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HomeMy WebLinkAboutResolution - 574 - Amendment To NIDP Loan Handbook - URA - Community Development Program - 08/14/1980SMT: bs RVQnT TTTTr%M RESOLUTION 4574 - 8/14/80 WHEREAS, the Board of Commissioners of the Urban Renewal Agency of the City of Lubbock is engaged in the issuance of No -Interest Deferred Payment '(NIDP) Loans; and WHEREAS, the policies and procedures governing the issuance of NIDP loans ;are set out in the "Rehabilitation No -Interest Deferred Payment Loan Handbook ;for the Lubbock Community Development Program"; and WHEREAS, the terms of each NIDP Loan do not provide an exception from repayment of the principal in full upon the occurrence of any one of three specific events; and WHEREAS, situations do arise where an alternative to foreclosure is desired; and WHEREAS, the Board of Commissioners of the Urban Renewal Agency of Lubbock has reviewed and approved a proposed amendment to said Handbook set forth as "Chapter 12. Repayment Provisions." specifically providing for an installment agreement in specialized circumstances; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the amendment to the "Rehabilitation No -Interest Deferred Payment (NIDP) Loan Handbook for the Lubbock Community Development Program" as attached in Exhibit "A" BE and is hereby accepted and approved by the City of Lubbock and is immediately effective. Passed by the City Council this 14th day of August , 1980. ATTEST,' �E^ elyn-Gaf `- a, C ty S APPROVED AS TO CONTENT: easurer Vicki Foster, Community Development Coordinator APPROVED AS TO FORM: M. Tom, Asst. City Attorney L McALISTER, MAYOR CHAPTER 12. REPAYMENT PROVISIONS 1. GENERAL. The terms of each NIDP Loan and the accompanying Deed of Trust expressly provide that the payment of the principal is immediately due and payable in full upon the occurrence of any one of three following events: (1) If the borrower ceases to occupy the property as his personal residence; or (2) If the borrower sells, transfers, or conveys the property or any interest therein or any part thereof by any means to any person, corporation or other legal entity; or (3) Upon the death of the borrower. Situations arise when one of the above three events have occurred where it doesn't seem desirable to pursue foreclosure proceedings. All of these are instances in which there exist valid reasons why the borrower or his family or his estate cannot pay the total amount due on the NIDP Loan in a lump sum; usually the Deed of Trust held in favor of the City is a junior lien, subservient to a purchase money mortgage or another senior lien; a foreclosure sale would not likely yield an amount sufficient to satisfy all of the liens (and in particular the NIDP loan) in full; and the borrower or his family or his estate is cooperative and willing to enter into some agreement with the Public Body to eliminate the need for foreclosure. When situations occur like the above, the Local Public Body will examine each on a case-by-case basis to determine the eligibility for repayment on a monthly basis and to prescribe the terms and conditions. In making provisions for these specific situations referred to above, it is the express policy of the Agency that the primary thrust of intent is to follow these or conditions and that the exercise of any other repayment provision is an exception to the rule and is to be applied only in special instances. 2. ELIGIBILITY. There are three basic requirements for eligibility for monthly repayment of the NIDP loan. (1) A legitimate reason exists as to why the borrower, his family, or his estate cannot pay the total NIDP loan amount in a lump sum. (2) The borrower, his family, or his estate must be cooperative and willing to enter into a repayment agreement to eliminate the need for foreclosure. (3) The property must continue in some form of owner -occupancy. EXHIBIT "A" 3. TERMS AND CONDITIONS. If a case is considered eligible for monthly repayment, the Local Public Body will counsel with the person or persons responsible to make payment and determine the repayment ability. The interest rate, if any, and the term of the repayment loans will be based upon the applicant's repayment ability attempting to get the principal repaid as soon as possible. 4. REVIEW AND APPROVAL. When the terms and conditions for a repayment loan have been recommended by the Local Public Body, the staff will verify the socio-economic data necessary for eligibility and will bring the case to the Repayment Loan Review Committee for approval. If approved by the Committee, the Local Public Body will recommend that the City transfer the lien to the Local Public Body (The Urban Renewal Agency of the City of Lubbock) and the repayment loan will be set up on the Agency books. The Repayment Loan Review Committee will consist of the Chairman or Vice - Chairman of the Agency, the Community Development Coordinator, the Executive Director or Deputy Director of the Agency, the Director of Rehabilitation, the Agency's Assistant Executive Director for Planning and Operations, and a representative of the Agency's Attorney's Office. The Rehabilitation Director will be the staff person responsible for presenting the cases and the staff recommendations. 5. COLLECTION PROCEDURES: Monthly payment cards will be made for each repayment loan and sent to the borrower each year,,said cards being very similar to those supplied by private mortgage lenders including a penalty added for late payments. The Agency staff would monitor the collections, and if a loan becomes sixty (60) days delinquent, staff personnel would make an immediate visit and counsel with the borrower and arrange for the account to be brought up-to-date. If a loan becomes ninety (90) days delinquent, it would be considered in default if no action was taken by the borrower, and foreclosure proceedings would be considered. If the owner -occupancy status is changed at any time during the term of the repayment loan, the total loan becomes due and payable, and foreclosure proceedings would be considered. 6. DOCUMENTS: The Agency Attorneys will prepare all instruments of transfer and all other instruments needed for setting up of the repayment loans and supervise their execution. 