FRIENDS OF THE LACY HISTORIC NEIGHBORHOOD-2011

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11. Married Sole and Separate Property. An individual taking title to the Property as contemplated by this Agreement is subject to special requirements because of California community property laws and Federal tax laws. If the Homebuyer is legally separated, or has filed for divorce and a legal property disposition agreement exists between the Homebuyer and the Homebuyer's spouse, a quitclaim deed from the Homebuyer's spouse and a copy of the property disposition agreement may be required by the Agency. In the absence of an existing legal property disposition agreement between the Homebuyer and the Homebuyer's spouse, as a condition of approval of the Homebuyer Assistance Loan, a quitclaim deed, a special agreement and a release of interest signed by both the Homebuyer and the Homebuyer's spouse, after consultation with an attorney, may be required by the Agency. Additionally, if the Homebuyer's spouse is to reside in the Property, the combined income of the Homebuyer and the Homebuyer's spouse must be included in the income test for eligibility under the Program. 12. Loan Servicing. The Agency may contract with an outside organization to originate and service the Homebuyer Assistance Loan. 13. Homebuyer Financing. The Homebuyer shall obtain First Lien purchase money mortgage financing which is a fixed rate and fully amortizing loan for its acquisition of the Property from a reputable institutional lender reasonably acceptable to the Agency (the "Lender"). The Homebuyer shall at all times during the term of Homebuyer Assistance Loan comply with all requirements of the Lender, including without limitation, loan underwriting standards, minimum down payment requirements, private mortgage insurance requirements, homebuyer education requirements, and tax and insurance impound requirements. In addition, not less than three percent (3%) of the purchase price of the Property shall be paid in cash from the Homebuyer's own resources and not from the proceeds of a loan secured by a lien on the Property, and gifts and seller concessions may not be used to meet this requirement, except as otherwise permitted by the Lender. The total amount of the First Lien mortgage loan and Homebuyer Assistance Loan (in addition to other affordable housing loans or grants described in Section 3.1) shall not exceed the sum of the fair market value of the Property at the time of the Homebuyer's purchase of the Property and non-recurring closing costs. 14. Subordination. Except as provided otherwise herein, the provisions of this Agreement, the Notice of Affordability Restrictions, the Agency Deed of Trust, and the Affordable Housing Resale Restriction, and the obligations therein, shall be subordinate only to the First Lien on the Property held by the Lender and, if applicable, other loan(s) as approved by the Executive Director, including lien instruments that secure other homebuyer purchase money and/or downpayment assistance, including without limitation City, State of California, or federal affordable housing programs, which liens shall not impair the rights of the Lender, or the Lender's assignee or successor in interest or the Agency, if applicable, to exercise their remedies under the First Lien in the event of default under the First Lien by the Homebuyer. Such remedies under the First Lien include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. If title to the Property is transferred by foreclosure or acceptance of a deed in lieu of foreclosure, or assignment of the First Lien to the Secretary of the Department of Housing and Urban Development, this Agreement and the Agency Deed of Trust shall be automatically terminated and shall have no further effect as to the Property or any transferee thereafter. However, in no event shall this Agreement, the Agency Deed of Trust, and the Affordable Housing Resale Restriction, be subordinate to any First Lien on the Property ATTACHMENT NO. 11-12 Form of Homebuyer Loan Agreement DOCSOC/1400673Y 14/200272-0001