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HomeMy WebLinkAboutDEPARTMENT OF HOUSING-2009INSURANCE NOT REOUIREi~j A-2008-339 WORK MAY PF~OCEEG ~,® ~ CLERK OF C,~UNCf~ ~" 'lATF {, 2~-fib CALHOME PROGRAM .~~ REUSE ACCOUNT and LOAN SERVICING MONITORING AGREEMENT Standard Agreement Number 08-CalHome-4922 THIS MONITORING AGREEMENT (hereinafter the "Agreement"), dated August 25, 2009 for reference purposes only, is made and entered into by and between the Department of Housing and Community Development, a public agency of the State of California (the "Department"), and the City ~ of Santa Ana a local agency, (the "Recipient"). RECITALS ~~ 0 ~- A. The Department and Recipient have entered into Standard Agreement No. 08-CalHome-4922, ~ dated May 11, 2009 (the "Standard Agreement"), whereby the Department has made a ~~ conditional commitment of $900,000.00 (the "Commitment") from the Department's N ~ CalHome Program (the "Program") to assist Recipient in the operation of an owner-occupied rehabilitation program .The Program is established by Chapter 6 (commencing with Section 50650 Part 2 of Division 31 of the Health and Safety Code, the "CalHome Statutes") and is ~ further governed by regulations issued by the Department as further described in the Standard Agreement (the "Regulations"). B. In executing the Standard Agreement, Recipient has agreed to abide by the provisions of the CalHome Statutes and the Regulations. The Regulations provide that all revenue generated from use of CalHome funds, including loan repayments if any, are to be deposited into a local reuse account and used as provided for in the Regulations and as described in a local Reuse Account Plan approved by the Department. The Standard Agreement contains additional requirements pertaining to the reuse account and plan, and specifically requires Recipient to enter into this Agreement. The Department has reviewed and approved the Reuse Account Plan and Loan Servicing Plan submitted to the Department and copies are attached. Any changes to either of these plans must be submitted to the Department for review and approval prior to implementation. C. In executing the Standard Agreement, Recipient also has agreed to service loans made with Program funds in accordance with aLoan-Servicing Plan approved by the Department. D. The purpose of this Agreement is to set forth Recipient's obligations with respect to long- term loan servicing and the administration of the local reuse account. A separate agreement is necessary because Recipient's obligations for loan servicing and administration of its local reuse account extend beyond the term of the Standard Agreement. NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: 1. Recipient's execution of this Agreement is given in further consideration for receipt of the Commitment. 2. The term of this Agreement shall commence on the Date of the Standard Agreement May 11, 2009 and remain in full force and effect for a period of twenty (20) years unless terminated earlier by the Department. Monitoring Agreement (October 2007) 3. Recipient shall administer its local reuse account in conformance with the reuse account plan approved by the Department. The Reuse Account Plan approved by the Department shall not be modified or amended except by the express written consent of the Recipient and Department. 4. Recipient shall monitor and service loans made with CalHome funds or funds from the local reuse account (hereinafter collectively referred to as "CalHome loans") in conformance with the loan servicing plan approved by the Department. The Loan Servicing Plan approved by the department shall not be modified or amended except by the express written consent of the Recipient and Department. Recipient shall permit the Department, its employees, agents, or designees, upon reasonable notice and at reasonable times, to enter Recipient's premises and inspect any and all records pertaining to the local reuse account and Recipient's servicing of CalHome loans. The Department may request any other information that it deems necessary to monitor compliance with requirements set forth in this Agreement. Recipient shall promptly provide such information. 6. Recipient shall file an annual report with the Department for the period July 1 through June 30. This report shall be submitted no later than July 31 of each year. The report shall provide information on the dollar amount of deposits to and withdrawals from the local reuse account, and a description of the uses of funds withdrawn, including but not limited to number and dollar amounts of loans made, expenses of providing homebuyer education, and dollar amount of fees for loan servicing, loan processing or loan activity. The annual report shall also provide information on Recipient's loan servicing activities during the year including, but not limited to costs of loan servicing, loans in default, remedial actions undertaken, foreclosures, and bankruptcies. 