Loading...
HomeMy WebLinkAbout25C - AGMT HOMEBUYER ASSISTANCEREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: MARCH 6, 2018 TITLE: APPROVE AN UPDATE TO THE HOMEBUYER DOWN PAYMENT ASSISTANCE LOAN PROGRAM (NON -GENERAL FUND) (STRATEGIC PLAN NO. 5,3; 5, 4) CI'O MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 1n Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER 1. Approve an update to the Homebuyer Down Payment Assistance Loan Program and allocate an initial $400,000 of Inclusionary Housing Funds program funding. 2. Authorize the City Manager and the Clerk of the Council to enter into loan agreement(s) with qualified and approved homebuyers, subject to non -substantive changes approved by the City Manager and City Attorney. COMMUNITY REDEVELOPMENT AND HOUSING COMMISSION RECOMMENDATION At a special meeting on February 27, 2018, the Community Redevelopment and Housing Commission (CRHC) approved the recommended action by a vote of 7:0 (Cann absent). BACKGROUND On November 18, 2013 City Council approved the Homebuyer Down Payment Assistance Loan Program and allocated Federal Home Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) funds for program funding. These federal funds have several restrictions including a maximum home sales price of $499,999 and an income limit for households at 80 percent of the area median income. Due to the substantial increase in home values in recent years, these restrictions have severely limited the number of homebuyers eligible to take advantage of the program. Although staff has continuously promoted the program, the Homebuyer Down Payment Assistance Loan Program has not issued a loan since 2015 due to these restrictions. At the January 8th Economic Development, Infrastructure, Budget and Technology (EDIBT) Committee meeting, the Committee members recommended that staff identify opportunities to promote homeownership. Following that recommendation, staff conducted outreach with non - 25C -1 Update to the Homebuyer Down Payment Assistance Loan Program March 6, 2018 Page 2 profit homeownership professionals in the area to identify potential opportunities for improvements to our current programs. Based on this outreach and the recommendation from the EDIBT Committee, staff is proposing the following revisions to the eligibility criteria for the Homebuyer Down Payment Assistance Loan Program to ensure the program is successful and homeownership more attainable for low to moderate income residents: *Maximum sales price is subject to HUD revisions The first proposed revision is to fund the Homebuyer Down Payment Assistance Loan Program with Inclusionary Housing Funds. Pursuant to Section 41-1909 (1) of the Housing Opportunity Ordinance, monies deposited into the Inclusionary Housing Fund must be used to increase and improve the supply of housing affordable to moderate, low, very low, and extremely low income households in the City. Pursuant to Section 41-1909 (3) of the Housing Opportunity Ordinance, a permissible use of monies deposited into the Inclusionary Housing Fund includes pre -home ownership co -investment. This proposed revision will allow the City to increase the eligible household income limit to moderate income, meaning up to 120 percent of the area median income. Second, this proposed revision will also remove the maximum sales price requirement. The second proposed revision to the program is to increase the maximum loan amount for low income buyers up to $80,000. The maximum loan amount for moderate income buyers would be $40,000, but low income buyers could qualify for up to $80,000. Under the current program guidelines, maximum loan amounts are $40,000. By increasing the loan amount for low income buyers, more lower income families will be able to more effectively qualify to purchase a home. 25C-2 Current Program Proposed Revisions Guidelines CDBG & HOME Inclusionary Housing CDBG Funding Source Funds Income Limit Low -Income (80% AMI) Moderate -Income 120% AMI Low -Income 80% AMI Maximum Sales $499,999* N/A $499,999* Price $40,000 for Moderate Maximum $40,000 Income Households; $80,000 for Low Assistance $80,000 for Low Income Households Income Households Local Preference N/A Must Live or Work in Santa Ana (except U.S. military veterans Gift Funds No Limit May not exceed 3% of purchase price Inclusionary Eligible Ineligible Homes Returning Student Incentive ($10,000 forgiven every five years up to $40,000 Loan Forgiveness N/A maximum loan forgiveness; Must have graduated from a high school located in Santa Ana and have a 4 -year college degree) *Maximum sales price is subject to HUD revisions The first proposed revision is to fund the Homebuyer Down Payment Assistance Loan Program with Inclusionary Housing Funds. Pursuant to Section 41-1909 (1) of the Housing Opportunity Ordinance, monies deposited into the Inclusionary Housing Fund must be used to increase and improve the supply of housing affordable to moderate, low, very low, and extremely low income households in the City. Pursuant to Section 41-1909 (3) of the Housing Opportunity Ordinance, a permissible use of monies deposited into the Inclusionary Housing Fund includes pre -home ownership co -investment. This proposed revision will allow the City to increase the eligible household income limit to moderate income, meaning up to 120 percent of the area median income. Second, this proposed revision will also remove the maximum sales price requirement. The second proposed revision to the program is to increase the maximum loan amount for low income buyers up to $80,000. The maximum loan amount for moderate income buyers would be $40,000, but low income buyers could qualify for up to $80,000. Under the current program guidelines, maximum loan amounts are $40,000. By increasing the loan amount for low income buyers, more lower income families will be able to more effectively qualify to purchase a home. 25C-2 Update to the Homebuyer Down Payment Assistance Loan Program March 6, 2018 Page 3 The third proposed revision to the program is to create a loan forgiveness incentive for returning Santa Ana high school students. Prospective homebuyers who graduated from a high school located in Santa Ana and have a 4 -year college degree will be eligible for a loan forgiveness up to $40,000. Under this loan forgiveness incentive, $10,000 will be forgiven every five (5) years over a twenty (20) year period up to a maximum of $40,000. The fourth proposed revision to the program is to require participants to live and/or work in Santa Ana, with an exception for U.S. military veterans. Consistent with the live and/or work requirements of the Housing Choice Voucher Administrative Plan, borrower(s) must be a resident of Santa Ana and/or work in Santa Ana at least 32 hours per week for at least the last 6 months. Participants must be first-time homebuyers in that they have not had ownership interest in, or have not held title to a principal residence during the three years preceding the purchase of the property. The homebuyer must attend an in-person homeownership training from a HUD - approved counseling agency. Additional eligibility requirements for the program are listed in the revised program guidelines (Exhibit 1). Following approval by the City's Loan Committee, the City will enter into a loan agreement with the approved homebuyer(s) using either the CDBG or Inclusionary Housing funds as determined by the committee (Exhibit 2). CDBG funds in the amount of $200,000 were approved as part of the FY 17-18 Annual Action Plan submitted to the U.S. Department of Housing and Urban Development for homebuyer down payment assistance, and City Council appropriated the funds as part of the annual FY 17-18 budget adoption. Staff recommends an initial $400,000 in Inclusionary Housing funds and $200,000 in existing CDBG funds be used for this program. The program will continue to be monitored and recommendations for increases in the allocation of funds for this program will be made in the future as part of the annual action plan and budget adoption if the program is successful. With these proposed revisions, homebuyers will once again be able to qualify for the Homebuyer Down Payment Assistance Loan Program and become Santa Ana homeowners. