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HomeMy WebLinkAboutItem No. 15 - Resolution Approving a Subordination of a Deed of Trust of Senior Mortgage - 756 West 8th Street Page 1 Consent Calendar City of San Bernardino Request for Council Action Date: May 6, 2020 To: Honorable Mayor and City Council Members From: Teri Ledoux, City Manager By:Michael Huntley, Community & Economic Development Director Subject: Resolution Approving a Subordination of a Deed of Trust of Senior Mortgage - 756 West 8TH Street Recommendation Adopt a Resolution No. 2020-77 of the Mayor and City Council of the City of San Bernardino, California, acting as the Successor Housing Agency to the Redevelopment Agency of the City of San Bernardino, to approve a Subordination of a Deed of Trust in connection with a refinancing of the Senior Mortgage relating to real property located at 756 West 8th Street, San Bernardino, California. Background The City of San Bernardino (“City”) is an entitlement jurisdiction that receives HOME Investment Partnerships Program Funds (“HOME”) from the U.S. Department of Housing and Urban Development (“HUD”). HOME funds are used to create a variety of affordable housing opportunities for eligible households whose income does not exceed 80% of Area Median Income. On September 19, 2016, the Mayor and City Council approved Resolution 2016 -200, establishing the Infill Housing Development Program (“Program”) and ent ered into an agreement with Housing Partners I (“HPI”) for the development of three (3) affordable housing units to be sold to income eligible, first-time home buyers. On June 21, 2017, the Mayor and City Council approved Resolution 2017 -116 authorizing the execution of a HOME Program Loan Agreement with Neighborhood Partnership Housing Services (“NPHS”) to implement the Modular Housing Component of the Program. Discussion The Program provides income eligible home buyers with acquisition financing to purchase a home constructed under the Program. The acquisition financing is a deferred loan at zero interest and has a program term of up to 15 years. The homeowner is required to occupy the home as their primary residence during the Program term, after which time the loan will be forgiven. Should the homeowner sell, transfer, or no longer occupy the home as their primary residence, the Program loan will become due and payable. The Program allows participants to refinance their mortgage 6704 Page 2 only to lower the interest rate and/or term. Should the homeowner request “cash out” of the property’s equity, the subordination request will be denied and the Program loan will become immediately due. The property owner for the property located at 756 W 8 th Street who received acquisition financing is now requesting to refinance their existing first mortgage. The property owner of the property listed above has submitted a subordination request to City and the application has been reviewed and approved. To proceed with the refinancing, the new lender and title company require the City’s deed of trust to be expressly subordinated to the new first deed of trust. Therefore, staff requests that the City Manager, or her designee, be authorized to sign and cause to be record ed the subordination agreement and associated documents which will allow the property owner to refinance their first mortgage. 2020-2025 Key Strategic Targets and Goals Adoption of the attached resolution aligns with Key Strategic Target No. 3: Improved Quality of Life. Refinancing supports homeownership and sustains neighborhoods throughout the City. Fiscal Impact There is no fiscal impact to the General Fund since the staff processing this request is funded by Federal grant funds. Conclusion It is recommended that the Mayor and City Council of the City of San Bernardino adopt the Resolution No. 2020-77, approving the Subordination of a Deed of Trust in connection with a refinancing of the senior mortgage relating to real property located at 756 West 8th Street, San Bernardino, California. Attachments Attachment 1 Resolution No. 2020-77 Attachment 2 Subordination Agreement for 756 W 8th Street Ward: 1 Synopsis of Previous Council Actions: September 19, 2016 Mayor and City Council approved Resolution 2016-200, establishing the Infill Housing Development Program (“Program”) and entered into an agreement with Housing Partners I (“HPI”) for the development of three (3) affordable housing units to be sold to income eligible, first-time homebuyers. June 21, 2017 Mayor and City Council approved Resolution 2017-116 authorizing the execution of a HOME Program Loan Agreement with Neighborhood Partnership Housing Services (“NPHS”) to implement the Modular Housing Component of 6704 Page 3 the Program. Resolution No. 2020-77 RESOLUTION NO. 2020-77 RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, APPROVING THE