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<br />Interest Rates and ReDavment <br /> <br />ADDI and rehabilitation loan proceeds not subject to forgiveness are offered as a deferred loan <br />with a zero percent interest rate. Repayment of the City loan will be required when any of the <br />following events take place: at the end of the term of affordability, when the property is sold, or <br />when the property is no longer the borrower's principal residence. <br /> <br />Repayment will be accelerated should the owner fail to show good faith in bringing the property <br />into compliance with applicable building codes within one year of the purchase or in the event of <br />any other breach of contract as stipulated in the affordability agreement. In the event of <br />repayment due to noncompliance, an interest rate equal to the 11th District Cost of Funds at the <br />time the loan was made will be added to the outstanding balance including costs associated with <br />the remediation of hazardous substances. If the borrower does not complete a post- <br />homeownership program, the same interest rate will be applied to the outstanding balance. The <br />interest rate will be applied beginning one year from date of close of escrow and will continue <br />until such time as proof of completion of post-homeownership training program is provided to <br />the City. <br /> <br />EXHIBIT 1 <br />Page 3 <br /> <br />19D-6 <br />