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City to meet Goal #5 — Community Health, Livability, Engagement & Sustainability, Objective #3 (Facilitate diverse housing opportunities and support efforts to preserve and improve the livability of Santa Ana neighborhoods) and Objective #4 (Support neighborhood vitality and livability). FISCAL IMPACT Funds are budgeted and available for anticipated expenditure as follows: Program Account No. FY Amount Inclusionary Housing Fund 41718820-69152 2017-18 $ 80,000 2018-19 $320,000 CDBG 13518782-69152 2017-18 $ 80,000 2018-19 $120,000 Totals $600,000 25C-3 Update to the Homebuyer Down Payment Assistance Loan Program March 6, 2018 Page 4 Robert M. Zur h ie Interim Executi ector Community Development Agency APPROVED AS TO FUNDS AND ACCOUNTS: Francisco Gutierrez, Executive Director Finance and Management Services Agency Exhibits: 1. Homebuyer Down Payment Assistance Loan Program Guidelines 2. Loan Agreement Template 25C-4 EXHIBIT 1 CITY OF SANTA ANA HOMEBUYER ASSISTANCE LOAN PROGRAM PROGRAM GUIDELINES The Program offers zero percent, deferred payment loans of up to $80,000 for Low Income Households and up to $40,000 for Moderate Income Households based on need. Homebuyer Assistance funds can help meet both a borrower's down payment and closing cost requirements. FUNDS ARE LIMITED - FIRST COME. FIRST SERVE Eligibility Requirements o Borrower(s) must be a first time homebuyer (a person with no ownership interest in, or who has not held `title' to a principal residence during the three-year period preceding the purchase of the property). o Borrower(s) must be a resident of Santa Ana and/or work in Santa Ana at least 32 hours per week for at least the last 6 months. o Total Annual Income of the household, meaning all persons residing in the home as their principal place of residence, cannot exceed the income limits established below: Household Size Low Income Moderate Income 1 $ 58,450 $ 73,900 2 $ 66,800 $ 84,500 3 $ 75,150 $ 95,050 4 $ 83,450 $ 105,600 5 $ 90,150 $ 114,050 6 $ 96,850 $ 122,500 7$ 103,500 $ 130,950 8 1 $ 110,200 $ 139,400 o Complete a minimum of eight (8) hours of in-person homeownership training offered by a counseling center approved by the U.S. Department of Housing and Urban Development (HUD). o Must have at least three percent (3%) of the purchase price for a down payment from buyer's own funds (at least 90 days seasoned). Three most -recent bank statements are required to verify seasoned funds. Seasoned funds cannot be from gift funds. Gift funds may contribute towards the purchase; gift funds may not exceed 3% of purchase price. o Must have a positive credit history and obtain a fixed-rate first mortgage. Co-signers and variable rate loans are not allowed. Use of Loan Proceeds o Loans of up to $80,000 for Low Income Households and up to $40,000 for Moderate Income Households will be approved based on need. Loan amounts will be based on underwriting front -end ratios of not less than 28 percent. Maximum debt -to -income ratios cannot exceed 38/43. o City of Santa Ana loan proceeds may be applied to down payment and closing costs associated with the purchase of a home in Santa Ana. 25C-5 EXHIBIT 1 o City of Santa Ana down payment assistance loan proceeds may not be applied to down payment and closing costs associated with the purchase of an Inclusionary home made available through the City's Housing Opportunity Ordinance. Interest Rates and Repayment o Loan proceeds are offered as a deferred loan with a zero percent interest rate. Repayment of the City loan principle balance will be required at the end of the 45 year term of affordability. • Santa Ana Student Incentive: Prospective homebuyers that graduated from a high school located in Santa Ana and have a 4 -year college degree are eligible for a loan forgiveness up to $40,000 ($10,000 will be forgiven every five (5) years up to a twenty (20) year period) Application and Approval Process o Prospective homebuyer completes a HUD approved 8 -hour homebuyer class. o Homebuyer chooses a local lender and gets pre -qualified. o Homebuyer provides a complete Homebuyer Assistance Loan Application Packet to the City of Santa Ana Housing Division for review and pre -approval with all required documents and forms. All applications must contain the documents indicated in the attached Document Checklist. o Once pre -approved, homebuyers will have 60 days to find a qualified home within Santa Ana to purchase. Pre -approval does not guarantee City funds. o Homebuyer shops for home based on Lender's pre -qualification amount. o When presenting an offer, Homebuyer and Realtor provide Seller's Statement for the Seller to sign. o Within three (3) business days, Homebuyer must contact the City of Santa Ana to schedule an inspection by City Staff for lead-based paint hazards and building/health and safety code deficiencies once a purchase contract has been executed. o If homebuyer is eligible and home passes inspection, City of Santa Ana reserves funds and notifies the Homebuyer and Realtor. o A minimum of two (2) weeks prior to close of escrow, the City of Santa Ana needs the lender's packet for final loan approval. o Realtor notifies the City of Santa Ana of scheduled closing date ten (10) business days prior to close of escrow date. 25C-6 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 & 27383 When Recorded Mail to: City of Santa Ana 20 Civic Center Plaza, M-26 P.O. Box 1988 Santa Ana, California 92702 Attention: Housing Manager CITY OF SANTA ANA HOMEBUYER DOWN PAYMENT ASSISTANCE LOAN PROGRAM INCLUSIONARY HOUSING FUNDS ; • - LOAN AGREEMENT THIS LOAN AGREEMENT (the "Loan Agreement") is ;made as of 20_, by and between ' (`Borrower") and the City of Santa Ana, a charter city and municipal corporation duly organized and existing under the Constitution and laws"of the State of California ("City"). RECITALS A. City is a r6cipient of.._ Inclusionary Housing funds from the Housing Opportunity Ordinance pursuant to,Santa,Ana Municipal Code Sec. 41-1900. B. Borrower has`entere&into an agreement (the "Purchase Agreement') to purchase residential property; located at Santa Ana, California; as more -particularly described in the legal description, Exhibit A attached hereto and" incorporated herein (the "Property"). Pursuant to the Purchase Agreement; the price to be paid for the Property is $ (the "Purchase, Price"). , C. The City wishes to encourage a greater degree of owner -occupancy of residences,in the neighborhoods of the City of Santa Ana. In order to promote this goal, the City has established its Homebuyer Down Payment Assistance Loan Program (the "Program"), under which the City will provide a subsidy in the form of a trust deed loan in the, maximum amount of $40,000.00 for moderate income households and $80,000.00 for low income households that are determined to be an "Eligible Person or Family" (as defined elsewhere in this Agreement) toward the purchase of a residence within the City. 25C-7 D. The Program is implemented in accordance with the City of Santa Ana Housing Opportunity Ordinance, and will be modified whenever necessary to insure compliance with regulations and continued Program feasibility. E. The City agrees to loan down payment funds to Borrower and Borrower agrees to borrow from the City $ (the "City Loan") pursuant to the Program, subject to the terms and conditions set forth herein.. Borrower must contribute a minimum of three percent (3%) of the purchase price, towards down payment. This minimum contribution cannot be from gift funds. F. The Purchase Price for the Property is to be paid,,by.,Borrower by a• combination of funds, including: a. Borrower's down payment in the amount of $ b. A loan to be made by secured by a first deed of trust, in the principal amount of $ Mortgage Loan"); and; 1 c. The City Loan, secured by a deed of trust, in t of $ G. Borrower has provided the City with written lender making the First Mortgage Loan stating that the requested by Borrower is the minimum amount of additional Borrower to qualify for the,First Mortgage Loan. (the "First principal amount documentation from the amount of the City Loan financing necessary for H. The Loan Agieement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Loan Agreement, the Income And Owner -Occupancy Covenants and Resale Restrictions/Affordability Covenants, the City Promissory Note and the City Deed of Trust provide a means of enforcement by the City if Developer is in b'reach-of its obligations hereunder and thereunder, including liens on the. Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c)(13)1: NOW, THEREFORE, for good and valuable consideration, the parties agree as follows:' ` Definitions: Unless otherwise defined, the following capitalized terms shall be defined ,in this Agreement as follows: "City Deed of Trust" means the deed of trust securing the City Loan, in the form attached herewith as Exhibit B and incorporated herein by reference. 2 25C-8 "City Loan" means the deferred loan of Inclusionary Housing funds to be made by the City to Borrower in the principal amount of $ in accordance with this Loan Agreement. "City Promissory Note" means the promissory note in favor of the City, evidencing the City Loan, in the form attached herewith as Exhibit' C and incorporated herein by reference. "Eligible Person or Family" means a person or family (1) with household 'annual income of less than 80% of the area median income for the City, adjusted for family size; (2) who is a "First -Time Homebuyer", and (3) who, is.purchasing a single family residence for occupancy as his, her or their principal residence. "Escrow Agent" means "Excess Refinancing Proceeds" means the amount df cash -received by Borrower as the result of any refinancing of the First Mortgage\Loan for a -loan amount in excess of the then -current loan balance of the First Mortgage Loan. "First Mortgage Loan" means the loan,to Borrower from in the amount of $ V,'or any loan obtained by Borrower to refinance the 'Firsf Morfgage,Loan. "First -Time Homebuyer" means anindividual or an individual and his or her spouse who have not owned a home during 'the three-year period before the purchase of the, Property: The term includes displaced homemakers and single parents as defined in 24 CFR Part 92.2. "Income And Owner -Occupancy' Covenants and Resale Restrictions (the "Affordability Covenants' ), means the document entitled "Income and Owner- Occuparicy­ Covenants and Resale Restrictions", in the form attached to this. Agreement as Ekhibit D and incorporated herein by reference. "Low Income" means "Moderate Income" means "Property," means the real property described in the legal description attached herewitli as Exhibit "A" and incorporated herein by reference. "Purchase Price" means the entire purchase price to be paid by Borrower for the Property. "Sale" means any sale, transfer, assignment or conveyance of the Property, any portion thereof or interest therein, including, without limitation, any lease, exchange, or other disposition of any interest in the Property, whether voluntary 3 25C-9 or involuntary, except that any transfer by gift, devise or inheritance to an existing spouse surviving joint tenants or other co-owner, or a spouse as part of a dissolution proceeding or in connection with marriage, or by devise or inheritance to children, shall not be considered a Sale for the purposes of this Loan Agreement. "Term of Affordability", shall be forty-five (45) years from close of escrow. 