SUBORDINATION OF A DEED OF TRUST IN CONNECTION WITH A REFINANCING OF THE SENIOR MORTGAGE RELATING TO REAL PROPERTY LOCATED AT 756 WEST 8TH STREET, SAN BERNARDINO, CALIFORNIA WHEREAS, the City has received HOME Investment Partnerships Program funds from the United States Department of Housing and Urban Development (“HUD”) pursuant to the Cranston-Gonzales National Housing Act of 1990 (“HOME Funds”). The HOME funds must be used by the City in accordance with 24 C.F.R. Part 92; and WHEREAS, On September 19, 2016, the Mayor and Common Council approved Resolution 2016-200, establishing the Infill Housing Development Program (“Program”) and entered into an agreement with Housing Partners I (“HPI”) for the development of three (3) affordable housing units to be sold to income eligible, first-time homebuyers; and WHEREAS, On June 21, 2017, the Mayor and Common Council approved Resolution 2017-116 authorizing the execution of a HOME Program Loan Agreement with Neighborhood Partnership Housing Services (“NPHS”) to implement the Modular Housing Component of the Program; and WHEREAS, a Deed of Trust affecting real property located at 756 West 8th Street, San Bernardino, California (“Property”) exists as of February 26, 2019, and recorded on April 15, 2019, as Instrument Number 2019-0116256 in the Official Records of the County of San Bernardino (“Deed of Trust”); and WHEREAS, the terms of the Deed of Trust allow the Trustor to obtain the release of the security interest of the First Mortgage Lender in the Property for the purpose of a third-party lender which refinances the purchase money mortgage of the First Mortgage Lender; and WHEREAS, an escrow has been opened on the Property affected by the Deed of Trust on which owner(s) (Linda Catalan) request the subordination so that they can proceed on a refinance and a clear lenders title policy can be provided to the new lender of the Property; and WHEREAS, City staff desires to cause to be signed and recorded a subordination agreement for the purposes of causing the new third-party lender to have a security interest in the Property senior to that of the City; and BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: SECTION 1. The above recitals are true and correct and are incorporated herein by this reference. Resolution No. 2020-77 SECTION 2. The City does hereby find and determine that the Deed of Trust is a housing asset and hereby authorizes the City Manager or his/her designee, to execute the Subordination Agreement (attached and incorporated herein as Exhibit “A”) and do all such acts and things necessary to cause it to be recorded with the San Bernardino County Recorder. SECTION 3. The City Council finds this Resolution is not subject to the California Environmental Quality Act (CEQA) in that the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty, as in this case, that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. SECTION 4. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end the provisions of this Resolution are declared to be severable. SECTION 5. Effective Date. This Resolution shall become effective immediately. APPROVED and ADOPTED by the City Council and signed by the Mayor and attested by the Acting City Clerk this ___ day of __________ 2020. John Valdivia, Mayor City of San Bernardino Attest: Genoveva Rocha, CMC, Acting City Clerk Approved as to form: Sonia Carvalho, City Attorney Resolution No. 2020-77 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) ss CITY OF SAN BERNARDINO ) I, Genoveva Rocha, CMC, Acting City Clerk, hereby certify that the attached is a true copy of Resolution No. 2020-___, adopted at a regular meeting held on the ___ day of _______ 2020 by the following vote: Council Members: AYES NAYS ABSTAIN ABSENT SANCHEZ _____ _____ _______ _______ IBARRA _____ _____ _______ _______ FIGUEROA _____ _____ _______ _______ SHORETT _____ _____ _______ _______ NICKEL _____ _____ _______ _______ RICHARD _____ _____ _______ _______ MULVIHILL _____ _____ _______ _______ WITNESS my hand and official seal of the City of San Bernardino this ___ day of ____________ 2020. Genoveva Rocha, CMC, Acting City Clerk 1 When recorded mail to: City of San Bernardino, Attn: Housing Division 290 North D Street San Bernardino, CA 92401 Owner Name: Linda Catalan 756 West 8th Street San Bernardino, CA 92404 SPACE ABOVE THIS LINE FOR RECORDERS USE. Form of SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. This AGREEMENT, made this 1st day of April, 2020, by (Linda Catalan), Owner of the land hereinafter described and hereinafter referred to as "Owner," and the City of San Bernardino, present owner and holder of the Deed of Trust and Note; WITNESSETH WHEREAS, Owner(s) did on February 26, 2019, execute a Deed of Trust to Lawyers Title Company, a California Corporation, as trustee, covering: LEGAL DESCRIPTION: The land