7. REIMBURSEMENT: The Local Public Body, the Urban Renewal Agency of the City of Lubbock, will contract with the City of Lubbock on an actual cost basis for services rendered by the Agency staff and the Agency Attorneys in setting up, collecting, and servicing these repayment loan accounts. The Agency will pay to the City all principal, interest and/or penalty payments received once a month. 8. EARLY PAYMENTS. If the borrower at any time in the life of an No -Interest Deferred Payment Loan wishes to make payment before the three events that cause the principal to become due and payable, the Local Public Body will accept such payments either in part of in full and reduce the outstanding principal accordingly. All NIDP Loans are set up on the Agency books to receive such payments if that is the desire of the borrowers. r .JTrban Renewal Agency REHABILITATION NIDP LOAN HANDBOOK of the City of Lubbock CHAPTER 12. REPAYMENT PROVISIONS 1. GENERAL. The terms of each NIDP Loan and the accompanying Deed of Trust expressly provide that the payment of the principal is immediately due and payable in full upon the occurrence of any one of three following events: (1) If the borrower ceases to occupy the property as his personal residence; or (2) If the borrower sells, transfers, or conveys the pro- perty or any interest therein or any part thereof by any means to any person, corporation or other legal entity; or (3) Upon the death of the borrower. Situations arise, when one of the above three events have occurred where it doesn't seem desirable to pursue foreclosure proceedings. All.of these are instances in which there exist valid reasons why the borrower or his family or his estate cannot pay the total amount due on the NIDP Loan in a lump sum; usually the Deed of Trust held in favor of the City is a junior lien, subservient to a purchase money mortgage or another senior lien; a fore- closure sale would not likely yield an amount sufficient to satisfy all of the liens (and in particular the NIDP loan) in full; and the borrower or his family or his estate is cooperative and willing to enter into some agreement .with the Public Body to eliminate the need for foreclosure. When situations occur like the above, the Local Public Body will examine each on a case-by-case basis to determine the eligibility for repayment on a monthly basis and to prescribe the terms and conditions. In making provisions for these specific situations referred to above, it is the express policy of the Agency that the primary thrust of intent is to follow these original conditions and that the exercise of any other repay- ment provision is an exception to the rule and is to be applied only in special instances. 2. ELIGIBILITY. There are three basic requirements for eligibility for monthly repayment of the NIDP Loan. (1) (2) A legitimate reason exists as to why the borrower, his family, or his estate cannot pay the total NIDP loan amount in a lump sum. The borrower, his family, or his estate must be cooperative and willing to enter into a repayment agreement to eliminate the need for foreclosure. (3) The property must continue in some form of owner -occupancy. 3. TERMS AND CONDITIONS. If a case is considered eligible for monthly repayment, the Local Public Body will'counsel with the.person or persons responsible to make payment and determine the repayment ability. The interest rate, if any, and the term of the repayment loans will be based upon the applicant's repayment ability attempting to get the principal repaid as soon as possible. i 4. 5. REVIEW AND APPROVAL. When the terms and conditions for a repayment loan have been recommended by the Local Public Body the staff will verify the socio-economic data necessary for eligibility and will bring the case to the Repayment Loan Review Committee for approval. If approved by the Committee, repayment loan will be set up on the Agency books. The Repayment Loan Review Committee will consist of the Chairman or Vice - Chairman of the Agency, the Community Development Coordinator, the Executive Director or Deputy Director of the Agency, the Director of Rehabilitation, the Agency's Assistant Executive Director for Planning and Operations, and a representative of the Agency's Attorney's Office. The Rehabilitation Director will be the staff person responsible for presenting the cases and the staff recommendations. COLLECTION PROCEDURES: Monthly payment cards will be made for each repayment loan and sent to the borrower each year, said cards being very similar to those supplied by private mortgage lenders including a penalty added for late payments. The Agency staff would monitor the collections, and if a loan be- comes sixty (60) days delinquent, staff personnel would make an immediate visit and counsel with the borrower and arrange for the account to be brought up-to-date. If a loan becomes ninety (90) days delinquent, it would be considered in default if no action was taken by the borrower, and foreclosure proceedings would be considered. If the owner -occupancy status is changed at any time during the term of the repayment loan, the total loan becomes due and payable,'and foreclosure pro- ceedings would be considered. 6. DOCUMENTS. The Agency Attorneys will prepare all instruments of transfer and all other instruments needed for setting up of the repayment loans and supervise their execution. 7. REIMBURSEMENT. The Local Public Body, the Urban Renewal Agency of the City of Lubbock, will contract with the City of Lubbock on an actual cost basis for services rendered by the Agency staff and the Agency Attorneys in set- ting up, collecting, and servicing these repayment loan accounts. The Agency will pay to the City all principal, interest, and/or penalty payments received once a month. 1. 8. EARLY PAYMENTS. If the borrower at any time in the life of an No -Interest Deferred Payment Loan wishes to make payment before the three events that cause the principal to become due and payable, the Local Public Body will accept such payments either in part or in full and reduce the outstanding principal accordingly. All NIDP Loans are set up on the Agency books to receive such payments if that is the desire of the borrowers.