1. City Loan. The City agrees to lend to Borrower, and Borrower agrees to borrow from the City, the City Promissory Note Amount, at zero percent. (0%) interest• as provided in Section 2 of this Agreement, subject to the conditions -and restrictions set. forth in this Agreement, in the Promissory Note and in the City Deed of Trust. When all conditions to the close of escrow other than payment of the Purchase Price 1iave been satisfied, the City shall deposit the Loan Amount with the -Escrow Agent. The City shall direct the Escrow Agent to apply the proceeds of the City L'oan`on.behalf of Borrower to the Purchase Price of the Property for the down payment Boirowei'shall execute and deliver to the Escrow Agent the City Promissory Note, the City,.DeW, of _Trust and the Affordability Covenants. 2. Authorized Use of City Loan. The City Loan proceeds may only be used for the down payment associated with the purchase of the:Property. w 3. Conditions Precedent. Borrower must complete eight (8) hours of homeownership training offered by a counseling center approved by HUD, and open an impound account for property.tazes and insurance cost's. Borrower must have a positive credit history and must obtain a fixed rate loan (co -signors and variable rate loans are not allowed). Borrower will be required` to. provide payment of at least three percent (3%) of the purchase price towaid�the down payment. All properties built before 1978 must have a Visual Lead Based Paint Inspection and must pass the inspection before loan approval. Inspections;will be made to ensure that there are not code related issues, including common areas in condominium complexes. 4. Interest Rate and Repayment /Acceleration Terms. . , - (a) Interest Rate. The City is making the City Loan to Borrower at zero percent (0%) interest. (b) Service Charge. Borrower shall be required to pay any and all service charges associated with the City Loan. (c) Repayment/Acceleration. The unpaid outstanding principal balance of the City Loan and any penalties thereon shall all be due and payable when any of the following events take place: i. at the end of the 45 year Term of Affordability; ii. when the Property is sold; 25C-10 iii. when the Property is not properly being used as the Borrower's principal residence; iv. the City discovers that Borrower knowingly or willfully made a misstatement or misrepresentation pertaining to Borrower's status, as an Eligible Person or Family; or, V. an uncured default in performance or breach by Borrower of any provision of this Agreement, the Promissory Note, the;City Deed. of Trust or the Affordability Covenants. t , (d) Excess Refinancing Proceeds. In the event that. -the' First Mortgage, Loan is refinanced, any Excess Refinancing Proceeds shall be paid out'in accordance•, with City policy. 5. Nondiscrimination. There shall be no discrimination against or segregation of any person, or group of persons, on account of race, colof,-religion, sex, disability, marital status, national origin or ancestry in the sale,\lease; sublease,, transfer, use, occupancy, tenure or enjoyment of the Property, or any part'thereof,'norshall Borrower or any person claiming under or through Borrower establishyor permit any such practice or practices of discrimination or segregation with reference ;to the selection, location, number, use or occupancy of the Property` `,The provisions of this section shall be set forth in the Agreement Containing Covenants recorded against,the Property. 6. Income Requirement. a. Borrower acknowledges the City's intent that the Property remain available to moderateeincome'or lower persons or families whose household annual income does not exceed 120%. of the, area median income for the City, adjusted for family at affordable housing cdst,,for'the lohgest feasible time, but in any event not less than e Forty Five (45) years from thdate.of recording of the Affordability Covenants, provided that the Property'remains habitable. b� 'Borrower'represents and warrants to the City that the information relating to Borrower'`s household income that has been provided by Borrower to the City to verify Borrower's eligibility for the City Loan is true, correct and complete as of the "date such information was provided to the City and as of the date of this Agreement. If any 'such,information,changes prior to the close of escrow for the purchase of the Property, Borrower'shall promptly notify the City of such change. Borrower acknowledges that the City is relying upon the representations made by Borrower with respect to, Borrower's household income and that the City would not enter into this "Agreement if Borrower's household annual income were in excess of 120% of the area N,median income for the City, adjusted for family size, as of the date of this Agreement. As of June 9, 2017 120% of the area median income for the City of Santa Ana, adjusted for family size (subject to change approximately annually) was as follows: 5 25C-11 Family Size Income $73,900 $84,500 $95,050 $105,600 $114,050 $122,500 $130,950 $139,400 7. First -Time Homebuyer. Borrower represents and warrants to the.City that Borrower and each adult in Borrower's household is a First -Time Homebuyer as defined by this Agreement. Borrower acknowledges that the, City _'is -relying on Borrower's representation that Borrower and each adult in Borrower"s household, -is a First -Time Homebuyer and that the City would not enter into this Agreement if Borrower and each adult in Borrower's household were not a First -Time Homebuyer.. t � 8. Owner -Occupancy Reauiremeut.- \ ', a. Borrower shall occupy the Property as his, her or their primary residence, and the Property shall,be used'as the,principal'iesidence of Borrower and Borrower's household and for. no other purpose. , The' maximum occupancy of the Property shall not exceed two persons per bedroom plus one additional person. b. The City shall have the right to monitor whether the Property is owner -occupied by requesting that Borrower provide the City, no more frequently than annually, with -a written certification under penalty of perjury that the Property is owner - occupied, accompanied bysuppoiting documentation reasonably satisfactory to the City. e. In,the event of a breach of this section, the City Loan shall become immediately due and payable: - d. The provisions of this section shall also be set forth in the Agreement Containing Covenants -recorded against the Property. 9. Maintenance of Property. Borrower must maintain the interior and exterior of the improvements and the landscaping on the Property in a manner consistent with community standards which will uphold the value of the Property, in accordance, .with this Agreement and the Santa Ana Municipal Code. The maintenance requirements are set forth in specific detail in the recorded Affordability Covenants. 10. Defaults. Failure or delay by either parry to perform any term of provisions of this Agreement, the Promissory Note, the City Deed of Trust or the Agreement Containing Covenants which is to be performed by such party constitutes a 25C-12 default under this Agreement. The other party (the "Complaining Party") shall give written notice of default to the party in default, specifying in reasonable detail the matter constituting the default. The party in default shall have 15 days following receipt of notice to cure the default. Except as required to protect against further damages, the, Complaining Party shall not institute proceedings against the party in default unless the matter is not cured within such 15 day period, or, if the default is of a nature requiring more than 15 days to cure, the party in default commences to cure the matter within such, period and diligently pursues such cure to completion within a reasonable time, but in no event more than 45 days after notice of default. Failure to cure the default within the applicable cure period shall entitle the Complaining Party to terminate this Agreement - and/or exercise any remedies available to such party, including,, without limitation; acceleration of payment due on the City Loan. ` . 