. The Corporation's Board of Directors is comprised of the same representatives as the Authority. . PROGRAM ADMINISTRATOR The Authority and the Corporation is administered and staffed by RCRC's Executive Director and its full-time staff of five (5) employees. As Program Administrator and Compliance Agent, RCRC will be responsible for the oversight and management of the Corporation' s obligations. .: :.:.:.:.::.~.: .... .':.~: COMPLIANCE AGENT The Compliance Agent will be responsible for ensuring that all submitted loan applications are eligible under the Program. The Compliance Agent does not revicv,' the loan underwriting standards and credit considerations for each eligible loan. However, the Compliance Agent will diligently review docwnents pertaining to the acquisition cost (i.e., Est.irrdted HUD I Settlement Statement) and condition (Le., sales conuact, appraisal, inspection report) of the property. The Compliance Agent reserves the right to submit comments and suggestions to ensure that the purchase of such property on behalf of the tenant is in the best interests of both the tenant and the Corporation. The Corporation is in no v..ay obligated to purchase the home on behalf of the tenant if any items or deficiencies have not been resolved to the complete satisfaction of the Compliance Agent. . LEASE SERVICER As Lease Servicer, the Corporation will execute a Lease Agreement with the homebuyer and collect the lease payments from each homebuyer, in advance and on the first of the month, as specified in the Lease Agreement. The Corporation will use the lease payments received from tenants to make its mortgage loan payments for the duration of the lease period until the homebuyer assumes the Mortgage Note, after which the mortgage payments will be made by the homebuyer directly to the LenderlServicer. The Lease Servicer will notify homebuyers of any delinquent pa)ments and institute eviction proceedings in accordance with State law if the non~pa)ment continues. Homebuvers will in turn notif.,. the Lease Servicer ofhislher intention to exercise the Durchase oDtion at least 90 davs before the oredetennined Purchase Date. Tne Lease Servicer ",ill track any voluntary contributions pledged by the homebuyer. The Lease Servicer will remit the monthly mortgage payments on behalf of the Corporation from amounts collected as lease payments and from resources available in the Mortgage Reserve and Mortgage Pool Policy. . ;:.:~:: . . '. '"0': LEASE-PuRCHASE PROGRAM 7 11.""""(<_ bt '1 .". ,.... .' ".' '.": . ~. . ;1 -.. ..' ",,: ,'. .-' .... .' ....... q CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY PROPERTY MANAGER As the Property Manager, the Corporation will be assuming the ownership responsibilities for each property during the lease period. A general information number will answer homebuyer questions and calls pertaining to other necessary services. The Property Manager will coordinate with the bomebuyer, the homeOwoer's insurance provider, and the homeowner's wananty carrier, to ensure that any damage, repairs, or maintenance are addressed. lbe Property Manager will conduct an annual walk-through inspection of the property to confirm the property's condition and appearance. Failure by the tc:nant to promptly correct any deficiencies or problems identified in the inspection report could result in the termination of the lease. In the event of eviction or lease termination, the Property Manager, with the assistance from Lenders, real estate brokers and local housing authorities, will seek new bomebuyers for the vacated propenies. THE CORPORATION'S ADVISORY COUNCIL As a means of providing additional assistance for tenants at the local level, the Corporation is soliciting the cooperation and experience of local housing authorities, housing departments, and redevelopment agencies on a consultant basis. These local housing agencies will provide information pertaining to local issues and concerns and can assist in finding new homebuyers for any lease terminations. OBLIGATION UNDER\VRTTER The Authority's investment banking firm is George K. Bawn & Company (Sacramento). As Obligation Underwriter, George K. Bawn & Company is responsible for the pricing and selling of the Lease Revenue Obligations and the ultimate structuring of the Lease.Purchase Program. George K. Bawn & Company also advises the Authority on maners pertaining to the Lease Revenue Obligations requirements and the pooling of mortgage loans into GNMA and F1ll..MC Cenificates. MASTERlSERVICER The Authority has selected First Nationv.ide Mortgage Corporation as the MasterlServicer of its Lease-Purchase Program; all Lease-Purchase Program loans will be serviced through First Nationwide Mortgage Corporation. PRINCIPAL LENDER The Principal Lender for the Program is Kaufinan & Broad Mortgage Company. Kaufman & Broad v.ill assist the Corporation in marketing the Program throughout the Authority's member counties. Kaufinan & Broad will also serve as Wholesale loan processor for other lenders who do not have a specific reserved allocation. LENDER CORRESPONDENTS - RET AIL/WHOLESALE Lender Correspondents - third-party originators or mortgage brokers - must be approved by the Authority and the MasterlServicer as participants in the Lease-Purchase Program - subject to certain tenns and conditions. Lender Correspondents not having specific reserved allocations must submit their loan packages to Kaufman & Broad Mortgage for processing and submission to First Nationwide. Lenders with reserved allocations and with Authority approval, may package and submit their loans directly to First Nationwide. AJllenders v.;1I develop and implement marketing programs throughout the Authority's member counties. LEASE-PuRCHASE PROGRAM 8 ll:a1>mIc'lIou<,bk CALIFORNlA RURAL HOME MORTGAGE FINANCE AUTHORITY . .' .; ; III. ADMINISTRATION TEA1\! . ISSUERlPROGRAM ADMlNISTRA TOR Regional Council of Rural Counties 1020 12th Street, Suite 200A Sacramento, CA 95814 (916) 447-4806 -(916) 448.3154 (fax) COMPLIANCE AGENT Regional Council ofRuraJ Counties 1020 12th Street, Suite 200A Sacramento, CA 95814 (916) 447-4806 (916) 448-3154 (fax) Marcia 1. Basque Executive Director Margo Jones Compliance Manager Ronald G. Lawton Director, Housing Programs CRHMF AfCRHMFC . . ..... TRUSTEE : U.S. Trust Company ofCaJifornia Corporate Trust Department 515 South Flower Street, Suite #2700 Los Angeles, CA 90071.2291 (213) 861-5049 (213) 488-1370 (fax) LEASE SERVTCER California Rural Home Mortgage Finance Corporation 1020 12th Street, Suite 200A Sacramento, CA 95814 (916) 447-4806 (916) 448-3154 (fax) . .. ....... ". . -"_...~:: Sandra Leess Trustee Valerie Justice Lease Service Manager Marc Paskulin Vice President PROPERTY MANAGER California Rural Home Mortgage Finance Corporation 1020 12th Street, Suite 200A Sacramento, CA 95814 (916) 447-4806 (916) 448-3154 (fax) (800) _. '" UNDERWRITER George K. Baum & Company 660 J Street, Suite #460 Sacramento, CA 95814 (916) 443-5525 (916) 443-7749 (fax) Ronald G. Lawton Property Manager ~<.- :..- . . p'. .-' - .. ..0. LEASE-PuRCHASE PROGRAM 9 lun..,/,_,bt /D .:.~. :::.: :. ..:;....:::....: : :. . .".. .' '--."., CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY . The Authority bas received authorization from FHLMC and CMAC to introduce a Lea.se- Purchase Program on a limited basis as a pilot program. Future authorization to continue the program is contingent upon the demand for such a product, the Corporation's ability to administer the Program to work with the homebuyers, and the successful assumption of the mortgages by the homebuyers. The Authority reserves the right to change the structure and forma! of the program in the interest of providing a more attractive mortgage product, provided the changes do DOt adversly affect the interests or rights of the Le:oderlServicer. AUTHORIZATION FOR THE ISSUANCE OF TAX-EXEMPT FINANCING The Authority's l...ease Revenue Obligations, 1996 Issue A, B and C, are treated for federal tax purposes as tax..excmpt "governmental purpose bonds" and do not require State authorizUion or allocation. The Authority expects to offer additional Lease-Purchase Issues according to the success and demand for such a product. Each Lease-Purchase Issue v.ill be designated by a distinct Issue number. The applicable loan ~, terms, and conditions for each Issue will be specified by the Authority in the Lender Notice of Rate, and explained in greater detail as necessary in a subsequently- released Bulletin from the Corporation. MORTGAGE PROGR-\M The Authority's Lease-Purchase Program is a FHLMC Participation Certificates (PC) and GNMA Mortgage-Backed Securities (MBS) Program. FNMA Mortgage Backed Securities are Dot currently eligible under this Program. The Trustee, on behalf of the Corporation, can only purchase eligible MBSIPCs and is not obligated to purchase Mortgage Loans. The Mortgage Loans are not eligible for inclusion in other MBSIPC pools sold or traded in the secondary market. Conventional Mortgage Loans must comply v.ith the FID..MC handbook and FID..MC Guide as well as the MasterlServicer's contraCt v.ith FHLMC pertaining to the Authority's Lease- Purchase Program. LOAN FUNDING To facilitate the loan funding process, the LenderlLender Correspondent v.ill fund the Subsidy Advance 7% for a FHA-insured loan; and 8% for a FID..MC conventionally-insured loan at settlement on behalf of the Corporation. These loans v.ill then be sold either to Kaufman & Broad or to First Nationwide Mortgage Corporation, depending on whether the LenderlLender Correspondent has a reserved allocation. First Nationv.ide Mortgage Corporation will pool all Lease-Purchase Loans. Once the Mortgage Notes are pooled into GN:MA MBS or FHLMC PCs, the MasterlServicer will sell the Certificates to the Trustee at an MBSIPC Purchase Price of 99.7% of Mortgage Note plus the amount of the Subsidy Advance. RESER V A TJON SYSTEM Once the Lease Revenue Obligations are issued, the Authority v.ill maintain a loan-by-loan reservation system to provide tenants with the appropriate funding for up to 90 days. The reservation system is necessary because of the Authority's obligation to track the loans on a LEASE-PuRCHASE PROGRAM 10 ll:m.m(<-...I>t II .:< .