herein after referred to is situated in the City of San Bernardino, County of San Bernardino, State of California, and is described as follows: THE EAST 49.72 FEET OF LOT 2, BLOCK 58, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 7, PAGE 1 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY to secure a Note in the sum of $48,000 dated February 26, 2019 in favor of the City of San Bernardino first hereinafter described and hereinafter referred to as "Beneficiary", whi ch Deed of Trust was recorded April 15, 2019, as Instrument No. 2019-0116256, Official Records of said county; WHEREAS, Owner has executed, or is about to execute, a Deed of Trust and Note in the sum of not to exceed $184,891, dated ________________________, in favor of Nationstar Mortgage LLC dba Mr. Cooper, hereinafter referred to as “Lender,” payable with interest and upon the terms and conditions described therein, which Deed of Trust is to be recorded concurrently herewith; and WHEREAS, it is a condition precedent to obtaining said loan that said Deed of Trust last above mentioned shall unconditionally be and remain at all times a lien or charge upon the land herein before de scribed, prior and superior to the lien or charge of the Deed of Trust first above mentioned; and WHEREAS, lender is willing to make said loan provided the Deed of Trust securing the same is a lien or charge upon the above described property prior and sup erior to the lien or charge of the Deed of Trust first above mentioned and provided that Successor Beneficiary will specifically and unconditionally subordinate the lien or charge of the Deed of Trust first above mentioned to the lien or charge of the Deed of Trust in favor of Lender; and WHEREAS, it is to the mutual benefit of the parties hereto that Lender make such loan to Owner; and Successor Beneficiary is willing that the Deed of Trust securing the same shall, when recorded, constitute a lien or 2 charge upon said land which is unconditionally prior and superior to the lien or charge of the Deed of Trust first above mentioned. NOW, THEREFORE, in consideration of the mutual benefits accruing to the parties hereto and other valuable consideration, the receipt and sufficiency of which consideration is hereby acknowledged, and in order to induce Lender to make the loan above referred to, it is hereby declared, understood and agreed as follows: 1. That said Deed of Trust securing said Note in favor of Le nder, and any renewals or extensions thereof, shall unconditionally be and remain at all times a lien or charge on the property therein described, prior and superior to the lien or charge or the Deed of Trust first above mentioned. 2. That Lender would not make its loan above described without this Subordination Agreement. 3. That this Agreement shall be the whole and only agreement with regard to the subordination of the lien or charge of the Deed of Trust first above mentioned to the lien or charge of the Dee d of Trust in favor of the lender above referred to and shall supersede and cancel, but only insofar as would affect the priority between the Deeds of Trust hereinbefore specifically described, any prior agreement as to such subordination including, but not limited to, those provisions, if any, contained in the Deed of Trust first above mentioned, which provide for the subordination of the lien or charge thereof to another Deed or Deeds of Trust or to another mortgage or mortgages. Beneficiary declares, agrees and acknowledges that: (a) Lender in making disbursements pursuant to any such agreement is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom Lender disburses such proceeds and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat the subordination herein made in whole or in part; (b) Beneficiary intentionally and unconditionally waives, relinquishes and subordinates the lien or charge of the Deed of Trust first above mentioned in favor of the lien or charge upon said land of the Deed of Trust in favor of Lender above referred to and understands that in reliance upon, and in consi deration of, this waiver, relinquishment and subordination specific loans and ad vances are being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination; and (c) An endorsement has been placed upon the Note secured by the Deed of Trust first above mentioned that said Deed of Trust has by this instrument been subordinated to the lien or charge of the Deed of Trust in favor or Lender above referred to. 3 NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. City of San Bernardino _____________________________________ ____________________________________ Teri Ledoux, City Manager Owner City of San Bernardino Owner (ALL SIGNATURES MUST BE ACKNOWLEDGED) IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS SUBORDINATION AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT THERETO.