11. Loan Servicing. The City may contract with a private lender to originate and service the City Loan, and any costs associated therewith shall be paid by the Borrower. ` t 12. Indemnification. Borrower shall indemnify, defend and hold harmless the City, and its respective officers, agents, 'employees, legal counsel, representatives and volunteers, from and, against any loss, liability, claim or judgment relating in any manner to the Property or this Agreement. Borrower shall remain fully obligated for the payment of taxes, liens and assessments relating to the Property. There shall be no reduction in taxes for Borrower, nor any transferor responsibility to the City to make such payments, by virtue of the City. Loan. 13. Insurance.. Borrower shall maintain, during the term of the City Loan, an all-risk property insirrance,policy insuring the Property in an amount equal to the full replacement value of the structures on, the Property. The policy shall name the City as loss payee and shall contain a statement of obligation on behalf of the insurance carrier to notify the City of -any material change, cancellation or termination of coverage at least 30 days in advance of the effective date'of such material change, cancellation or termination. Borrower'shall deliver a copy of the certificate of insurance and loss payee endorsement to the City at the time of escrow closing, and Borrower shall annually deliver a copy of the certificate of insurance and loss payee endorsement to the City, signed by an %.auihorized agent of the insurance carrier and setting forth the general provisions of coverage. The copy of the certificate of insurance and loss payee endorsement shall be delivered to the City as follows: City of Santa Ana, Community Development Agency 20 Civic Center Plaza, M26 P.O. Box 1988 Santa Ana, Ca 92702 Attention: Housing Manager Any certificate of insurance required by this section must be a in a form, content and with an insurance company that is acceptable to the City in its sole discretion. 25C-13 14. Non -Waiver. Failure to exercise or delay in exercising any right the City may have or be entitled to, in the event of default hereunder, shall not constitute a waiver of such right or any other right in the event of a subsequent default. 15. Documents. Borrower has reviewed and agrees to execute the following . documents in substantially the form as attached to this Agreement prior to receiving the City Loan, and any other documents or instruments reasonably required -by City or a participating entity to complete the transaction contemplated herein: �. (a) Promissory Note (Exhibit C); (b) City Deed of Trust (Exhibit B); (c) Affordability Covenants (Exhibit D); and (d) Disclosure Statement and Notice of Rescission (_Exhibit E) c Borrower agrees and acknowledges that this Agreement,'the City Deed of Trust and the Affordability Covenants all be recorded against the Property with She County, Recorder of the County of Orange and shall appear of record with resp ect�to` and as an encumbrance against the Property. 16. Further Assurances. Borrower` shall execute 'any further documents consistent with the terms of this Agreement, including documents in recordable form, as the City may from time to time find necessary or appropriate to effectuate its purposes in entering into this Agreement and making the City Loan. 17. Governing Law., This Agreement shall be governed by the laws of the State of California, with venue in Orange County. 18. Severability. In the event that any provision or clause of this Agreement conflicts with applicable law, such^.conflict will not affect other provisions of this Agreement which can'be given effect without the conflicting provision, and to this end the provisions of the Agreement are declared to be severable. 19. Amendment of Agreement. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by Borrower and the duly authorized representative of the City. 20. Assignment by City Permitted. The City may, in its sole and absolute discretion, assign its rights under this Agreement and/or its right to receive repayment of the City Loan without obtaining the consent of Borrower. 21. Assignment of Borrower Prohibited. In no event shall Borrower assign or transfer any portion of this Agreement or any rights herein without the prior express written consent of the City, which consent the City may give or withhold in its sole and absolute discretion. This provision shall not affect or diminish the City's right to assign 25C-14 all or any portion of its rights under this Agreement or to the proceeds of the City Loan hereunder. 22. Relationship of Borrower and Citv. The relationship of Borrower and City pursuant to this Agreement is that of debtor and creditor and shall not be, or -be construed to be a joint venture, equity venture, partnership or other relationship. 23. Notices. (a) Except as otherwise expressly provided in this,Agreement,. in every case when, under the provisions of this Agreement, it shall be,necessary or desirable for one party to serve any notice, request demand; report or other 'y communication on another party, the same shall be in writing and'�shall riot be effective _ E for any purpose unless served (i) personally, (ii) by independent; reputable;.\overnight commercial courier, or (iii) by deposit in the United States mail, postage and fees fully prepaid, registered or certified mail, with return receipt requested, addresses as follows: To Borrower. 4+ To City: City of Santa Ana N") Community.D'evelopment ;Agency 20 Civic Center Plaza; M26. P.O. Boz 1988 Santa Ana, CA 92702 Attention: Housing Manager 24. Attorney's Fees and Costs: In the event that any action is instituted to enforce payment or performance under this' Agreement, or otherwise in connection with this Agreement, the parties agree.that the prevailing party shall be reimbursed by the other party for all' costs and.. all attorney fees incurred by the prevailing party in such action. 25. - Entire Aereement. This Agreement, together with all attachments hereto and all documents executed pursuant hereto, constitutes the entire understanding and agreement'of the parties. This Agreement integrates all of the terms and conditions mentioned herein or -incidental hereto, and supersedes all prior negotiations, discussions and previous agreements between the City and Borrower concerning all or any part of the subject matter of this Agreement. 26. Conflict of Interest. No member, official or employee of City shall have any- personal interest, direct or indirect, in this Agreement nor shall any member, official or mployee participate in any decision relating to the Agreement which affects his personal interests or the interests of any corporation, partnership or association in which he is directly or indirectly interest. 25C-15 27. Captions. The captions and headings in this Agreement are for convenience only and are not to be used to interpret or define the provisions hereof. 10 25C-16 IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of the day and year written below. Dated: Dated: iia \"CITY OF SANTA ANA APPROVED,kS,TO, FORM: City'Attomey By. -lie' y. .4an Oodk \ Assistant City Attorney ` -Dated: asIORGIU, BI Name: 11 25C-17 Raul Godinez 11 City Manager Dated: CITY OF SANTA ANA HOMEBUYERDOWN PAYMENT ASSISTANCE LOAN PROGRAM INCLUSIONARY HOUSING FUNDS PROMISSORY NOTE NOTICE TO BORROWER THIS DOCUMENT CONTAINS PROVISIONS RESTRICTING ASSUMPTIONS AND IS SECURED BY A SECOND DEED OF TRUST ON RESIDENTIAL PROPERTY ,20 FOR VALUE RECEIVED, the undersigned, (the `Borrower') hereby promises to pay to the order of THE CITY OF SANTA ANA, a charter city and municipal,coiporation duly organized and existing under the Constitution and laws of the State of California ("tender") at the following address or at such other place as the Lender may from time to time designate by written notice to Borrower, in lawful money of the United States, the sum of Dollars ($ ) with zero percent (0%) interest, until due and payable. The obligation of the"Borrower;viith respect to this Note is secured by that certain First -Time Homebuyer Down Payment Assistance Loan Program Deed of Trust loan No. (the "Deed of Trust"), and executed by the Borrower concurrently herewith. 1. Borrower's Obligation. This Note evidences the obligation of the Borrower to the Lender for the repayment of funds loaned (the "City Loan") to finance the down payment money for the purchase of that certain real property (the "Property"), which has the address of Santa Ana, California, more fully described in Exhibit A of the Dee&of Trust. 2. Borrower's Acknowledgment. Borrower acknowledges and agrees that the City Loan is subject to the terms, conditions; and restrictions of the City's Homebuyer Down Payment Assistance Program, Inclusionary Housing Programs, and all applicable implementing guidelines or regulations. 3. Repayment of Loan Principal and Interest. No periodic payments are required hereunder. Borrower agrees to pay the unpaid principal balance, and any other amounts due under this Note upon the earlier of i. at the end of the 45 year term of affordability; ii. when the Property is sold; iii. when the Property is not properly being used as the Borrower's principal residence; iv. the City discovers that Borrower knowingly or willfully made a misstatement or misrepresentation pertaining to Borrower's status as an Eligible Person or Family; or, 25b-18 V. an uncured default in performance or breach by Borrower of any provision of this Agreement, the Promissory Note, the City Deed of Trust or the Affordability Covenants. 