-.:.: CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORlTY RESERVATION SYSTEM (CONTINUED) per county and per development basis. The Lender will provide the Authority with the preliminary information so that a reservation confirmation can be released. Once the Lender has obtained the reservation, the Compliance Agent expects the Lender to abide by the following timetable, or the reservation may be canceled and the reservation amount returned to the p<XlI: . Within 30 days of the reservation request, the Lender will confinn the status of the loan; . Within 60 days, the Mortgage Loan Package must be delivered to the Compliance Agent; . . Within 90 days, if the Mortgage File has been approved by the Compliance , Agent, the Mortgage Loan must be closed and funded. . Reservations will be assigned based on considerations of geographical location; lessee/tenant income and family size; property purchase price; whether the property is new construction or existing; and other programmatic requirements. LENDER ALLOCATIONS The Authority may accept Lender requests on behalf of developers for a specific allocation of funds v.ithin a time period of up to six (6) months or more, as negotiated (see Exhibit L- Lender Allocation Agreement). The Lender will be required to execute an agreement and to pledge the pa)ment of a front-end or back-end penalty fee, or both., subject to a defined tolerance level, for unused allocations, which can be charged to the developer. The allocation will be assigned to the Lender in its own name and will be reserved specificall)' for Mortgage Loans originated by the developer. As the Mortgage Loans are originated, the Lender is to contact the Authority and request a single loan reservation providing the required information. The Lender's allocation for the specific developer will be reduced accordingly until the commitment has been fully expended. The Lender may reassign any unused funding if the developer fails to originate as expected within the specified time period. . -.". -..... .:;:':':'.:.:'~'; _r' ~.. . .... The Program Administrator reserves the right to allocate proceeds in whatever manner in its , sole judgment best fulfills the purposes of the Program. TARGETED AREAS The Lease-Purchase Program has-no federall)'~efined Targeted AIe2S, nor are there any fund set.asides in this program designated for such ate2S. The Corporation does reserve the right to establish certain incentives or exemptions for specified Priority Counties to encourage loan originations in those are2S. ., ,. RESTRICTIONS ON USE OF FuNDS Funds realized from the Lease Revenue Obligations may be used throughout the Authority's jurisdiction but without the consent of MBlA, Lenders shall not originate nor the Authority approve mortgage loans with respect to Homes v.ithin the jurisdiction of any member of the Authority such that the principal amount of mongage loans within the jurisdiction of such member exceeds the greater of (a) that percentage of the total amount initially deposited in the Program Fund under the Trust Agreement equal to the percentage the county member's population represents of the total population of all members of the Authority or (b) 10% of the total amount initially deposited in the Program Fund under the Trust Agreement. Additionally, no more than 25% of the units in a development or subdivision may be :financed with Lease Revenue Obligation funds v.ithout MBlA's consent. ~ LEASE-PuRCHASE PROGRAM 11 lo:aNnr._bt J .?- . . 1- . ......... . . :..... ~ :_"::. -:.- ~. :':_: .. . . . "-.' CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY ELIGmLE HOMEBUYERS Elisrible aDolicants need not be a first-time homebuyer to Qualify for the CoroOr.\tion's Lease-Purchase Prwram. Eligible homebuyers desiring to purchase a bome in any of the member counties must qualify wif:h the Lc:oder/Lcnder Correspondent, prior to the purchase of the bome by the Corporation, as if the homebuyer were applying for the Mortgage Loan. The applicants must conform to standard FHA, CMAC, and Fffi.MC (Affordable Gold) (also VA and FmHA if applicable) loan underwriting guidelines to verify if the bomebuyer is initially qualified as a potential mortgagor and to ultimately assume the Mortgage Note obligation from the Corporation. The bomebuyer's creditworthiness must not only be determined initially but verified again during the lease period and confirmed once again prior to the assumption date. The Homebuyer must remain qualified as a potential mortgagor to be eligible for the Mortgage Note assumption and the forgiveness of the unfunded balance. Eligible homebuyers must meet household income requirements as determined by the Authority . OCCUPANCY !PRIMARY RESIDENCE The bomebuyer must occupy the property as a primary residence and not intend to use the property for investment or income producing purposes. Renting all or a portion of the property is prohibited (except under extreme hardship circumstances on a temporary basis with the prior written approval of the Corporation). The first lease payment \\;11 be due at close of escrow. ELIGIBLE PROPERTIES The borne being purchased by the Corporation on behalf of the homebuyer must meet all program requirements, housing code specifications, and underwriting guidelines prior to the Closing Date. Eligible properties may be new or existing, must be a single-family, oy,ner- occupied, principal residence defined as: one-unit detached, condominium, or planned unit developments (PUDs). Manufactured homes are acceptable but must meet housing code requirements. Co-Operative Housing Units are not eligible. Homes located in neighQarhoods that have vacant, boarded-up or abandoned properties may not exclude a property from being purchased by the Corporation but such circumstances will be considered and evaluated on an individual basis. The Corporation is interested in acquiring properties in good and presentable condition. Failure by the homebuyer to maintain the premises in good and presentable condition could result in the termination of the Lease Agreement. Properties with swimmin~ pools, in-zround or above zround, are not eligible under this proZram. INCOME!PURCHASE PRICE LIMITS There are no federally-mandated income or purchase price limits similar to first-time bomebuyer programs imposed on this Lease-Purchase Program. However, the Authority will establish maximum income and purchase price limits, as necessary, to insure loan availability to low and moderate income borrowers. Currently, the Authority has established bouseho1d income parameters of 120% of statev.;de median income for families of two or less and 140% of statey,;de median income for families of three or more. These limits are subject to change by the Authority. There is no income differential for new vs. existing housing. Home purchase prices will be restricted by the loan limits imposed by FHA on a county by county basis (y,ith a ma..ximwn loan amount ofS152,362) and by F1U.MC on a PC pool basis (a maximum loan limit of $207,000). LEASE-PURCHASE PROGRAM 12 b.:aNn(<_bt. /5 .'--. ....- . -." . , , . '., ',' . . ~ . ...... . ......... ' .. .--' -' ..' "-." . , ...-. '-- :..' Ii CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY FHA I FHLM C COUNTY MAXIMUM LOAN AMOUNT LIMITS FHA FHLMC Alpine Countv 101.250 207.000 Amador County 123.000 '. 207.000 Calaveras County 125.850 207.000 Colusa Counrv 101.250 207.000 Del None County 101.250 207.000 El Dorado County 151.800 207.000 Glenn County 122.550 207.000 Humboldt CounN 123.500 207.000 lnvo CounN 147.250 207.000 Lake County 123.500 207.000 Lassen County 122.550 207.000 Madera County 146.550 207.000 Marioosa County 128,250 207.000 Merced County 128,250 207.000 Madoc Count'\' 122.550 207.000 Mono CounN 119.700 207.000 Nevada County 152.362 207.000 Placer Count'\' 151,800 207.000 Plumas Count'\' 122.550 207.000 San Benito CounN 123.500 207.000 San Bernardino County 151.525 207.000 Shast.a County 152.362 207.000 Sierra Count'\' 122.550 207.000 Siskivou Count'\' 122.550 207.000 Tehama County 122.550 207.000 Trinit'\' Count'\' 122.550 207.000 Tuolumne County 122,550 207.000 Yolo Count'\' 152.362 207,000 . . These loan limits are subject to change based on FHA I FHLMC guidelines, Please refer to updates provided by FHA I FHLMC for cumnt infonnation, MAXIMUM HOUSING EXPENSE AND OBLIGATIONS-To-INCOME RATIO FHA-insured Mortgage Loans (29o/cJ41 %); FHLMC-eligible Mortgage Loans (33o/cJ38%) Although FHLMC no longer dictates a maximum monthl)' expenses-to-income ratio of3~%, these general parameters will be adhered to unless there are strong compensating factors, FHLMC's GOLD MEASURE WORKSHEET Fffi..MC will require the compilation of credit scores to determine the overall creditworthiness of the homebuyer, FHLMC's Gold Measure worksheet identifies borrower and lw characteristics most closely related to credit risk and enables lenders to evaluate borrowers on a statistical basis. FHLMC's worksheets measure factors v.ithin the following categories: credit history, debt-payment ratios, income, assets and collater.a.l, and loan/property type. Correlated to FHLMC's statistical findings, risk units (ru's) are assigned for each of the factors under each category, Credit scores Will be calculated for both Conventional and FHA loans, . LEASE-PuRCHASE PROGRAM 13 IL-alvnrc_,bl: .... .. :./ .:~.: ..... : :. . .'. - - . .". - ,-'- .:..;...~~.~ ,.." .' -,Ow. . .'. -:.:~.:". . /5 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY LEASEIMORTGAGE TYPE FHA-Insured, (for GNMA MBS only) Conventionally-Insured (FHLMC PCs only) FMHA-GUARANTEED ! V A-GUARANTEED These loans types are eligible but still require FmHA and VA approval, LEASEIMORTGAGETERMS 30-yw, fixed-rate, level-amortization Mortgage Loans (FHA and FHLMC), (V A, FmHA.