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Home My WebLink AboutR13-Redevelopment Agency - - - , R~LOPMENT AGENCY.~EST FOR ~_ISSION/COUNClL A* From: Glenda Saul Subject: RDA Nei ghborhood Rehabi 1 i tation Program Loan Collection Policy and Procedures /"...... ........t: Redevelopment Agency Date: October 16, 1985 Synopsis of Previous Commission/Council action: On May 9, 1983, the Mayor AND Common Council adopted Resolution 83-132 which formalized and approved the NRP Collection Policy and procedures. Recommended motion: (MAYOR AND COMMON COUNCIL) Redevelopment Committee Recommendation RESOLUTION OF THE CITY OF SAN BERNARDINO APPROVING AND ADOPTING THE COMMUNITY ~. DEVELOPMENT BLOCK GRANT NEIGHBORHOOD REHABILITATION PROGRAM LOAN COLLECTION POLICY AND PROCEDURES. ~~A~ . Signature Contact person: Glenda Salll Phone: 383-5081 Supporting data attached: Staff Report Ward: 1 - 7 FUNDING REQUIREMENTS: Amount: $ N/A Project: All No adverse Impact on City: Date: P'-llcil Notes: '- Agenda Item No, /3 CI\..I OF SAN BERNARDOo - REQUIOr FOR COUNCIL AC..JoN STAFF REPORT '- On May 9, 1983, the Mayor and Common Council approved and adopted a collection policy and procedures for the CDBG NRP. Based upon the experience of staff in implementing the current policy, staff has developed revisions to the policy and procedures that will aid in the administration of the program in general and the collection of loans in particular. In the curent policy there are provisions that are in apparent conflict and, in the opinion of staff, provide ample opportunity for bad faith negotiations on the part of loan clients. After preliminary discussion with the Redevelopment Committee, staff consulted with the Agency Counsel and the attached revised policy and procedures is the result of that consultation. The Redevelopment Conunittee considered this matter at its October 15, 1985 meeting and directed that staff amend the "Reinstatement" provisions of the policy to confonn to applicable state law and bring the matter before the Mayor and Common Council. The amendments have been accomplished. Adoption of the resolution by the Mayor and Conunon Council would authorize and direct the Executive Director of the Redevelopment Agency to implement the NRP Collection Policy and Procedures as contained herein. ~ ~-""'w. ........ 75.0264 i"^ '- .",-,",,", '"- ,,""- ........ ,"-', '"''''''', - ......,I .I I RESOLUTION NO. 2i RESOlllTION OF THE CITY OF SAN BERNARDINO APPROVING AND 3 OMMUNITY DEVELOPMENT BLOCK GRANT NEIGHB<RHOOD REHABILITATION OLLECTION POLICY AND PROCEDURES. ADOPTING THE PROGRAM LOAN 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN ERNARDINO AS FOLLOWS: SECTION 1. Recitals The City of San Bernardino is the recipient of ommunity Development Block Grant f\Ulds. Said funds are administered on ehalf of the City by the Community Development Commission, and are used in art for a housing rehabilitation program. The Mayor and Common Council of he City of San Bernardino have appropriated on an annual basis a portion of BG f\Ulds for housing rehabilitation activities. The United States epartment of Housing and Urban Development, the grantor Agency has ecommended the adoption of a policy and procedures relating to the collection f CDBG NRP loans. SECTION 2. Implementation The Executive Director of the Redevelopment gency of the City of San Bernardino is hereby authorized and directed to mplement the NRP Collection Policy and Procedures, a copy of which policy and rocedures is annexed hereto as "Exhibit 1" and incorporated herein by eference as though fully set forth at length. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the ayor and Common Council of the City of San Bernardino at a , 1985, by II C Ii 1 '- 2 3 4 5 6 7 8 f 9 10 ",'*'~' '- ."-'" ........ - - - - 1"'....... '-' ."""" '>..wI j AYES: Councilmen NAYES: ABSENT: City Clerk The foregoing resolution is hereby approved this day , 1985. Mayor, City of San Bernardino 11 12 pproved as to form: 13 .)A , City Attorney 15 OOL 16 17 18 19 20 21 22 23 24 25 26 27 28 ~ - - - '-' c -- COLLECTION l'B.OCEDURES OWNER OCCUPIED LOANS ~',~. ........ In order to maintain a low delinquency rate, time is of the essence. Prompt action must be taken when an account becomes delinquent. Generally, Borrowers of owner-occupied loans are conscientious in paying their accounts, but unforeseen circumstances can arise, which cause a hardship on the Borrowers. Since the program concentrates on low-to-moderate income Borrow.ers, their budget is usually very tight, and, therefore, arrangements on a delinquent account should be made as soon as possible. This does not mean the delinquent status should be taken for granted or overlooked. 