4. Permitted Transfers. The City Loan is not assumable except under the following limited circumstances: (a) The transfer of the Property to the surviving joint tenant by devise, descent or operation of the law, on the death of a joint tenant. (b) A transfer of the Property where the spouse becomes an owner of the Property; (c) A transfer of the Property resulting from a decree of dissolution of marriage, legal separation or from an incidental property settlement agreement by which the spouse becomes an owner of the Property. (d) A transfer to an inter vivos trust in which the Borrower is and remains the beneficiary and occupant of the property. ' 5. Acceleration of Payment. The principal -amount of this loan shall become immediately due and payable at the option of the Lender and without demand or'notice, upon the occurrence of any of the following events: - (a) In the event of a default.under the terms of this Note or the Deed of Trust; (b) In the event that the Borrower shall cease to occupy the Property as Borrower's principal place of residence; or (c) In the event of any sale,,transfer, lease, or encumbrance of the Property without Lender's prior written consent id -violation of Paragraph 4 of this Note. y . 6. Effect of Due=on Sale Clause. Failure of the Lender to exercise the option to accelerate payment as provided in Paragraph 5 of this Note will not constitute waiver of the right to exercise this option in the event of subsequent cause for acceleration. Failure by Borrower to loccupy. the Property as Borrower's principal place of residence shall be considered an on- going event of default ander this Note. 7. Place and Manner of Payment. All amounts due and payable under this Note are payable at the principal office of the Lender set forth above, or at such other place or places as the Lender may designate to the Borrower in writing from time -to -time. S. "Application of Payments. All payments received on account of this Note shall be fust applied to the reduction of principal. 9. Attorney Fees. The Borrower hereby agrees to pay all costs and expenses, including reasonable attorney fees, which may be incurred by the Lender in the enforcement of this Note. 25d-19 10. Default and Acceleration. All covenants, conditions and agreements contained in the Deed of Trust are hereby made a part of this Note. The Borrower agrees that the unpaid balance of the then principal amount of this Note, together with all accrued interest thereon and charges owing, shall, at the option of the Lender or, if so provided in this Note and Deed of Trust executed by the Borrower, shall automatically, become immediately due and payable, and thereafter until paid bear interest at the rate of 0 % per annum, upon the failure of the Borrower to make any payment hereunder as and when due; upon the failure of the Borrower to perform or observe any other term or provision of this Note, or upon the occurrence of any event (whether termed default, event of default or similar term) which under the terms of the Deed of Trust, shall entitle the Lender to exercise rights or remedies thereunder. 11. Notices. Except as maybe otherwise specified herein, any approval,'hotice, direction, consent, request or other action by the Lender shall be in writing and must be communicated to the Borrower at the address of the Property, or at such other place or places as the, Borrower shall designate to the Lender in writing, from time to.time, for the receipt 0,P communications from the Lender. Mailed notices shall be deemed delivered and received five (5) working days after deposit in the United States mail in accordance with this provision. ` 12. Prepayment Policy. Borrower may prepay this Note at any time without penalty. 13. Governing Law. This Note shall be construed'in accordance with and be governed by the laws of the State of California. 14. Severability. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. . 15. No Waiver by the Lender. No waiver of any breach, default or failure of condition under the terms of the Note or Deed of Trust shall thereby be implied from any failure of the Lender to take, or any delay by the Lender in taking action with respect to such breach, default or failure or 4rom any previous waiver of any similar or unrelated breach, default or failure; and a waiver of any,term of the Note, Deed of Trust, or any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of 'such waiver. 16. Successors andAssigns. The promises and agreements herein contained shall bind and inure to the benefit of, as applicable, the respective heirs, executors, administrators, successors and assigns of the parties. 25t-20 Executed as of the date set forth above Mailing Address for Notices: California 25C 421 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 When Recorded Mail to: City of Santa Ana — Community Development Agency 20 Civic Center Plaza P.O. Box 1988 Santa Ana, California 92702 Attn: Executive Director f , L , CITY OF SANTA ANA HOMEBUYER DOWN PAYMENT ASSISTANCE.LOAN PROGRAM, INCLUSIONARY HOUSING FUNDS DEED OF TRUST This INCLUSIONARY HOUSING FUND LOAN DEED' OF TRUST (the "Deed of Trust") is made this _ day of 26' among 11 (the "Trustor"), First American Title Insurance. Company, a 'California corporation (the "Trustee"), and the City of Santa Ana, a charter city'and municipal corporation duly organized and existing under the Constitution and laws of the Sfate' of California (the "Beneficiary"). Trustor, in consideration of the promises herein I recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to Trustee, in trust, with power of sale, the property located in the City.of Santa Ana, County of Orange, State of California, described in the attached Exhibit A and mole commonly, known as Santa Ana, California (the "Property/Security"); , TOGETHER with all the,improvements now or hereafter erected on the Property, and all easements, rights, appurtenances 'and all fixtures now or hereafter attached to the Property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Property covered by this Deed of Trust; TOGETHER with the right, power and authority during the continuance of these Trusts, to collect issues, and. profits of the Property, reserving unto the Trustor the right, prior to any default by Trustor in,payment of the indebtedness secured by this Deed of Trust or in the performance of any agreement secured by this Deed of Trust, to collect and retain these issues and profits as they become due and payable; and, TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used. in and about the building or buildings now erected, or hereafter to be erected, on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and refen•ed to, 25C-22 and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Property, is herein referred to as the "Security"; To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever; TO SECURE to the Beneficiary (a) the repayment of the sums -evidenced by a Promissory Note to the Beneficiary executed by Trustor, dated concurrently, herewith in the principal amount of Dollars ($ .00) (the "Loan" ); (b) the payment and performance of the covenants and agreements of Trustor contained in that certain Homebuyer Down Payment Assistance Loan Agreement dated -concurrently herewith and recorded in the official land records of the County of Orange concurrently herewith, by and among Trustor, Beneficiary, and Agency ("Agreement"), (c) the payment and performance of the covenants and agreements of Trustor contained in the :Income and Owner -Occupancy Restrictions for Homebuyer Down Payment Assistance \Lba{i -Agreement ("Affordability Covenants") dated concurrently herewith, and (d) the payment of all other,sums, with interest thereon, advanced in accordance herewith to protect the security 'of this Deed of Trust; and the performance of the covenants and agreements of Trustor contained herein. Each of the Loan Agreement, the Affor'dab'ility Covenants, the City Promissory Note and the City Deed of Trust provide a means of enforcement by the City if Trustor is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed restrictions and covenants running with the land [24 CFR 92.504 (c)(13)], TRUSTOR AND THE BENEFICIARY COVENANT AND AGREE AS FOLLOWS 1. The Loan. This Deed of Trust is executed and delivered, along with the Promissory Note, pursuant to and in implementation of the Homebuyer Down Payment Assistance Loan Program (the "Program") underwhich the,City will provide a subsidy in the form of a trust deed loan in the maximum amount of $80,000.00 to an "Eligible Person or Family" (as defined elsewhere in this Agreement) toward the purchase of a residence within the City. Trustor acknowledges that but for the execution of this Deed of,Trust, the Beneficiary would not enter into the Promissory Note secured by this Deed of Trust. 2. . Trustor's Estate. Trustor is lawfully seized of the estate hereby conveyed and has the tight to grant and convey the Security; that other than this Deed of Trust, the Security is not encumbered except for obligations secured by deeds of trust, or any other security agreement, to secure financing or, refinancing for the purchase of the Property. 3. Renavment of the Loan. Trustor will promptly repay, when due, the principal and inteiesf, if any, as required by the Promissory Note secured by this Deed of Trust. 