- eligible if approved) ORlGINA nON PERIOD The Corporation expects the MasterlServicer to fund eligible Lease-Purchases and the Trustee to purchase GNMA MBS/Fffi..MC PCs from the LenderlServicer over a five(5) yw origination period. LEASE-PURCHASE RATES Lease-Purchase rates for each Issue will be defined by the Lender Notice of Rate, LEASE AGREEMENT! ASSUMPTION N OTI CE Prior to the purchase of the home by the Corporation, the homebuyer has agreed to enter into a Lease Agreement with the intention of exercising the option to purchase the home at the Fair Market Value and to assume the outstanding Mortgage Note at any time during the Purc~e ~eriod, Although the Lender bas determined that the homebuyer is initially qualified for homeownership, the lease agreement establishes the appropriate conduct of the bomebuyer during the lease period if the Corporation is to approve the assumption. The Purchase Period begins 12 months into the Lease Period and extends up to the Final Assumption Date. Acceleration of the purchase date is subject to program conditions and the Authority's approval. The homebuyer must provide the Corporation with 90 days notice to provide sufficient time to verify the Homebuyer's creditworthiness, the reimbursement of the Subsidy Advance, and to execute the appropriate assumption documents. Under certain circumstances, the assumption date may be extended by the Corporation if the Homebuyer needs additional time. LEASE-PuRCHASE PROGRAM 14 b;crlvtICc- lK CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORlTY LEASE PAYMENTS (M ONTHL y) The Homebuyer will agree to make lease payments equal to what he/she would have had to pay as Mortgagor; the calculation ofwhieh would include the following: · Mortgage principal and interest . . Mortgage msur.mce premium . Property taxes, other taxes " . Estimated Homeowner's all risk insurance premium . Lease Servicing Fee . Other mortgage - related items (to be determined) . Monthly contribution (voluntary) . COMMITMENT FEEIDOWNPA YMENT CONTRIBUTION AJ; evidence of the applicant's commitment to the Program, the bomebuyer must contribute a Conunitment Fee payment at closing ofar.lcast 2% of the purchase price, which is nonrefundable if the lease is terminated or if the option to purchase the bome is not exercised. The Conunitment Fee may be funded from the homebuyer's o....n resources, as a gift from a documented relative, or as a concession from the seller or developer of the property, and ....ill be used to fund closing costs. If the homebuyer's Commitment Fee and the Corporation's Subsidy of up to 7% for a FHA. insured loan; and 8% for a FHLMC conventionaIly.insured loan is still Dot enough to cover the total doy,npa)'ment and closing cost for the home purchase, the homebuyer y,ill be required to obtain an additional cash contribution to fund the difference. This cash contribution is non.refundable if the homebuyer elects not to exercise the assumption option. :. - w-.- + ,:-: .::~'.. . , ..... OTHER GIITS/SELLER'S CONCESSIONS For conventionally.insured (FHLMC) loans, the homebuyer may combine a variety of funding sources. either initially prior to purchase or accumulated during the lease period - as long as the homebuyer can verify that a minimum 3 % of the purchase price has been paid either by the Subsidy Advance or from the homebuyer's own financial resources. SUBSIDY ADVANCE AND REIMBURSEMENT Once the compliance review is completed, the Lease Agreement signed, and the Conunitment Fee received, and, if applicable, other contributions identified and paid, the Corporation will purchase the home as selected by a qualified homebuyer, using Lease Revenue Obligation funds to finance the mortgage. Together with the homebuyer's Commitment Fee, the Corporation will finance 7% for a FHA-insured loan; and 8% for a FID..MC conventionally~ insured loan of the Mortgage Note amount to fund the required equity deposit and/or the total closing costs, including prepaid items. The difference between the Lease Payments and the tax-exempt Lease Revenue Issue A Obligation payments, less financing charges and issuance costs, generates a Subsidy up to 7% for a FHA-insured loan; and 8% for a FID..MC conventionally.insured loan, of the loan amount over a lease period of approximately 3 years. The accumulation of the Program's Subsidy up to 7% for a FHA-insured loan; and 8% for a FID..MC conventionally.insured loan during the lease period qualifies under FHLMC Affordable guidelines as the equity required from the Tenant's own resources. .,'. LEASE-PuRCHASE PROGRAM /6 15 ..ertunr._,bC :.. :/: .- .. ..' ....- .... :.&."..:. . ... . . .".. ~ . -: .-: "--. \::.-: /1 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY MORTGAGE INTEREST DEDUcnON Since the ownership oftbe property resides with the Corporation during the lease period, the Tenants. cannot deduct the portion of the lease payment representing the interest on the Corporation's Mortgage from their income tax returns. RECAP11JREIlNVESTOR SHARED EQUITY SUBSIDY REIMBURSEMENT FEE There is no federal recapture due the feckral government. However, once assumed, the bomebuyer as Mortgagor will incur an Investor shared equity subsidy reimbursement fee if the Mortgage Loan is refinanced or if the property is sold within the first three and one.half years after the assumption date. The Mortgage Note may be assumed by another qualified bomebuyer without penalty in the first three years. The Mortgagor will be liable for half of the Mortgage Ra1e percentage multiplied by the outstanding Mortgage balance. For example, if the Mortgage Rate is 7.50/0., the shared equity subsidy reimbursement fee will be 4% of the principal amount of the related Mortgage loan. The shared equity subsidy reimbursement fee is enforceable to the extent penniued by the State law. v. OTHER PROGRAM FEATURES ORIGINATION FEE A maximum Origination Fee equal to 1.00% (FHA. FHLMC) of the final Mortgage Amount is payable to the loan originator of record at closing; an additional .25 % Discount F ce may be charged if funded as a concession from the seller or developer. Additional Discount Fees or Points of any amount may Dot be charged by the Lender. Total compensation to the lenderlbroker may not exceed I % origination and .25% discount point. CLOSING COSTS Nonrecurring costs must be customary and reasonable. Such items may include but not be limited to: -Escrow Fees -Title Insurance - Appraisal -Credit Report Fees -Tax Service -Flood Certification -Wire Fees -Document Preparation Fees -Recording Fees -Inspection Fee (for properties 5 years of age or older) A credit report will be issued and reviewed 12~18 months into the lease period to ensure homebuyer compliance with the lease agreement. LEASE SERVICING FEE The Lessee shall be obligated to pay, in conjunction with the monthly lease payment, a Dominal Lease Servicing Fee to an Operations, Repair and Maintenance Fund for expenses incurred by the Corporation in operating the Program and for repairing, rehabilitating and . otherwise maintaining properties owned by the Corporation. Currently the monthly Lease Servicing Fee is set at twenty-five dollars (S25.00) per month. This fee is subject to change by the Corporation. LEASE-PuRCHASE PROGRAM 16 lI:_lc_bi ... ! . ..,- . , .. -'. .- .,... .:: : :.: : . . ., ...., '" .. :'.:.:;. '. ::/:..::....~.~-.::. .. ..... -~_:.....--: .. . - ~. '.' -.' . . :., -"."".- . . ..... '-'w' /q CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY RECURRING COSTS (PREP AIDS) Funding for prepaid items, such as property taxes, MelllrRoos, and accrued interest will vary for c:ach loan. Lenders should attempt to limit such expenses by arranging the Closing .... Dates to minimize accrued interest or prepaid taxes. Lease payments will be adjusted by the Corporation to ~flcct any changes to the taxes and/or premiums due from the Corporation or any changes to fees due to the Corporation. MORTGAGE INSURANCE All Mortgage Loans must have qualified mongage insurance. GNMA~ligible Mortgage loans require either FHA insurance, or (if approved) a V A-Guarantce or a FmHA- Guar.1ntee. For FHLMC-eligible Mortgage Loans, the Corporation has selected Commonwealth Mortgage Assurance Company (CMAC) as the sole provider of private mongage insurance for conventional loans. Under FHLMC's Affordable Gold Program, mongage insurance is not required for the life of the loan and may be discontinued subject to certain loan-to-value tests and conditions. CMAC will provide 30% primary mortgage X insurance coverage at an annual cost during the Lease Period of 110 basis points, to be charged as a premium on a monthly basis.' After the assumption by the Homebuyer, the monthly premium will be reduced to 78 basis points. . TEMPORARY BUYDOWNS Temporary buydov.ns are permitted for FHA-insured loans in accordance with FHA underv..riting guidelines. Temporary buydowns are not pennitted for FHLMC-eligible conventional loans. SUBORDJNA TE FINANCING Subordinate financing is not authorized for this program. INSPECTIONS For existing properties that are five (5) years of age or greater, the homebuyer on behalf of . the Corporation will be responsible for; obtaining a qualified inspection report prior to the date of purchase for review by the Corporation. A qualified inspection report is one accomplished by a member in good standing of the California Real Estate Inspection Association andlor the American Society of Home Inspectors. Any items listed in the Inspection Report must be resolved prior to the Closing Date to the satisfaction of the Corporation. At the time of purchase by the Corporation, the property must be in compliance v.ith local code requirements and the requirements for the elimination of lead- based paint hazards. The property must be in good repair, with the major components having an estimated life of at least ten years from the date of sale to the Lessor. A walk-through inspection of the property will be conducted by the Corporation 12.14 months into the lease period and annually thereafter, to ensure that the property is being properly maintained and in good condition and at other times as deemed necessary by the Corporation. If the home is less than five (5) years old, an inspection repon v.ill not be required as a condition of the loan. However, the Corporation reserves the ri~ht to approve or reject any property based on its 'own evaluation. LEASE-PuRCHASE PROGRAM 17 1<crtn!