1. Accounting: By the 10th of each month a "Community Development Aging of Notes Receivable" report will be completed by the Accounting Division. Copies will be distributed to the Manager of Community Development, Rehabilitation Coordinator, Loan Officer, and Executive Director. 2. Collection: ........ It is the Loan Officer's responsibility to contact the Borrower or designate a collection form letter to be sent to the Borrower. When the account is 30 days delinquent, collection form letter #l should be sent. The Loan Officer will send out the letter with a ten (10) day suspense. The Loan Officer will follow up on the letter, or, if the Borrower contacts the office, repayment arrangements will be discussed and approved by the Rehabilitation Coordinator, Manager of Community Development or the Executive Director. Any changes in the Borrower's financial status should be determined at this time; if appropriate, financial counseling should also be offered. When repayment arrangements are agreed upon, a repayment form will be completed, if the term of repayment exceeds a month's time. Continual monitoring of repayment arrangements by the Loan Officer is necessary, so the Borrower is not allowed to continue the account in a delinquent status. If no response is made by the Borrower after the II letter is sent, the procedures listed in the Foreclosure Policy shall be initiated. FORECLOSURE POLICY Prompt action shall be taken to collect amounts due from the borrowers to minimize the number of accounts in a delinquent or default status. In determining cause to foreclose, the circumstances peculiar to each individual case must be taken into account. When it is apparent the borrower is unwilling to cooperate, then\the property should be foreclosed upon. \ 1. When the account is delinquent two (2) months, and the borrower has not made satisfactory arrangements for resolving the delinquency, collection form letter #2 will be sent, certified mail (return receipt requested), to notify the borrower of the default status of the account. If the account is reinstated and again becomes delinquent, collection form letter #1 will be sent, followed by collection form letter #2. -'"...." ........ -- c :- '- - - - "" i,.".. .:) i -....I 2. If the account is not brought current or other satisfactory arrangements made for resolving the delinquency after the #2 letter is sent, collection form letter #3 will be sent by certified mail (return receipt requested). Every reasonable effort should be made to have a face-to-face interview with the borrower to determine the cause of the delinquency and obtain the necessary verification of any changes in the borrowers' financial status. The interview should. be completed by the Loan Officer as soon as possible. If, at the interview or by phone, a repayment arrangement is made, a form stating and describing the arrangement shall be completed and signed by the borrower. If default occurs under the written repayment arrangement, the loan will be referred to the Redevelopment Agency legal counsel. Agency Counsel will send a letter, certified mail (return receipt requested) notifying the borrower of the date that the foreclosure is scheduled to be taken to the Mayor and Common Council of the City of San Bernardino for action, unless the account is reinstated by a specified final deadline (not to exceed 5 days). Only a cashiers check will be accepted as payment. 3. Foreclosure can commence only if the account is three (3) months delinquent and all of the procedures specified in Paragraphs land 2 have been followed. If the account is not reinstated by the specified final deadline, a Notice of Default will be completed and a check for the fee deposit will be requested by Agency Counsel who, upon receiving the written approval of the Executive Director of the Redevelopment Agency, shall initiate foreclosure procedures. Once the foreclosure is initiated, the City Administrator shall be notified in writing of the action taken. Agency Counsel will instituee foreclosure proceedings through the Trustee in accordance with applicable state laws. '-' REINSTATEMENT /-"''' "- The borrower shall be permitted reinstatement of the account, even after the institution of foreclosure proceedings, if the borrower tenders in a lump sum all amounts required to bring the account current, including foreclosure costs and reasonable attorney's, fees and expenses properly associated with the foreclosure action. Reinstatement thereafter shall be governed by state law. 369L 10/85 -2- -- - ... - - - \...... -. '-' -. -....,I ~ -" ("'~ '- COLLECTION PROCEDURES NON-DWNER OCCUPIED LOANS In order to maintain a low delinquency rate, time is of the essence. Prompt action must be taken when an account becomes delinquent. Generally, Borrowers of non-owner occupied loans are conscientious in paying their accounts, but unforeseen circumstances can arise which cause a hardship on the Borrowers. Arrangements on a delinquent account should be made as soon as possible. This does not mean the delinquent status should be taken for granted or overlooked. 