4. Subordination. This obligation secured by this Deed of Trust shall be subordinated to any and all obligations secured by deeds of trust, or any other security agreement, to secure financing for the refinance of the Property; subject to and provided that the Beneficiary and such Senior Lender 2 25C-23 enter into a subordination agreement providing notice and cure rights to Beneficiary that are reasonably acceptable to the City. 5. Prior Mortgages and Deeds of Trust: Charges: Liens. Trustor shall perform all of Trustor's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this instrument, including Trustor's covenants to make payments when due. Trustor: will pay all taxes, assessments and other charges, fines and impositions attributable to the Security, which may attain a priority over this Deed of Trust, by Trustor making any payment,'when due, directly to the payee thereof. Trustor will promptly furnish to the Beneficiary all notices of amounts due under this paragraph, and in the event Trustor makes payment directly, Trustor will promptly .' discharge any lien which has priority over this Deed of Trust; provided.that'Trustor will not'be required to discharge the lien of the Deed of Trust securing any senior lender or, any other lien,' described in this paragraph so long as Trustor will agree in writing to ttie payment of -the obligation secured by such lien in a manner acceptable to the Beneficiary, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part lh reof.. 6. Hazard Insurance. Trustor will keep the Security'insured by such insurance policies in such amounts and for such periods as called for in the Agreement. All insurance policies and renewals thereof will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of any senior lender and the Beneficiary as their. interests may appear and in a form acceptable to the Beneficiary. The Beneficiary shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and Trustor shall promptly famish to the Beneficiary, or its designated agent, the original'insueance policies or certificates of insurance, all renewal notices and all receipts of paid premium's. In the event of loss, Trustor will give prompt notice to the insurance carrier and the Beneficiary or its designated agent. The Beneficiary, or its designated agent, may make proof of loss if not made promptly by Trustor. The Beneficiary shall receive 30 days' advance notice of cancellation of any insurance policies required under this Section. Unless the Beneficiary and Trusior, otherwise agree in writing, insurance proceeds, subject to the rights of any senior lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the -security of this' Deed of Trust would be impaired, again, subject to the rights of any senior lender, the -insurance proceeds will be used to repay the grant under this Deed of Trust, with the excess; if'any, paid to Trustor. If the Security is abandoned by Trustor, or if Trustor fails to respond to the Beneficiary, or its designated agent within 30 days from the date notice is mailed by either of them to Trustor that the insurance carrier offers to settle a claim for insurance benefits, the Beneficiary, or its designated agent, is authorized to collect and apply the insurance proceeds at the Beneficiary's option either to restoration or repair of the Security or to repay the Loan. If the Security is acquired by the Beneficiary, all right, title and interest of Trustor in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Beneficiary to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of any senior lender. 25C-24 7. Preservation and Maintenance of Security. Trustor will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. 8. Protection of the Beneficiary's Security. If Trustor fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the Beneficiary's interest in the Security, including, but not limited to, default,. under this Deed of Trust securing any senior lender, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Beneficiary, of the Beneficiary's option, upon notice to Trustor, may make such appearances, disburse such, sums'and take such action as it determines necessary to protect the Beneficiary's interest, includingN,but not limited to, disbursement of reasonable attorneys' fees and entry upon the Security to make repairs. Any amounts disbursed by the Beneficiary pursuant to this paragraph, with interest thereon, will become an indebtedness of Trustor secured by this Deed of Trust. Unless Trustor and the Beneficiary agree to other terms of payment, such aiiiountwill be payable upon notice from the Beneficiary to Trustor requesting payment thereof,`and'will bear interest from the date of disbursement at the rate payable from time to time on, outstanding principal under the Promissory Note unless payment of interest at such rate woul&b8 contrary to-applicable law, in which event such amounts will bear interest at the highest rate permissible under applicable law. Nothing contained in this paragraph will require the Beneficiaryxto,;insure any expense or take any action hereunder. 9. Inspection. The Beneficiary may make, or,cause to be'made, reasonable entries upon and inspections of the Security during normal business flours; provided that the Beneficiary will give Trustor reasonable notice of inspection. 10. Forbearance by the Beneficiary Not a Waiver. Any forbearance by the Beneficiary in exercising any right or remedy will not be a•waiver of the exercise of any such right or remedy. The procurement of insurance or the payment of taxes or other liens or charges by the Beneficiary will not be a waiver of the Beneficiary"s right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 11. ' Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other. right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 12. Successors, and Assiens Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the Beneficiary and Trustor subject to the provisions of this Deed of Trust. 13. Joint and Several Liability. All covenants and agreements of Trustor shall be joint and several. 14. Notice. Except for any notice required under applicable law to be given in another manner, (a) any notice to Trustor provided for in this Deed of Trust will be given by certified mail, return receipt requested, addressed to Trustor at , Santa Ana, CA and (b) any notice to the Beneficiary will be given by certified mail, return receipt requested, to the Beneficiary at 20 Civic Center Plaza, P.O. Box 1988, Santa Ana, California 92702, Attention: Housing Manager, or at such other address as the Beneficiary may designate by notice to Trustor as 25C-25 provided above. Notice shall be effective as of the date received by the Beneficiary as shown on the return receipt. 15. Governing Law. This Deed of Trust shall be governed by the laws of the State of California, with venue in Orange County. 16. Severability. In the event that any provision or clause of this Deed of Trust or the Promissory Note conflicts with applicable law, such conflict will not affect other. provisions of this Deed of Trust or the Promissory Note which can be given effect without the conflicting provision, and to this end the provisions of the Deed of Trust and the Promissory Note "are declared 'to be , severable. 17. Captions. The captions and headings in this Deed of Trust are fo,i-convenience only and are not to be used to interpret or define the provisions hereof. 18. Default in Foreclosure: Remedies. Upon Trustors breach of any covenant or agreement of Trustor in this Deed of Trust or the Promissory Note secured by this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums,secured;by this Deed of Trust, or any default under any other agreement the performance ofwhich is secured by this Deed of Trust, the Beneficiary may declare all sums secured by this Deed of Trust immediately due and payable by delivering to Trustor notice thereof specifying: (1) The breach; (2) the action required to cure such breach; (3) a date not less than 30 days from the date the notice is received by Trustor as shown on the return receipt, by which such'breach••is to be cured provided, however, that if such default is not reasonable susceptible to being cured within 30 days; Trustor shall have a reasonable period to cure the defect so long as Trustor is diligently prosecuting the cure to completion; and (4) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. The notice will also inform Trustor of Trustor's'righi to reinstate after acceleration and the right to bring a court action to assert the non-existence of default or any other defense of Trustor to acceleration and sale. If the breach is not cured on or before the date specified in the notice or such longer period as provided above, the Beneficiary, at the Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may,.ihvoke the power of'sale and any other remedies permitted by California law; (b) either in person"or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take,possession thereof (or any part thereof) and of any of the Security, in its own name or in the name'of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or'marketability, of the Property, or any part thereof or interest therein, increase the income therefrom or protect the security thereof The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et M., as amended from time to time; or (e) exercise all other rights 25C-26 and remedies provided herein, in the instruments by which Trustor acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. 