<Il-<.bk e. . ... ..' .- ',' . ". . . '::.... .".~' _'~" 0.' e, /1 CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY ApPRAISALS Appraisals must meet the qualification standards and/or guidelines of each l..eDder, FHA, VA., CMAC and Fffi...MC; appraisers must be licc:nsed or certified by the State of California. A second appraisal may be requested and funded by the Tenant prior to the assumption date but is not required by the Corporation as a condition for the assumption. REFINANCING/CONVERSIONS After (the first) three and one-balf years from the Purchase Date, (the assumption by the bomebuyer), the Mortgage Note may be refinanced. converted, or the property sold without any recapture, shared equity, or prepayment liability due from the homebuyer. Streamlined refinancing is available for FHA-insured and conventional loans. HOMEOWNER'S INSURANCE The Corporation, as owner of the purchased properties, will enter into an all-risk commercial property insurance policy which will cover all risks of direct physica1loss, including theft and vandalism, normally provided by standard homeoYmer's insurance policies. Damage to covered property as defined in the policy means the follo....ing: eFixtures, machinery, equipment eClean up and removal of debris eCompleted additions eDamage resulting from theft, eOutdoor fixtures burglary, or robbery eOutdoor Furniture eGarages, storage buildings eOutdoor property eFloor Coverings e All refrigerating, ventilating, cooking, dishwashing, or laundering appliances that are property of the Corporation. Any deductible under the Corporation' s Insurance Policy will be covered b)' the Corporation. LEASE-PuRCHASE PROGRAM 18 k:crtlml<~ bl CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY HOMEOWNER'S WARRANTY As a condition of the purchase of a new home, the seUer or developer must agree to provide a borne warranty in favor of the Corporation and acceptable by the Corporation, for the period of the lease to protect the Corporation, as bomebuyer, against costly repairs to fixtures, appliances and to the property in general. Sellers of existing homes are also required to provide home warranties acceptable to the Corporation. In the evcnt the seUer of an existing home refuses to provide for a home warranty policy, the Lessee (prospective bomebuyer) agrees to provi~ a home wananty policy for the tenn of the lease or accc:pt responsibility for maintaining the property in good repair in accordance with terms of the Lease Agreement. Wananties will cover items such as: eplumbing system eWater beater e Air Conditioning!beating system e Ductwork e Electrical system eGarage door opener (built-in) eTelephone wiring ePest control eDishwasher (built.in) eGarbage disPosal eBuilt.in microwave oven e RangeJovenlcooktop (built.in) eTrash Compactor (built-in) eBuilt-in food center e Ceiling fan eWell pump W"'_ '. . .:::~':..::: ~. :.:::~.:- Home Warrant)' policies may impose a service fee, payable by the tenant, per repair visit or based on actual cost of service, whichever is less. \- ~i. ~ t/ r H~.tOI' ' ASSUMPTIONS \ ~ ~ An assumption fee ....iU be imposed by the MastcrlServicer and the Corporation to cover associated processing and recording costs. After being assumed by the homebuyers, Mortgage Notes are again asswnable by a subsequent homebuyer. Subsequent bomebuyers need not seek approval from the Corporation, except in the first three and one.ha1fyears (42 months) after the Assumption Date. ....... . . ,-. LEASE-PuRCHASE PROGRAM 19 k:_~~ . 'i . . . ,.' '. . CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY HOMEBlJYER EDUCATION Pre-purchase homebuyer education or COWlSeling is required. Topics such as what to look _for in selecting a home, how to bid for a borne purchase, budgeting, loan application and closing procedures, as well as home maintenance and personal credit should be covered. Course material and instruction may be provided by CMAC in conjunction with the Lender/Correspondent. Certification that the homebuver Oessee) bas comoleted homebuver education will be reauired for Comoliance review and aooroval. .-'" . ." .):~/;;}.\);~: .. '" ::.' . :. For those homebuyers with good credit that have suddenly experienced adverse credit issues during the lease period. participation in a lender's Homebuyer Club or some other approved homebuyer COWlSeling program is mandatory and will focus primarily on resolving those credit issues prior to the assumption date. .; ; :::: <:-.~. . " .' ". .' . .:, ':., ...:- -': ::'.'- ....::.. '.: '-::: :;~ >-:-.'.:..:: .::.'- " . . . . .' .' ,':.... '.".- .' ..... .'.-. .... .... Co-SI GNERS/Co- ~1 ORTGAGORS .. Co-si~ners (individuals who si~n only the Mort~a2e Note but not the Deed of Trust) . ".: will not be permitted under this pro~rarn. Co-mortgagors (those who will execute the Mortgage Note and the Deed of Trust) must occupy the property and meet the guidelines of FHA, flll.MC and CMAC. The failure of ODe or more of the co-mortgagors to qualify, would require the remaining mortgagors to qualify on histber oym merits prior to the assumption date. ......-. . . . 0... .:' ~ ....\ .:"; ~.:' :::',:~:~ ~:": :-......... :-': ::.:. :'. ~ :.:::;,:0.- _:: .:. .:'.. . ': '.:'.': . :,::.:.-~..:.:.:, ..:....:....;....:. :.:.}..::\~:;V::~~~/? . . ....0. o' ::: :.:' ~..:'~.:(//:\'~. ...(;.~ ::~::.: (: ~.:.:~ t~::::": . '- - ..... W(f~\;c;t. ...0...... '. .:: SubjectS to be covered will include, but Dot necessarily limited to: . Prepare for the loan assumption process and understand the issues involved in qualif)ing. . Understand the importance of establishing a strong credit reputation. . Address any inaccuracies or deficiencies on their credit report. . Identify the important elements of home selection and how to find a home that is affordable over the long-term. . Know about the financing and closing processes associated with a home purchase. . Understand how to avoid mortgage delinquencies, defaults and foreclosures. _.. . - ~- LEASE. PuRCHASE PROGRAM . . . o. . ~':~:: ....... ~ ;'~' ~ :0'.: ;1{tfIi1il '::.~ :_: > : _:A,' :' ..:> ::,~:.: 20 lI:~,bk . '.. - . '. .' ... .:'- .'.: -. -' . ; .::' . '-" '.-', . -. . . . ." ..' . . .:</ .' . ,'" ..' -'. : :': . - . :. : : : ~ ': ; : .. . . e.. ". ." e:.,-. , -. . ~ '0 JOINT EXERCISE OF POWERS AGREEMENT CALIFORNIA RURAL flO:ME MORTGAGE FINANCE AUTHORI1Y (AMENDED MARCH 1, 1995) THIS JOINT EXERCISE OF POWERS AGREEMENT, dated for convenience as of July 1, 1993, by and among the California Local Government Finance Authority, the County Members (hereinafter defined), the Associate Members (hereafter defined) and any other public agencies that may hereafter be added as a County Member or Associate Member pursuant to the tenns hereof (with all parties to the agreement collectively referred to herein as the "Members") identified on the signature page hereto and incorporated by reference herein. WITNESSETH: WHEREAS, the Joint Exercise of Powers Act (commencing with Article 1 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California) (the "Act") authorizes the Members to create ajoint exercise of powers entity to be designated the "California Rural Home Mortgage Finance Authority" (the "Authority) which has the power to jointly exercise any powers common to any or all of the Members; WHEREAS, the Members are each empowered by law to finance the construction, acquisition, improvement and rehabilitation of homes; WHEREAS. the Members have detennined that a joint exercise of powers authority should be fonned to exercise their respective powers for the purpose of financing home mortgages with respect to property within the boundaries of the Members and other participating public agencies; WHEREAS, by this Agreement the Members desire to create and establish the California Rural Horne Mortgage Finance Authority for the purposes set forth herein and to exercise the powers described herein and as provided by law. NOW, THEREFORE, the Members for and in consideration of the mutual premises and agreements herein contained so each agree as follows: SECTION 1. Definitions Unless the context otherwise requires, the tenns defined in this Section 1 shall for all purposes of this Agreement have the meanings herein specified. erlunfa~paman:h.96 1 EXHIBIT 3 d-- "Act" Means the Joint Exercise of Powers Act commencing with Article I of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, including the Marks-Roos Local Bond Pooling Act of 1985, as amended. :-... . , "Agreement" means this Joint Exercise of Powers Agreement, as the same now exists or as it may from time to time be amended by any supplemental agreement entered into pursuant to the provisions hereof "Authority" means the California Rural Home Mortgage Finance Authority created by this Agreement. "Associate Member" means a non-Regional Council of Rural Counties member county, city or other public entity having housing powers admitted to associate membership in the Authority pursuant to a vote of the Board establishing that admission. "Board" means the governing board of the Authority as described in Section 7_ "Board member" means a duly appointed director of the Board. "Bonds" means bonds, notes, warrants, leases, certificates of participation, installment purchase agreements, loan agreements and other securities or obligations issued by the Authority or financing agreements entered into by the Authority pursuant to the Act and any other obligation given to the tenn "Bonds" under the Act. ,. -w.:;, . - . . :-. "California Local Government Finance Authority" means the California Local Government Finance Authority, a joint powers authority, organized and established under the provisions of the act. "County Member" means each county which is a member of the Regional Council of Rural Counties (RCRC) and which is a party to this Agreement, including the initial Counties identified on the signature page of this Agreement and each additional RCRC member county added pursuant to the provisions of this Agreement. "Member" means each County Member or Associate Member which is a party to this Agreement. "Regional Council of Rural Counties" means that agency incorporated under that name which shall staff the Authority. .Section 2. Purpose .. c:rbmfa \jpamatcl1.96 2 .