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Home My WebLink AboutItem 4.16 First Time Homebuyer Loan Program CITY CLERK File # D[j[kJ[!hJ-l2][Q] AGENDA STATEMENT CITY COUNCIL MEETING DATE: December 19, 2006 SUBJECT: First Time Homebuyer Loan Program (FTHLP) - Approval of CalHF A Agreement Report Prepared by Jeri Ram, Community Development Director ATTACHMENTS: 1) Resolution authorizing the City Manager to sign California Housing Finance Agency Subordinate Lender/CalHF A Subordinate Financing and Resale Control Agreement with Agreement attached as Exhibit A. .J =. \ ry ""Z/V\' Adopt the Resolution authorizing the City Manager to execute the California Housing Finance Agency Subordinate Lender/CalHF A Subordinate Financing and Resale Control Agreement (Agreement attached as Exhibit A). RECOMMENDATION: FINANCIAL STATEMENT: $500,000 for Fiscal Year 2006-2007 has been allocated for the FTHLP from the Inclusionary Fund, budgeted in the Housing Division budget. The FTHBLP provides second mortgages and as such the FTHLP loans would be subordinate to the first deed of trust. DESCRIPTION: The City Council included a First Time Homebuyer Program as a high priority in the 2005-2006 Goals and Objectives for the City of Dublin. At a Joint Study Session held on December 13, 2005, the City Council provided Staff with direction on policy issues affecting the development of a First Time Homebuyer Loan Program (FTHLP). Staff returned to City Council on March 21, 2006 with the document entitled "City of Dublin First Time Homebuyer Program" ("the FTHLP Summary") which the City Council approved by Resolution. Staff indicated at that meeting that the development of loan documents would follow and would be brought back to the City Council at a later date. COpy TO: In-House Distribution Page 1 of2 ITEM NO. !:l\ LJ K:\First time homebuyers\12-19-06catHF A AgreementDOC ~ On September 19, 2006, the City Council authorized the City Manager to approve the form of the City's Loan Documents to implement the FTHLP. The City Loan Documents have now been finalized and approved by the City Attorney and City Manager. In order to provide for the most flexibility in the FTHLP and to enable the buyer to layer the City's program with CalHF A financing, CalHF A requires that the City sign an agreement with the California Housing Finance Agency that clarifies the positioning of the loans. This Agreement (Exhibit 1 to Attachment 1) sets forth that the City's loan documents would be subordinate to the CalHF A loan. The City's subordinate position is not unusual for any program providing second mortgages. If the buyer were to default on the senior loan, the City would have the option to cure the buyer's default. In that event, the City loan documents would remain in place, and the City would be able to add the amount of any funds advanced by the City to the debt secured by the City deed of trust. In addition, the City could declare an event of default under the City loan documents and could pursue foreclosure of the City deed of trust. The City could bid to purchase the property at any foreclosure sale held by either the senior lender or the City. RECOMMENDATION: Staff recommends that the City Council adopt the Resolution authorizing the City Manager to execute the California Housing Finance Agency Subordinate Lender/CalHF A Subordinate Financing and Resale Control Agreement. (Agreement attached as Exhibit A). Page 2 of2 lob RESOLUTION NO. XX - 06 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ************************************ AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT ON BEHALF OF THE CITY WITH CalHFA AS PART OF THE FIRST TIME HOMEBUYER LOAN PROGRAM WHEREAS, the City Council approved a First Time Homebuyer Loan Program ("FTHLP") on March 21,2006; and WHEREAS, the FTHLP will make available home loans to qualified applicants; and WHEREAS, in order to provide flexibility in the FTHLP and the ability for layered financing with the California Housing Finance Agency (CalFHA), CalFHA requires that the City enter into an agreement with their Agency. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin authorizes the City Manager to execute the Agreement (Exhibit A) on behalf ofthe City. PASSED, APPROVED AND ADOPTED this 19th day of December 2006 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: City Clerk K:\First time homebuyers\ccResoJution 12-19-06.doc /2 ~ /q-D& 4./ /..p Attachment 1 ~eo cal,~r CALIFORNIA HOUSING FINANCE AGENCY SUBORDINATE LENDERlCalHFA SUBORDINATE FINANCING AND RESALE CONTROL AGREEMENT This Subordinate Lender/CalHF A Subordinate Financing and Resale Control Agreement (the "Agreement") is made and entered into on ~c, 13, LeO lo ,by and between the California Housing Finance Agency (the "CaIHF A") a public instrumentality and a political subdivision of the State of California, and Ti)t:.- Crtj C' t 'o~Ab t', u (the "Subordinate Lender"). RECITALS A. CalHF A intends to make a commitment to provide below-market rate mortgage financing (the "CaIHF A Loan(s)") to facilitate the acquisition by low- and moderate-income borrowers (the "Borrower(s)") of single family homes located in.Pi......bli N , Alc.rnedc....... County, California and more particularly described as follows (the "Home(s)"): B. Subordinate Lender intends to provide additional financial assistance for such acquisition andlor to impose restrictions on the transfer of the Homes as provided in those certain documents attached hereto and incorporated herein by this reference (collectively the "Subordinate Lender Documents"). C. In order to ensure that the Subordinate Lender Documents (1) are consistent with certain federal tax law requirements relating to CaIHFA's tax exempt bond financed loans, and (2) are subordinate to the CalHFA Loan(s), the parties hereto have entered into this Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Subordinate Lender Documents. The Subordinate Lender represents and warrants that all of the financing documents and transfer restrictions which will be imposed on the Borrowers or the Homes by Subordinate Lender or otherwise in connection with the provision of its financial assistance or imposition of its transfer restrictions are included in the documents described herein as the "Subordinate Lender Documents". 2. Representations to Bond Counsel. The Subordinate Lender represents and warrants that any factual representations made to CalHF A's bond counsel in connection with the Subordinate Lender Documents are and will be accurate and complete to the best of its knowledge. 3. Amendment. The Subordinate Lender Documents shall not be revised or amended without the prior written consent of CalHF A. 4. Subordination. The Subordinate Lender Documents shall be subordinate to the CalHFA Loan(s) and foreclosure of any CalHF A deed of trust shall extinguish the Subordinate Lender Documents as encumbrances on the Home being foreclosed. The Subordinate Lender shall take all actions and execute all documents as necessary to cause such subordination and enable CalHF A to obtain title insurance which insures the CalHF A Loans(s) as superior to the Subordinate Lender Documents. CalHF A Subordinate Financing & Resale Control Agreement 12/15/02 Page 1of2 Exhibit A 5. Attorney Fees, Remedies. In any proceeding to enforce this Agreement, the prevailing party shall be entitled to receive from the other party reasonable attorneys fees and costs. In the event of the inaccuracy or breach of any of the representations, warranties or agreements of Subordinate Lender contained herein CalHF A may pursue any remedies available at law or in equity to redress any damage resulting to CalHF A. IN WIlNESS WHEREOF, the parties hereto have executed this Agreement on the date set forth above. CALIFORNIA HOUSING FINANCE AGENCY SUBORDINATE LENDER Ca\j of Ul\btln By: By: Name: RICho.Y'd C, A\Y10r os-e-- C\~ flloV\a3er Name: Title: Title: CalHF A Subordinate Financing & Resale Control Agreement 12/15/02 Page 2 of2 3&fJ~