19. Trustor's Right to Reinstate. Notwithstanding the Beneficiary's acceleration of the sums secured by this Deed of Trust, Trustor will have the right to have any proceedings begun by.the Beneficiary to enforce this Deed of Trust discontinued at any time prior to 5 days before sale bf the Security pursuant to the power of sale contained in this Deed of Trust or at'any time,prior to entry`of' a judgment enforcing this Deed of Trust if. (a) Trustor pays the Beneficiary all sums,which would be then due under this Deed of Trust and no acceleration under the Promissory Note •has. occurred; (b) Trustor cures all breaches of any other covenants or agreements Trustor contained in'this'Deed of Trust and the Covenants; (c) Trustor pays all reasonable expenses'incurred by the Beneficiary and the Trustee in enforcing the covenants and agreements of Trustor contained iii this Deed of Trust and the Covenants, and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attorneys' fees; and (d) Trustor takes such action as the Beneficiary may reasonably require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Security and Trustor's obligation to pay the sums secured by this Deed of Trust shall'continue unimpaired. Upon such payment and cure by Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 20. Acceptance by Trustee. Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a.public'record as provided by law. Trustee is not obligated to notify any party to this Deed of Trust of pending sale under any other deed of trust or any action or proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee. 21. Reconvevance., Upon payment or forgiveness of all sums secured by this Deed of Trust and expiration of the Term of the Agreement and the Term of the Affordability Restrictions, the Beneficiary will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the. Promissory Note- to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 22. Substitute Trustee. The Beneficiary, at the Beneficiary's option, may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will -succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 23. Request for Notice. Trustor requests that copies of the notice of default and notice of sale be sent to Trustor at the address set forth in Section 14 above. 24. Nonrecourse Liability. Neither Trustor nor any general partner of Trustor shall have any personal liability under the Loan Agreement, Promissory Note, and this Deed of Trust and any judgment, decree or order for payment of money obtained in any action to enforce. the obligation of Trustor to repay the Loan evidenced by such documents shall be enforceable against Trustor only to the extent of Trustor's interest in the Property. 3 25C-27 25. Third Party Beneficiaries. City and the Housing Authority of the City of Santa Ana are third party beneficiaries of Beneficiary's rights hereunder, with fall right (but no obligation) to enforce the terms and exercise the remedies provided to Beneficiary hereunder. 7 25C-28 IN WITNESS WHEREOF, Trustor has executed this Inclusionary Housing Fund Loan Deed of Trust as of the date first written above. "Trustor" By: By: 8 25C-29 E)GIIBIT A LEGAL DESCRIPTION IV 25C-30 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 6103 &27383 When Recorded Mail to: City of Santa Ana 20 Civic Center Plaza, M-26 P.O. Box 1988 Santa Ana, California 92702 Attention: Loan Specialist CITY OF SANTA ANA HOMEBUYER DOWN PAYMENT ASSISTANCE LOAN PROGRAM, INCLUSIONARY HOUSING EUNDS INCOME AND OWNER -OCCUPANCY COVENANTS_ AND RESALE RESTRICTIONS - ["Affordability Covenants"] A. The City of Santa Ana (the "City"); acting to carry out its'public purposes by making financial assistance available to assist persons and, families of low- o'r moderate income to obtain housing at affordable housing cost, is making a loan to ' ("Owner") pursuant to the terms of a certain Loan Agreement of even date herewith (the "Loan Agreement"), for the purpose of assisting Owner to purchase a single-family residence located as described in the legal description attached hereto as Exhibit "A" and incorporated herein by this reference. B. This financing is available to Owner through the City's First -Time Homebuyer Down Payment Assistance Loan Program (the "Program"), under which the City will provide a subsidy in the form of a trust deed loan of up to a maximum of $40,000.00 for moderate income households and $80,000.00 for low income households that are determined to be an "Eligible Person or Family" (as defined elsewhere in'this Agreement) toward the purchase of a residence within the City. C. The Program is implemented in accordance with the City of Santa Ana Housing Opportunity Ordinance, "and• will be modified whenever necessary to insure compliance with regulations and continued Program feasibility. D. The financial assistance being made available by the City to the Owner is conditioned on the use of the Property for housing affordable to persons or families of low or moderate income as .their primary residence for the longest feasible time, but in any event not less than Forty Five (45) years ("Term of Affordability"), provided that the Property remains habitable. In the event that the Owner fails to comply with these affordability covenants for the 45 years, the Note will become immediately due and payable (see Section 4 below). E. It is in the public interest and is of benefit to all real property within the City of Santa Ana, including, but not limited to, real property owned by the City, to ensure that there is an adequate supply of decent, safe and affordable owner -occupied housing within the City of Santa Ana. FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, the City and the Owner hereby agree and NOTICE IS HEREBY GIVEN -1- 25C-31 that the Property shall be subject to the provisions of these INCOME AND OWNER -OCCUPANCY COVENANTS AND RESALE RESTRICTIONS (the "Affordability Covenants"). Definitions: Unless otherwise defined, the following capitalized terms shall be defined in these Covenants as follows: "City Deed of Trust" means the deed of trust securing the City Loan, in the form attached to ' the Loan Agreement as Exhibit B and incorporated herein by reference. "City Load" means the deferred loan of Inclusionary Housing Funds fo. be made by the City to Borrower in the principal amount of $ in accordance with the Loan` Agreement. "City Promissory Note" means the promissory note in favor of the City, evidencing the City Loan, in the form attached to the Loan Agreement as `Eihibit C and incorporated herein by reference. "Eligible Person or Family" means a person or family (1),with household.annual income of less than 120% of the area median income for the City, adjusted for family size; (2) who is a "First -Time Homebuyer", and (3) who is,purchasing a single\family residence for occupancy as his, her or their principal residence. ' "Escrow Agent" means "Excess Refinancing Proceeds" means the amount of cash received by Borrower as the result of any refinancing of the First Mortgage Loan for a loan amount in excess of the then -current loan balance of the First Mortgage Loan. "First Mortgage Loan" means the loan to Borrower from in the amount of $ or any loan obtained by Borrower to refinance the First Mortgage Loan. "First-Time`Homebuyer" means an individual or an individual and his or her spouse who have not owned a home during the three-year period before the purchase of the Property. The term includes displaced homemakers and single parents as defined in 24 CFR Part 92.2. "Income And Owner=Occupancy Covenants and Resale Restrictions (the "Affordability Covenants") means this document entitled "Income and Owner -Occupancy Covenants and Resale Restrictions". "Low Income" means "Moderate Income" means "Property" means the real property described in the legal description attached to the Loan Agreement as Exhibit "A" and incorporated herein by reference. "Purchase Price" means the entire purchase price to be paid by Borrower for the Property. -2- 25C-32 "Sale" means any sale, transfer, assignment or conveyance of the Property, any portion thereof or interest therein, including, without limitation, any lease, exchange, or other disposition of any interest in the Property, whether voluntary or involuntary, except that any transfer by gift, devise or inheritance to an existing spouse surviving joint tenants or other co- owner, or a spouse as part of a dissolution proceeding or in connection with marriage,'or by devise or inheritance to children, shall not be considered a Sale for the purposes of the Loan - Agreement. "Term of Affordability", shall be forty-five (45) years from close of escrow:' 1. Nondiscrimination. There shall be no discrimination against or segregation of., any person, or group of persons, on account of race, color, religion, sex, disability, marital status, national' origin or ancestry in the sale, lease, sublease, transfer, use, occupancy,'tenure or'enjoyment of the Property, or any part therefore, nor shall Owner or any person claiming under or through Owner establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use of occupancy of tenants',, 'le`ssees,- subtenants, sublessees, or vendees of the Property. 2. Income Requirement. The Property shall remain available,to persons or families whose household annual income does not exceed 120%o.of the area median -income adjusted for family size (as defined by HUD) at affordable housing cosffor'the longest feasible,time, but in any event not less than 45 years from the date of recording of these Affordability Covenants, provided that the Property remains habitable. As of June 9, 2017,:1.200io of the -area median income for the City of Santa Ana, adjusted for family size, as defined by. HUD' (sirbject'-do 'change"approximately annually) was as follows: Family Size Income 1 $73,900 2 $84,500 3 _. $95,050 $105,600 5 $114,050 6'" , $122,500 7 $130,950 -8 $139,400 It shall not be a breach of these Affordability Covenants if a person or family whose household annual income was less than 120% of the area median income for the City at the time such ,person or family first acquired title to or took possession of the Property subsequently increases to an amount in excess of the 120% of the area median income. 