~. .3 .. .' e;. e" \~~ The purposes of this Agreement is to provide financing for the construction, acquisition and rehabilitation of homes in accordance with applicable provisions of law for the benefit of the residents of the Members and other participating public agencies. In pursuit of these purposes, this Agreement provides for the joint exercise of powers common to any of its Members and other local agencies as provided in this Agreement, including assisting in financing as further authorized herein. These common powers will be jointly exercised in the manner hereinafter set forth. SECTION 3. Creation of Authoritv; Addition of Members (a) There is hereby created pursuant to the Joint powers Law an agency and public entity to be known as The "California Rural Home Mortgage Finance Authority." As provided in the Act, the Authority shall be a public entity separate from the Members. (b) Within 30 days after the effective date of this Agreement or any . amendment hereto, the Authority will cause a notice of this Agreement or amendment to be prepared and filed with the office of the Secretary of State of California in the manner set forth in Section 6503.3 of the Act. 10 Additional Members may be added upon the affirmative vote of a majority of the Board members. The addition of any new Member shall become effective upon the execution on behalf of such Member of a counterpart of this Agreement. (d) Associate Members may be added to the Authority pursuant to action by the Board upon such terms and conditions, and with such rights, privileges and responsibilities, as may be established from time to time by the Board. Such terms and conditions, and rights privileges and responsibilities may vary among the Associate Members. Associate Members shall be entitled to participate in one or more housing programs ofthe Authority, as determined by the board. The Executive Director of the Authority shall enforce the terms and conditions for prospective Associate Members to the Authority as listed in By-Law No. 1 to the Agreement, as amended from time to time by the Board. Changes by the Board of the terms and conditions for Associate Membership will not constitute an amendment to this Agreement. This Agreement shall become effective as of the date hereof and shall continue until such time as all Bonds and the interest thereon shall have been paid in full, or provision for such payment shall have been made, whichever period is shorter, or at such time as the Authority shall no longer own or hold any interest in a public capital improvement or program. SECTION 5. Powers: Restriction Uoon Exercise (a) To effectuate the purposes hereof, the Authority shall have the power to c:rbmfil\jpamarch.96 3 J.~ exercise any and all powers of the Members and other participating local agencies under the Act .:...._ and other applicable provisions of law, subject, however, to the conditions and restrictions . hereinbefore and hereinafter in this Agreement contained. Each Member may also separately exercise any and all such powers. (b) The Authority may adopt, from time to time, such bylaws, guidelines, rules and regulations for the conduct of its meetings and the activities of the Authority as are necessary or desirable for the purposes hereof. 1O The Authority shall have the power to finance residential home mortgages. The Authority shall have the power to purchase, with the amounts received or to be received by it pursuant to a bond purchase agreement, bonds issued by any of its Members and other local agencies at public or negotiated sale, for the purposes set forth in Section 2 hereof: all in accordance with the Act. Any such bonds so purchased may be held by the Authority or sold to public or private purchasers at public or negotiated sale, in whole or part. The Authority shall set any other tenns and conditions on any purchase or sale contemplated herein as it deems to be necessary, appropriate and in the public interest, in furtherance of the Act. (d) The Authority may issue or cause to be issued Bonds and other indebtedness, and pledge any property or revenues as security to the extent permitted under any applicable provision ofIaw. The Bonds, together with the interest and premium, if any, thereon of the Authority shall not constitute debts, liabilities or obligations of any Member. The Members hereby agree that any such Bonds issued by the Authority shall not constitute general obligations of the Authority but shall be payable solely from the moneys pledged to the repayment of principal or interest on such Bonds under the tenns of the resolution, indenture, trust, agreement or other instrument pursuant to which such Bonds are issued. Neither the Members nor the Authority shall be obligated to pay the principal of or premium, if any, or interest on the Bonds, or other costs incidental thereto, except from the revenues and funds pledged therefore, and neither the faith and credit nor the taxing power of the Members or the Authority shall be pledged to the payment of the principal of or premium, if any, or interest on the Bonds, nor shall the Members of the Authority be obligated in any manner to make any appropriation for such payment. .... No covenant or agreement contained in any Bond shall be deemed to be a covenant or agreement of any Director, or any officer, agent or employee of the Authority in an individual capacity, and neither the Board of Directors of the Authority nor any officer thereof executing the Bonds shall be liable personally on any Bond or be subject to any personal lability or accountability by reason of the issuance of any Bonds. (e) To effectuate the purposes hereof, the Authority is hereby authorized to do c:rbmfa~paman=h.96 4 .... . ~_::.-:", ft&..-.: '~..:.> "5 .""""' . ,....:~ . . . . . .. . ~~ , - .... all acts necessary for the exercise of such powers, including, but not limited to, any or all of the following: to make and enter into contracts; to employ agents and employees; to acquire, construct, provide for maintenance and operation of, or maintain and operate, any building, works or improvements; to acquire, hold or dispose of property wherever located, including property subject to home mortgages; to incur debts, liabilities or obligations; to receive gifts, contributions and donations of property, funds, services and other forms of assistance from persons, finns, corporations and any governmental entity; to sue and be sued in its own name; and generally to do any and all things necessary or convenient to accomplish the purpose set forth in Section 2 hereof. All property, equipment, supplies, funds and records of the Authority shall be owned by the Authority, except as otherwise provided in this Agreement. (f) Subject to the applicable provisions of any indenture or resolution providing for the investment of moneys held thereunder, the Authority shall have the power to invest any money in the treasury pursuant to Section 9(b) hereof that is not required for the immediate necessities of the Authority, as the Authority detennines is advisable, in the same manner and upon the same conditions as local agencies pursuant to Section 53601 of the Government Code of the State of California. (g) Such powers shall be exercised subject only to such restrictions upon the manner of exercising such powers as are imposed upon the County of Nevada in the exercise of such powers, as provided in Section 6509 of the Act. (h) Pursuant to the provisions of Section 6508.1 of the Act, the debts, liabilities and obligations of the Authority shall not be debts, liabilities and obligations of the Members. SECTION 6. Termination of Powers The Authority shall continue to exercise the powers herein conferred upon it until the tennination of this Agreement, except that if any Bonds are issued and delivered, then in no event shall the exercise of the powers herein granted be tenninated until all Bonds so issued and delivered and the interest thereon shall have been paid or provision for such payment shall have been made. SECTION 7. Governin2: Board (a) The number of Board members on the Board shall be the number of the members of the California Local Government Finance Authority, if that authority becomes a Member, plus the number of County Members that are parties to this Agreement. The governing board of each member of the California Local Government Finance Authority and of each County Member shall select a Board member. .... ~' 5 munra~pamarch.96 .10 (b) Members of the governing bodies of the Members may serve as Board .. _' members. The governing body of each member county represented on the board may designate an alternate Board member to act on its behalf and in the absence of the principal Board member and to exercise all the rights and privileges of the principal Board member, including the right to be counted in constituting a quorum, to participate in the proceedings of the Board, to execute and deliver documents, and to vote upon any and all matters. No such person may represent more than one Board member at any meeting of the Board. Any such designation shall be in writing, shall be filed with the secretary of the Authority