7. In the event of a breach or violation of the provisions of this Agreement, the Department may give written notice to the Recipient thereof by certified mail or any express delivery service with a delivery receipt addressed to the Recipient at the address stated in this Agreement. If the breach or violation is not cured to the satisfaction of the Department within the time period specified in the notice, which shall not be fewer than 30 days, the Department may declare a default and may seek legal remedies including specific performance of this Agreement, declaratory, and/or injunctive relief, or other remedies as may be available at law or equity. 8. Recipient agrees and acknowledges that failure to cure a violation to the satisfaction of the Department within the time allotted shall constitute grounds for denial of eligibility for future CalHome funding due to lack of organizational capacity, and shall constitute grounds under any other program administered by the Department for making a determination that the Recipient lacks the capacity to administer the program funds being applied for. 9. In the event that the breach or violation involves charges to individual homebuyers in excess of those permitted under the Standard Agreement or Regulations, the Department may demand, and seek as an additional remedy, the return of such excess charges to the affected households. Monitoring Agreement (October 2007) 10. The remedies of the Department hereunder are cumulative, and the exercise of one or more of such remedies shall not be deemed an election of remedies and shall not preclude the exercise by the Department of any one or more of its other remedies. In witness heretofore, the parties hereby execute and enter into this CalHome Program Reuse Account and Loan Servicing Monitoring Agreement as of the date set forth above and agree to be bound hereby: THE DEPARTMENT Department of Housing and Community Development, a public agency of the State of California By Sharon Sarno Program Manager CalHome Program RECIPIENT City of Santa Ana Local Public Agency ~~ David N. Ream City Manager P.O. Box 952054 Sacramento, CA 94252-2054 Attachments: Loan Servicing Plan Reuse Account Plan P.O. Box 22030 Santa Ana, CA 92702 APPli.4V~I~ AS TO FORM - ~. ~ ____ LISA E. STORCK Assistant City Attorney ATTEST: MARIA D. WUI~A~! ~L~~tK (7F `fit= C~UNCfL Monitoring Agreement (October 2007) .. .:~, CITY OF SANTA ANA CALHOME OWNER OCCUPIED REHABILITATION LOAN SERVICING PLAN Introduction The Housing and Neighborhood Development Division of the City of Santa Ana will maintain loan servicing/managing capabilities and procedures that meet all requirements of the CalHome Program (the "Program"). All loan servicing activities will be carried out by City staff or by AmeriNational Corporation acting under contract to the City Qf Santa Ana. Servicing fees for work performed by AmeriNational will be paid for out of existing accounts. II. Transfer of Loans from Underwriting to Loan Servicin A. Underwriting will be carried out by AmeriNational Corporation in accordance with the requirements of the Program. Files will be organized and maintained in accordance with the Division's existing procedures, and will include, at a minimum, the following items: 1: Notice of completion of work executed by the owner and the responsible Rehabilitation Construction Specialist; 2. Copy of a complete set of executed loan documents including the loan agreement, registration form and promissory note; 3. Copy of escrow instructions and amendments, if applicable; 4. Certified copy of Settlement Statement from escrow; 5. Evidence of coverage for hazard, and if applicable, flood ~/ insurance; and 6. All other underwriting documents. B. The registration form and promissory note will be secured in the Division's locked, fireproof file cabinet. III. Discounting Promissory Notes A. In those cases where not all loan funds are used, the City will direct AmeriNational to reduce the loan principal by the amount of unspent ;;~ , funds. ~~ B. The Housing Division will direct AmeriNational will send a letter to the borrower indicating that the loan principal has been reduced by the amount of the unspent funds. IV. Impound Accounts The Division does not anticipate the creation of impound accounts. V. Property Taxes, Assessments Registration Fees As Applicable A. The Housing Division does not anticipate making loans to mobile homeowners who own the lot on which their home is located. Were it to .~ do so, it would establish and maintain an impound account for the payment of property taxes through AmeriNational Corporation. 