1. Accounting: By the lOth of each month a "Community Development Aging of Notes Receivable" report will be completed by the Accounting Division. Copies will be distributed to the Manager of Community Development, Rehabilitation Coordinator, Loan Officer, and Executive Director. 2. Collection: /-~''''.. It is the Loan Officer's responsibility to contact the Borrower or designate a collection form letter to be sent to the Borrower. When the account is 30 days delinquent, collection form letter #1 should be sent. The Loan Officer will send out the letter with a ten (10) day suspense. The Loan Officer will follow up on the letter, or, if the Borrower contacts the office, repayment arrangements will be discussed and approved by the Rehabilitation Coordinator, Manager of Community Development or the Executive Director. Any changes in the Borrower's financial status should be determined at this time; if appropriate, financial counseling should also be offered. When repayment arrangements are agreed upon, a repayment form will be completed, if the term of repayment exceeds a month's time. Continual monitoring of repayment arrangements by the Loan Officer is necessary, so the Borrower is not allowed to continue the account in a delinquent status. If no response is made by the Borrower after the #1 letter is sent, the procedures listed in the Foreclosure Policy shall be initiated. '- FORECLOSURE POLICY Prompt action shall be taken to collect amounts due from the borrowers to minimize the number of accounts in a delinquent or default status. In determining cause to foreclose, the circumstances peculiar to each individual case must be taken into account. When it is apparent the borrower is unwilling to cooperate, then the property should be foreclosed upon. 1. When the account is delinquent two (2) months, and the borrower has not made satisfactory arrangements for resolving the delinquency, collection form letter #2 will be sent, certified mail (return receipt requested), to notify the borrower of the default status of the account. If the account is reinstated and again becomes delinquent, collection form letter #l will be sent, followed by collection form letter #2. 2. If the account is not brought current or other satisfactory arrangments made for resolving the delinquency after the #2 letter is sent, then collection form letter #3 will be sent by certified mail (return receipt ...-, '-' - c ".,........" --- c - "- - - - - . - ,...."...." o ...,,'" V requested). Every reasonable effort should be made to have a face-to-face interview with the borrower to determine the cause of the delinquency and obtain the necessary verification of any changes in the borrower's financial status. The interview should be completed by the Loan Officer as soon as possible. If, at the interview or by phone, a repayment arrangement is made, a form stating and describing the arrangement shall be completed and signed by the borrower. If default occurs under the written repayment arrangement, the loan will be referred to the Redevelopment Agency legal counsel. Agency Counsel will send a letter, certified mail (return receipt requested) notifying t~e borrower of the date that the foreclosure proceedings will commence, unless the account is reinstated by a speCified final deadline (not to exceed 5 days). Only a cashier's check will be accepted as payment. A copy of said letter will be sent to the Mayor, each Council Member, Redevelopment Agency Executive Director, and City Administrator. -.J 3. Foreclosure can commence only if the account is three (3) months delinquent and all of the procedures specified in Paragraphs 1 and 2 have been followed. If the account is not reinstated by the specified final deadline, a Notice of Default will be completed and a check for the fee deposit will be requested by Agency Counsel. Final approval to foreclose will be requested by memorandum from the Agency Counsel to the Executive Director, with a copy to the Mayor and each City Council Member and City Administrator. Once the foreclosure is approved, Agency Counsel will initiate foreclosure proceedings to be completed by the Trustee in accordance with applicable state laws. REINSTATEMENT The borrower shall be permitted reinstatement of the account, even after the institution of foreclosure proceedings, if the borrower tenders in a lump sum all amounts required to bring the account current, including foreclosure costs and reasonable attorney's, fees and expenses properly associated with the foreclosure action. Reinstatement thereafter shall be governed by state law. 372L 10/85 -2-