and shall be effective for the meeting, meetings or other period of time specified in the writing. co Each Associate member may designate a representative to the Board, such representative shall not be a voting member of the Board; and shall not count for or against a quorum; but may attend meetings, propose agenda items and otherwise participate in Board Meetings. (d) Board members shall not receive any compensation for serving in their capacity as Board members, but shall be entitled to reimbursement for any expenses actually incurred in connection with serving as a Board member if the Board shall detennine that those expenses shall be reimbursed and there are unencumbered funds available for that purpose. SECTION 8. Meetin2S of the Board (a) The Board shall hold at least one regular meeting each year, and, by resolution, may provide for the holding of regular meetings at more frequent intervals. The date upon which, and the hour and place at which, each regular meeting shall be held shall be fixed by resolution of the board. ' <. (b) All meetings of the board shall be called, noticed, held and conducted subject to the provisions of the Ralph M. Brown Act, Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. <0 The secretary of the Authority shall cause minutes of all meetings of the board to be kept and shall, as soon as possible after each meeting, cause a copy of the minutes to be forwarded to each Board member and to each Member. (d) A majority of the Board members entitled to vote shall constitute a quorum for the transaction of business, except that less than a quorum may adjourn from time to time. Each Board member shall have one vote. Associate Members shall have no vote. (e) The principal office for the transaction of the business of the California Rural Home Mortgage Finance Authority is located at 1020 12th Street, Suite 200 A, abmf:aupamarch.96 6 . ~.. .: -'. . . ~ J.1 . .. ....:. . . . - .' . -, ." -:'.". .... ~~; ).tf Sacramento, CA 95814, in Sacramento County, including properly posted meetings at any facility in Sacramento County which complies with the requirements of California Government Code Section 54954(b)(4) and (d). SECTION 9. Officers~ Duties: Official Bonds (a) The Board shall elect a chair of the Authority and a vice chair of the Authority among its Board members. The officers shall perform the duties normal to those offices and as otherwise may be provided in the by-laws of the Authority. The Chair shall sign all contracts on behalf of the Authority, and shall perform such other duties as may be imposed by the board. The Vice Chair shall act, sign contracts and perform all of the Chair's duties in the absence of the Chair. The Board shall appoint an Executive Director who shall perform the duties of Secretary, Treasurer, and Auditor of the Authority; and shall be authorized to sign all contracts and conduct all business and shall perform those duties that may be imposed by the Board. The board shall appoint the Regional Council of Rural Counties Legislative Advocate as Assistant SecretaryfTreasurer/ Auditor for the Authority authorized to perform the duties of the Executive Director in hislher absence. The Board shall also appoint the Regional Council of Rural Counties Legislative Advocate as Legislative Advocate for the Authority. A Board member may hold more than one office of the Authority. (b) Subject to the applicable provisions of any indenture or resolution providing for a trustee or other fiscal agent, the treasurer is designated as the depository of the Authority to have custody of all the money of the Authority, from whatever source, and, as such, shall have the powers, duties and responsibilities specified in Section 6505.5 of the Act. (Q The Auditor shall have the powers, duties and responsibilities specified in Section 6505.5 of the Act. (d) The Treasurer and Auditor of the Authority are designated as the public officers or persons who have charge of, handle, or have access to any property of the Authority, and each such officer, if the offices are held by separate persons, shall file an official bond with the secretary of the Authority in the amount of$100,000. If and to the extent permitted by law, any such officer may satisfy this requirement by filing an official bond in at least that amount obtained in connection with another public office. (e) The offices of treasurer and auditor may be held by separate officers or employees of the Authority or combined and held by one officer or employee; provided that such person or persons shall comply with the duties and responsibilities of such office or offices as set forth in the Act. In the event the Board designates its officers or employees to fill the functions of treasurer or auditor, or both, such officers or employees shall cause periodic independent audits to be made by a certified public accountant, or public accountant, in compliance with Section 6505 mvnf&\jpamard1.96 7 of the Act. ..... (f) The Authority shall be staffed by the Regional Council of Rural Counties or any successor thereto. The Board shall have the power to appoint such other officers and employees as it may deem necessary and to retain independent financial advisors, counsel, consultants, contractors and accountants. The Board shall have the power, by resolution, to the extent pennitted by the Act or any other applicable law, to delegate any of its functions to one or more of the Board members or officers or agents of the Authority and to cause any of said Board members, officers or agents to take any actions and execute any documents or instruments for and in the name and on behalf of the Board or the Authority. The Board may establish an Executive Conunittee to oversee day-to day administrative matters of the Authority, subject to policy approval by the Board. The Executive Committee shall consist of the Chairman and Vice Chairman of the Board, and one other member to be elected by the Board to serve for the tenn elected (one year or the remainder of an unexpired tenn). The Board may also establish any other conunittees for any lawful purpose as it may detennine SECTION 10. Fiscal Year Unless and until changed by resolution of the Board, the fiscal year of the Authority shall be the period from July 1 of each year t and including the following June 30, except for the first fiscal year which shall be the period from the date of this Agreement to June 30, 1994. SECTION 11. Disposition of Assets '. .. Upon termination of this Agreement, all assets of the Authority shall be distributed to the respective Members and other participating local agencies in such manner as shall be agreed by the Members. SECTION 12. Bonds The Authority shall have power to issue Bonds in accordance with the provisions of the Act for the purpose of raising funds necessary to carry out its powers under this Agreement and to enter into appropriate agreement to secure those Bonds. The Authority shall also have the power to issue any other fonns of indebtedness authorized by the Act in accordance with th~ provisions of the Act for those purposes. SECTION 13. A~reement Not Exclusive: Operation in Jurisdiction of Member This Agreement shall not be exclusive, and each Member expressly reserves its rights to carry out other public capital improvements and programs as provided for by law and to issued other obligations for those purposes. This Agreement shall not be deemed to amend or .:.-. .. . ..w _ &._-_, = . .' - ,~-...: c:rhmfaljpamarch.96 8 ~9 .. .... .._0. ~ .-" .'" - .-..: \:.::;;." alter the terms of other agreements among the Members, except as expressly provided herein; provided that, the Authority shall not make or purchase any home mortgage secured by any home within the jurisdiction of a Member financed by an issue of Bonds without the consent of the Member to the issuance of those Bonds and that the giving or withholding of that consent is in the sole and absolute discretion of the Member but, if given by the Member and then relied upon by the Authority for purposes of entering into agreements with developers, lenders, other Members or others, such consent may not be revoked. SECTION 14. Conflict of Interest Code The Authority by resolution shall adopt a Conflict of Interest Code as required by law. SECTION 15. Contributions and Advances Contributions or advances of public funds and of personnel, equipment or property may be made to the Authority by any Member or any other local agency for any of the purposes oftrus Agreement. Payment of public funds may be made to defray the cost of any contribution. AllY advance may be made subject to repayment, and in that case shall be repaid, in the marmer agreed upon by the advancing Member or other local agency and the Authority at the time of making the advance. SECTION 16. Accounts and Reports: Annual Budl!et and Administrative Expenses (a) The Authority shall establish and maintain those funds and accounts as may be required by good accounting practice and by any provision of any resolution or indenture of the Authority securing the Bonds. The books and records of the Authority shall be open to inspection at all reasonable times by each Member and its representatives. The Authority shall give a written report of all financial activities for each fiscal year to each Member within 120 days after the close of each fiscal year. (b) Subject to Section 9(e), the auditor of the Authority shall either make, or contract with a certified public accountant or public accountant to make, an annual audit of the accounts and records of the Authority. In each case, the minimum requirements of the audit shall be those prescribed by the State Controller for special districts under Section 26909 of the Government Code of the State ofCalifomia and shall conform to generally accepted auditing standards. \\Then an audit of accounts and records is made by a certified public accountant or public accountant, a report thereof shall be filed as public records with each member and also with the county auditor of each county which is, or in which there is, a Member. The report shall be filed within 12 months of the end of the fiscal year. crbmfa\jpamarch.96 9 o ro Any costs of the audit, including contracts with, or employment of. certified public accountants or public accountants in making an audit pursuant to this Section, shall be borne by the Authority and shall be a charge against any unencumbered funds of the Authority available for the purpose. 