1\cda-ch\user$\MAguilar\DesktoplLoan Servicing Plan 2008.docx w.ri-:,~. B. The Division will use the California Department of Housing and Community Development's website to determine if owners are paying registration fees in a timely manner. Owners who fail to do so will be contacted by Division staff. VI. Owner-OccupancX A. On an annual basis, the Division will mail a certified letter to all CalHome ,/ borrowers requesting verification that they are still occupying the home as' their principal residence. B. Verification from the borrower will be kept on file. VII. Hazard Insurance A. The Division will require that the City be added as an additional mortgagee for hazard and, if applicable flood insurance policies. B. To ensure that insurance requirements are satisfied for the term of the loan, the Division will: 1. Utilize its existing tracking/tickler system for reviewing insurance renewal notices; 2. Follow its existing procedure of funding insurance on behalf of borrowers who fail to maintain such insurance, and adding the cost of that insurance to the loan balance. VIII. Demands and Pavoffs A. In accordance with existing procedure and its contract with AmeriNational Corporation, the Division will request that demand computations be done by AmeriNational, but will review those computations for accuracy. Demands will continue to be approved by the Division before transmittal to the borrower. B. The Division will continue to process reconveyances and lien releases in accordance with City policy and existing procedures. The City will maintain access to a notary public. ` IX. Collection and Receipt of Payments A. The Division will continue to follow existing procedures and the terms of its contract with AmeriNational Corporation to collect and record borrower payments of principal and interest. B. The City of Santa Ana and AmeriNational Corporation have and will maintain the necessary controls and separation of duties to insure the integrity of their accounting systems. C. AmeriNational will continue to maintain a readily accessible tracking system for the loans it services for the City of Santa Ana. D. AmeriNational will continue to generate yearly statements and 1099s in an accurate and timely manner. E. The Division does not anticipate creation of impound accounts for program borrowers. Should it do so, the Division would act through AmeriNational to create and maintain such accounts. \\cda-ch\user$\MAguilar\Desktop\Loan Servicing Plan 2008.docx s n ~ • ~ _. F. The Division will create a separate reuse account within the City's accounting system for payments made on CalHome Program loans. This will enable the City to track, spend appropriately and report on these funds. X. Monitoring The Division will use its existing database and monitoring procedures for the owner-occupancy requirement of the CalHome Program. XI. Credit Counseling The Division will continue to follow existing procedure, and refer homeowners who require such assistance to established credit counseling services. X. Defaults and Foreclosures Should a default and/or foreclosure occur, the Division will follow the policy adopted by the City Council at its meeting of June 1, 1992. That policy authorizes the Executive Director of the Community Development Agency to take any of the following actions to protect the City's interests: a. Initiating foreclosure proceedings; b. Bidding at a foreclosure sale in an amount sufficient to protect the City's security interest; c. Purchasing a senior note and deed of trust or other lien; d. Acquiring property through foreclosure or deed in lieu of foreclosure. The Executive Director may determine not to take any of the above actions when in the Executive Director's opinion such actions would be financially infeasible or would be counter-productive to the interests or objective of the City. XI. Subordinations In accordance with Section 119 of the CalHome Program Guidelines, the lien securing payment of the program loan shall be subject only to liens, ~`, encumbrances and other matters of record reviewed and approved by the Division in the exercise of its responsibility for underwriting the loan. Refinancing of the first mortgage loan, transfer of the property to another party, or assumption of the first mortgage loan by another party will call the CalHome Program loan due and payable. \\cda-ch\user$\MAguilar\Desktop\Loan Servicing Plan 2008.docx ,~ . CITY OF SANTA ANA CALHOME OWNER OCCUPIED REHABILITATION REUSE ACCOUNT PLAN All repayments of loan principal and any loan interest derived from loans funded through the CalHome Owner Occupied Rehabilitation Loan Program will be deposited into the City of Santa Ana CalHome Manufactured Housing Loan Program Account No.143-01- 5360. This account will insure that CalHome funds are separated from other funds, and that no co-mingling of funds will occur. Any accrued interest earned on CalHome funds will accrue to this account. Maintenance of this account will enable the Division to use the City's computerized accounting system. This system will assist the Division to make all required reports on the use of CalHome Program funds. It will also ensure timely processing of payment or other requests relating to these funds. Funds deposited into this account will be used only for the following approved, eligible uses of such funds: 1. Loans to individual homeowners as allowed pursuant to CalHome Program requirements; 2. A CalHome activity delivery fee in accordance with CalHome Program requirements; 3. Up to 5% of funds deposited may be used towards the cost of loan servicing by the Division or the cost of third-party loan servicing contracted by the Division. The City may use these funds for other CalHome-eligible activities upon approval from the State of California. H:\Share\TERRYG1CalHome Program\CalHome 2008\Reuse Plan updated.doc