3. Owner -Occupancy Requirement. (a) Owner shall occupy the Property as his, her or their primary residence, and the Property shall be used as the principal residence of Owner and Owner's household and for no other purpose. The maximum occupancy of the Property shall not exceed two persons per bedroom plus one additional person. -3- 25C-33 (b) The City shall have the right to monitor whether the Property is owner -occupied by requesting that Owner provide the City, no more frequently than annually, with a written certification under penalty of perjury that the Property is owner -occupied, accompanied by supporting documentation reasonably satisfactory to the City. (c) In the event that Owner no longer resides on the Property as his or,her or their, primary residence, it shall constitute a breach of contract which may accelerate repayment of the City Loan. 4. Repayment/Acceleration. The unpaid outstanding principal balance of the City Loan and any penalties thereon shall all be due and payable when any of the following events take place:' i. at the end of the 45 year Term of Affordability; ii. when the Property is sold; iii. when the Property is not properly being used as the Owner's ,principal residence; 1 _ _ - ` iv. the City discovers that Owner knowingly or willfully made a misstatement or misrepresentation pertaimng'to Owner's status as an Eligible Person or Family; or, N V. an uncured default in per or breach by Owner of any provision of this Agreement, the Promissory Note, or the City Deed of Trust. 5. Maintenance of Property— Owner shall maintain, the interior and exterior of the improvements and the landscaping on the Property in a manner consistent with community standards which will uphold the value of the Property, in' accordance with these Affordability Covenants and the Santa Ana Municipal Code. (a) Exterior Maintenance. All exterior surfaces of any structures located on the Property shall be maintained at all times in a clean and presentable manner. (b) Graffiti Removal. All graffiti, and defacement of any type, including marks, words and pictures, must be removed from the Property and any necessary painting or repair completed within a reasonable'time, but in no event more than one (1) week after notice to Owner from the City. (c) Landscabing. All landscaping surrounding the Property shall be maintained in a manner consistent with standards of the Santa Ana Municipal Code and any rules, regulations and standards adopted pursuant thereto. In addition, for example, the yard areas shall not contain the following: (i) lawns with grasses in excess of 9 inches in height; (ii) trees, shrubbery, lawns or other plant life which are, dying from a lack of necessary maintenance; (iii) trees and shrubbery grown uncontrolled without proper pruning; (iv) vegetation so overgrown as to be likely to harbor rats or vermin; (v) dead, decayed or diseased trees, weeds and other vegetation; or (vi) inoperative irrigation systems. (d) Maintenance by Owner. Owner shall, at his, her or their sole cost and expense, maintain and repair the Property and the improvements thereon, keeping the same in good condition and making all repairs as may be required by these Affordability Covenants and applicable City rules and regulations. (e) Damage and Destruction Affecting Property — Duty to Rebuild. If all or any portion of the Property and the Improvements thereon is damaged or destroyed by fire or other casualty, it -4- 25C-34 shall be the duty of Owner to rebuild, repair or reconstruct the Property in a timely manner to restore it to comply with any applicable City regulations. (f) Variance in Exterior Appearance and Design. If the Property is damaged or destroyed by casualty, Owner may not, without the prior written consent of the City, reconstruct, rebuild or repair the Property in a manner which will provide the same or different exterior,, appearance and lot design from that which existed prior to the date of the casualty. (g) Time Limitation. In the event of damage or destruction due to casualty, Owner shall be obligated to proceed with all due diligence to commence reconstruction,within two (2)•.months after the damage occurs and to complete reconstruction within a reasohable'-time after damage occurs, unless prevented by causes beyond the reasonable control of Owrier. 6. Notices. 4` Except as otherwise expressly provided in these AffordabilityCovenants, in every case when, under the provisions of these Affordability Covenants, it shall be,necessary or desirable for one party to serve any notice, request, demand, report or other communication'on another party', the same shall be in writing and shall not be effective for any purpose unless served (i) personally, (ii) by independent, reputable, overnight commercial courier, or (iii) by deposit in the United States mail, postage and fees fully prepaid, registered or certified mail, with return`receipt requested, addressed as follows: To Owner: To City: City of Santa Ana 20 Civic Center,Plaza, M-26 P.O. Box 1988 Sania Ana;.California 92702 Attention: Housing Manager 7. Effect -of Violation on Other Liens. No violation or breach of these Affordability Covenants shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other security'instrument permitted by the Loan Agreement and made in good faith and for value. 8. Covenants Run with the Land. Notwithstanding any other provision of law, these Affordability Covenants shall run with the land and shall be enforceable against the Owner and successors in interest by the City. Once the City has been repaid in full, these Affordability Covenants shall be released. 9. Modification. Only the City, its successors, and assigns, and the Owner and the successors and assigns of the Owner in and to the Property shall have the right to consent and agree to changes in, or to eliminate in whole or in part, these Affordability Covenants or to subject the Property to additional covenants, easements, or other restrictions without the consent of any tenant, lessee, easement holder, licensee, trustee, beneficiary under a deed of trust (other than the First Mortgage Loan) or any other person or entity having an interest less than a fee in the Property. -5- 25C-35 These Affordability Covenants, without regard to technical classification or designation, shall not benefit or be enforceable by any person, or firm, or corporation, public or private, except the City, the Owner and their respective successors and assigns. 10. Enforcement. These Affordability Covenants, without regard to technical classification or designation, shall be binding for the benefit of the City, and its successors and assigns, for the entire period during which such covenants shall be in force and effect, without regard to whether the City, or its successors and assigns are or remain an owner of any land or interest therein to which such covenants relate. In the event of any breach of any such covenants, the City,'or its successors and assigns, shall have the right to exercise all the rights and remedies, and to maintain any action at , law or suits in equity or other proper proceedings to enforce the curing of such -breach. The Loan Agreement and all of its attachments shall be enforceable by City in accordance with the terms thereof. Each of the Loan Agreement, the Affordability Restrictions, the Promissoiy Note and the Deed of Trust provide a means of enforcement by the City if Borrower is in breach of its obligations hereunder and thereunder, including liens on the Property, use and deed_ restrictions and covenants running with the land [24 CFR 92.504 (c) (13)]. 11. Duration. The provisions of Section 1 of these Affordability,Covehants shall remain in effect in perpetuity. The provisions of Section 2 of these Affordability Covenants shall remain in effect for the longest feasible time, but in any event, not less than 45 years from the date on which these Affordability Covenants are recorded in the Official Records o6h'e Recorder of the County of Orange, State of California, provided that the Property remains habitable. ' The provisions of Sections 3, 4 and 5 shall remain in effect for so long as the City Loan remains outstanding, or for so long as the provisions of Section 2 of these Affordability Covenants remain in effect, whichever is longer. Notwithstanding the foregoing, as required by 24 C.F.R. Section'92.254 (a) (5) (i), the provisions of Section 2 of these Affordability Covenants shall terminate upon occurrence of any of the following termination events: foreclosure, transfer in lieu of foreclosure or assignment of an FHA insured mortgage to HUD. 12. No Forfeiture. These Affordability Covenants shall be construed as covenants running with the land and not as conditions which might result in forfeiture of title. 0 25C-36 IN WITNESS WHEREOF, the parties have executed these Affordability Covenants as of the day and year written hereinabove. OWNER: OWNER: Name: Name: Dated: ated: APPROVED AS TO FORM: CITY OF SANTA -ANA,-a-charter city and municipal corporationI" . City Attorney By: Wyan U Hodge Assistant City Attorney Dated: 19 Raul Godinez City Manager Dated-.� -7- 25C-37 % -7- 25C-37 EXHIBIT "A" Legal Description -8- 25C-38