'P' (d) In any year in which the annual budget of the Authority does not exceed $5,000, the Board may replace the annual special audit with an audit covering a two-year period. (e) Annually prior to July 1 of each year, the Board shall adopt a budget for administrative expenses of the Authority in the succeeding Fiscal Year, which shall include all expenses not included in any Bond issue of the Authority. (f) All the books, records, accounts and files referred to in this Section shall be open to the inspection of owners of Bonds to the extent and in the manner provided in any resolution or indenture providing for the issuance of Bonds. SECTION 17. Breach If default shall be made by any Member in any covenant contained in this Agreement, the default shall not excuse an Member from fulfilling its obligations under this Agreement, and each Member shall continue to be liable for the perfonnance of all conditions herein contained. Each Member hereby declares that this Agreement is entered into for'the benefit of the Authority created hereby, and each Member hereby grants to the Authority the right to enforce, by whatever lawful means the Authority deems appropriate, all of the obligations of each of the parities hereunder. Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enact are cumulative, and the exercise of one right or remedy shall not impair the right of the Authority to any or all other remedies. ... SECTION 18. Indemnification To the full extent permitted by law. the Board may authorize indemnification by the Authority of any person who is or was a Board member or alternate Board member of the Board, or an officer, employee or other agent of the Authority, and who was or is a party or is threatened to be made a party to a proceeding by reason of the fact that such person is or ~as such a member or alternate member of the Board, or an officer, employee or other agent of the Authority. Such indemnification may be made against expenses, judgements, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding, if such person acted in good faint an in a manner such person reasonably believed to be in the best interests of the Authority and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful and, in the case of an action by or in the right of the Authority acted with such care, including reasonable inquiry, as an ordinarily prudent person :. crivnfa ~parnlU'Cb. 96 10 '-'- 3/ . e,. ,e. . . . . ' ~ . :. ,-. -. . '. . ~::;.. in a like position would use under similar circumstances. SECTION 19. Immunities All of the privileges and immunities from liabilities, exemptions from law" ordinances and rules, all pension, relief, disability, workers' compensation and other benefits which apply to the activity of officers, agents or employees of any of the Members or other local agencies when perfonning there respective functions, shall apply to them to the same degree and extent while engaged as Board members or otherwise as an officer, agent or other representative of the Authority or while engaged in the performance of any of their functions or duties under the provisions of this Agreement. SECTION 20. Severability Should any part, term or provision of this Agreement be decided by the courts to be illegal or in conflict with any law of the State of California, or otherwise be rendered unenforceable or ineffectual, the validity of the remaining parts, terms or provisions hereof shall not be affected thereby. SECTION 21. Successors: Assi2:nment This Agreement shall be binding upon and shall inure to the benefit of the successors of the paries. Except to the extent expressly provided herein, no Member may assign any right or obligation hereunder without the consent of the Board. SECTION 22. Amendment of A2:reement This Agreement may be amended by the Board. Notice of each such amendment shall be given by the Board to each Member and shall be binding upon each Member unless notice is given by a Member to the Authority within 30 days of receipt of such amendment that it does not consent thereto. In the event such notice is timely given by a Member to the Authority, that Member shall not be bound by the terms of such Amendment. SECTION 23. Withdrawal of Members A Member may withdraw from this agreement upon written notice to the Board; provided however, that no such withdrawal shall result in the dissolution of the Authority so long as any Bonds or other obligations of the Authority remain outstanding. Any such withdrawal shall be effective only upon receipt of notice of withdrawal by the Board and the filing of the notice as an amendment to this Agreement. crbmfa~pamarch.96 11 '3; SECTION 24. Miscellaneous (a) This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. (b) The section headings herein are for convenience only and are not to be construed as modifying or governing the language in the section referred to. <0 Wherever in this Agreement any consent or approval is required, the same shall not be unreasonably withheld. (d) This Agreement is made in the State of California, under the Constitution and laws of such State and is to be so construed. (e) This Agreement is the complete and exclusive statement of the agreement among the parties hereto, which supersedes and merges ail prior proposals, understandings, and other agreements, whether oral, written, or implied in conduct, between and among the parties relating to the subject matter of this Agreement. Certification By Executive Director: In accordance with amendment provisions provided, this Agreement as amended and dated March 1, 1995, reflects the actions of the Board of Directors in Resolutions 94-1, 94-2, 94-5, and 95-4 and other directions of the Executive Conunittee. This amended Agreement was mailed to the Members on Wednesday March 22, 1995. Marcia L. Basque Executive Director criunfa\i~96 12 33 .. ..... .. . e":, -.J' 'e' , " .,: , ' , " IN WITNESS WHEREOF, The parties hereto have caused this Agreement to be executed and attested by their proper officers thereunto duly authorized, and their official seals to be hereto affixed, as of the day and year first above written. COUNTY OF By: Title: ..-.-" ... ," 13 erhmfa\ipamarch.96 3i :.::'>."'; .Or" " .".- ~-5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and attested by their proper officers thereunto duly authorized, and their official seals to be hereto affixed, as of the day and year first above written. CITY OF By: Title: c:ilmfa \jparnazeh. 96 14 . . .:. e.. . .,~:: CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY (A1'\'IENDED MARCH 29, 1996) BY LAWS OF THE JOINT EXERCISE OF POWERS AGREEMENT By.Law No.1 Associate Members - Mortgage Revenue Bond Program Section L Tenns and Conditions for Associate Membership ~ounties, cities or other public entities, either not eligible for or not desirous of belonging to the Regional Council of Rural Counties, but wanting to participate in the Authority's housing program may be accorded associate membership subject to the following terms and conditions. (1) The Executive Director will determine that a prospective associate member represents and/or is otherwise identified as a rural area entity. (2) A prospective associate member county may not exceed 200,00 population (1990 Census), except in accordance with (3) below. (3) If a prospective associate member county exceeds 200,000 population, benefits of the Authority's housing programs will be limited only to rural areas of that county as determined by the Executive Director, and will not include any metropolitan area exceeding the population of the largest city of an RCRC member county. A county joining the CRHMFA as an Associate Member, will make all eligible cities and unincorporated areas of that county that are rural in nature eligible to participate in the Authority's housing program. (4) A city, or other public entity whose principal interest is providing housing, whose populations do not exceed that of the largest city of an RCRC member county, may join the Authority as an Associate Member provided they serve an area principally rural in nature as determined by the Executive Director. (5) Prospective Associate Members must notify the Authority of their desire to join the Authority and indicate by resolution of their governing body their acceptance of the tenns and conditions of Associate Membership. They must submit an executed counterpart of the Joint Exercise of Powers Agreement; a copy of the publicly adopted resolution of the governing body indicating their fonnal acceptance of the terms and conditions of the program; and a payment from the governing body of the prospective associate member of applicable membership fees. Upon receipt of the appropriate documents, the associate membership request will be placed before the CRHMF A Board of Directors for affirmation. ~.' 