FRIENDS OF THE LACY HISTORIC NEIGHBORHOOD-2011

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S. Encumbrances. a. Subordination. Except as provided otherwise herein, the provisions of the Loan Agreement, this Restriction, the Notice of Affordability Restrictions and the Agency Deed of Trust and Rider, the obligations herein and therein, shall be subordinate only to the First Lien on the Property 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 under the First Lien in the event of default under the First Lien by 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, the Loan Agreement, this Restriction, and 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 the Loan Agreement, the Agency Deed of Trust, and this Affordable Housing Resale Restriction, be subordinate to any First Lien on the Property securing a loan with provisions which allow negative amortization, or to refinancing of the lien of the First Lien for a loan amount in excess of the sum of the then current loan balance secured by the First Lien and loan closing costs. b. Request for Notice of Default. Agency may cause a Request for Notice to be recorded on the Property subsequent to the recordation of the First Lien deed of trust or mortgage requesting a statutory notice of default as set forth in California Civil Code Section 2924b. A form of a Request for Notice is attached hereto as Attachment No. 3 and incorporated herein. C. Further Encumbrances. Homebuyer agrees that it shall not record or cause the recordation of any deed of trust ("Further Encumbrance") securing a note having an original principal sum which, when added to the sum of the principal amount(s) of any notes secured by any deeds of trust against the Property as of the date of recordation of the Further Encumbrance, exceeds one hundred percent (100%) of the fair market value of the Property. 6. Reimbursement Agreement. Homebuyer and Agency shall enter into a Reimbursement Agreement, substantially in the form attached hereto as Attachment No. 4 and incorporated herein, which provides that Agency may make payments to cure a default or delinquency on the First Lien, on the condition that Homebuyer agrees to reimburse Agency for any payments made to cure a default or delinquency on the First Lien. Homebuyer's repayment obligations pursuant to the Reimbursement Agreement shall be secured by a subordinate deed of trust which encumbers the Property. In the event that Homebuyer refinances the First Lien, Homebuyer and Agency shall enter into an amendment to the Reimbursement Agreement or a new Reimbursement Agreement. The Transferee of the Property and Agency shall also enter into a new Reimbursement Agreement upon the Transfer of the Property. Agency shall execute such subordination agreements as may be reasonably requested by the holder of a First Lien. 7. Uses. Homebuyer covenants and agrees to devote, use and maintain the Property in accordance with this Restriction. All uses conducted on the Property, including, without EXHIBIT D-6 TO ATTACHMENT NO. 11 Affordable Housing Resale Restriction D O CS 0 G 1400 673 v 141200272-0001