15 crlunfa ~pam:u-ch. 96 70 (6) Prospective Associate Members will certify that they are in full compliance with all reporting requirements of the California Debt Advisory Commission (CDAC) prior to being affirmed by the Board denying the application for membership. To subsequently become not in compliance so that it jeopardizes the status of the Authority's standing with CDAC will result in immediate suspension of the Associate Member from the Authority and its programs. (7) The Executive Director may deny and return any and aU applications for associate members that do not meet the terms and conditions for such membership. (8) Associate Member status may be accorded to counties, cities and other public entities without regard to population or to being rural in nature provided those counties, cities and other public entities comply with all other Associate Member requirements set forth in these By-laws; that they assign their tax-exempt housing allocation entitlement and any additional revenues derived from those entitlements to -the Authority; and that such counties, cities and other public entities agree to utilize the Regional Council of Rural Counties as Compliance Agent to review, process and approve loan packages for loans originated under their allocation entitlement. Section ll. Duties and Powers of the Executive Director Pursuant to the direction of the Board of Directors, and in addition to other duties that may be imposed by the Board: (1) , ~?fe.~~S~J~y~-p'f~e~!?r~wUl, ~inPO.s~.M_~~~ .k~~~i~~~M~mbecfe_f!" ~f ~6t less than $7,500 on counties exc,e~,~~~g20.o,OQ9,popl.llati~~; of not less than $5,000 on countIes under 200,000 population; and.~o(less than $2,000 for'cities or-other public entities.. For those counties, cities and other public entities applying for Associate Member statUs 'under ihe--' , I provisions of Section I (8) above, annu'al Associate Membership fees may be waived provided there is agreement between the Authority and the applicable county, city or other public entity to include, but not limited to, the assignment of the applicable county, city or public entities tax- exempt allocation assignment; distribution of Bond Issuer fees; reimbursement of the Authority's expenses related to pooling and issuing of bonds and other programmatic expenses; utilization of the Regional Council of Rural Counties for compliance services and other matters of mutual interest. The Executive Director is empowered to negotiate and approve the terms and conditions of any agreement between the Authority and any county, city or other public entity in this regard. (2) Th~~~~clltiye Direct~r"?1ay. establisn,~.u~h <?tE~~,~Q~_f:.~!~tiy"~_fees as :' necessary to the operation of the' Autho'rity's. hc)usirig 'program: - -- "'" . ... (3) The Executive Director may limit the number oflenders participating in the c:rbmf.l ~pamarch.96 16 '. :::. . '. .: ...c, e, .> - ,';.- :. . -.-. .~'. housing program and may impose appropriate application participation fees on lenders desiring to join the program. (4) The~Ex'ecutiveDirector will allocate available bond funds to insure :::... ':/ adequate arid appropriate funding is available to a) Member counties; b) Associate Member . bodies; c) specific allocation to lenders; and d) other allocations required by law or identified as a program management action. By.Law No.2. Associate Member - Lease Purchase Mortgage Program Section I. Terms and Conditions for Associate Membership in Lease Purchase Mortgage Program Counties, cities or other public entities, either not eligible for or not desirous of belonging to the Regional Council of Rural Counties, or not eligible or desirous of the tenns and conditions of By-law No. I, but wanting to participate only in the Authority's Lease Purchase Mortgage Program may be accorded Associate Membership without regard to population or to being rural in nature, subject to the following tenns and conditions. (1) Associate Member status accorded to counties, cities and other public entities for participation in the Authorities Lease-Purchase Program only does not make that jurisdiction eligible otherwise for participation in any other Authority Housing Program. (2) Any expenditure or allocation offunds for Associate Member jurisdictions shall be strictly from Revenue Pass-through Obligations and no other Authority revenues. (3) Allloanslmortgages originated and funded under the Lease-Purchase Mortgage Program must be reviewed and approved by the Authority's Compliance Agent, (the Regional Council of Rural Counties), in accordance with Program directives and documents. (4) Associate Membership under this By-Law does not entitle the jurisdiction to a seat on the CRHMF A Board of Directors or a vote on Authority matters. (5) Prospective Associate Members under this Section must infonn the Authority of their desire to participate in the Lease-Purchase Program and indicate by Resolution ofthe!r governing body their acceptance of the. tenns and conditions of Associate Membership. They must submit an executed counterpart of the Joint Exercise of Powers Agreement and a copy of the publicly adopted Resolution of the governing body indicating their fonnal acceptance of the tenns and conditions of the program. Upon receipt of the appropriate documents, the request for Associate Membership will be place before the CRHIv1F A Board of Directors for affirmation. crlwfa \jpamarch.96 17 /J;cf (6) Any jurisdiction seeking, and subsequently accorded Associate Member status under this Section understands and accepts that such status does not guarantee any specific or minimum allocation of funds to that jurisdiction and that any allocation will be subject to programmatic decisions of program management and by the Executive Director. Section n. Duties and Powers of the Executive Director Pursuant to the direction of the Board of Directors, and in addition to other duties that may be imposed by the Board: (1) The Executive Director is empowered to negotiate and approve the terms and conditions of any agreement between the Authority and any county, city or other public entity in this regard. (2) The Executive Director may limit the number of lenders participating in the Housing Program and may impose appropriate participation fees on lenders desiring to participate in the program. (3) The Executive Director may deny and return any and all applications for Associate Membership that may be considered to be not in the best interests of the Authority. (4) The Executive Director will allocate available funds so as to best serve the needs and goals of the Authority Housing Programs generally, and to insure adequate and appropriate funding is available to a) CRHMFA member counties; b) Associate Member jurisdictions; and c) other allocations. ctbmfa':jparnardL96 18 01 ... . . ..:.:...... . ." . . . . ,". '.- . e:. e:, .' ' RESOLUTION NO. - 96 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ********* AUTHORIZING THE EXECUTION AND DELIVERY OF A JOINT EXERCISE OF POWERS AGREEMENT TO PARTICIPATE AS AN ASSOCIATE MEMBER OF THE CALIFORNIA RURAL HOME MORTGAGE FINANCE AUTHORITY IN THE RURAL CALIFORNIA GOLD LEASE-PURCHASE PROGRAM WHEREAS, the City of Dublin (the "City") desires to participate, as an Associate Member with other counties, cities and local agencies, pursuant to the laws of the State of California, in the California Rural Home Mortgage Finance Authority's (the "Authority") Lease-Purchase Program; WHEREAS, there has been presented to this meeting a form of the Joint Exercise of Powers Agreement (the "Agreement"), which Agreement as amended March I, 1995, creates and establishes the Authority; and which sets terms and conditions for Associate Membership in the Authority; and By-law Number 2 of the Agreement sets terms and conditions for Associate Membership to participate in the Lease-Purchase Program only; WHEREAS, the City may issue Bonds (as defined in the Marks-Roos Local Bond Pooling Act of 1995, being Article 4 of the Chapter 5 of Division 7 of Titles 1 commencing at Section 6584 of the Government Code) (the "Act"), expend bond proceeds, borrow and loan money for its corporate purposes under various provisions oflaw, and acquire, sell, develop, lease or administer property pursuant to various provisions oflaw for the benefit of the lands and inhabitants of the City; WHEREAS, the purpose of the Authority is to assist the City and the other members of the Authority in providing for the financing, acquisition, construction and rehabilitation of homes for the benefit of the inhabitants of the City and the other Members, including but not limited to issuing bonds to encourage home ownership within the City and the boundaries of the members of the Authority. NOW, THEREFORE, BE IT RESOLVED that Section 1: The City Council of the City hereby fmds and declares that entering into the Agreement satisfies various public purposes, including, without limitation, encouraging home ownership within the City. With respect to the financing of the construction, acquisitions, and rehabilitation of homes, the City Council of the City declares that this resolution is being adopted pursuant to Section 52000 of the Health and Safety Code of the State of California. Section 2: The City Council of the City fmds and declares that the City desires to participate in the Authority's Lease-Purchase Program only and applies for Associate membership in the Authority for that purpose only. EXHIBIT 4 YD Section 3: Section 4: Section 5: The form of the Agreement, as submitted to the City and incorporated into this Resolution by reference, is hereby approved. The Mayor of the City is hereby authorized to execute and deliver the Agreement in substantially said form, with such changes, or additions thereto that thereafter may become necessary in the interests of the City and the other members of the Authority and which are reviewed and approved by the City Attorney, any such changes or additions to be effective upon the execution and delivery of the Agreement. The City COlU1cil acknowledges that Associate Membership in the Authority is subject to the terms and conditions of Associate Membership as set forth in the Agreement and in By-law Number 2, dated March 29, 1996 and by this Resolution agrees to and accepts those terms and conditions, generally, and specifically, those provisions relating to participating in the Lease-Purchase Program only. This Resolution shall take effect from and after its adoption. PASSED, APPROVED AND ADOPTED this 4th day of November, 1996. AYES: NOES: ABSENT: ABSTAIN: ATTEST: Mayor H1cc-mtgSlresogold.doc City Clerk . . "