Submitted By
Tammie Grossman, Director of Development Customer Services
Reviewed By
LKS
Agenda Item Title
Title
A Resolution Authorizing Subordination of a Lien for the Property Located at 1026 South Harvey Avenue (BPIP-056)
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Overview
Overview
The loan recipient is requesting a subordination of their Barrie Park Investment Program Loan to a new first mortgage. The Village remains secure in junior position on the title.
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Recommendation
Recommendation
Approve the resolution.
Fiscal Impact
The subordination is not a direct cost to the General Fund. Staff time in document preparation, which is a regular part of loan portfolio management, is the only cost.
Background
On September 6, 2005, the Board of Trustees approved a $15,000 loan to the owner of 1026 South Harvey Avenue. The loan is supported by a mortgage which was recorded against the property. The mortgage was recorded as a third mortgage on the property with the purchase loan mortgage being first.
Loans made under the Barrie Park program are deferred for repayment until conveyance or transfer of any interest in the property. The guidelines were amended in September 2008 to clarify under what circumstances requests for subordination will be granted. The guidelines provide that in cases where former loan recipients wish to refinance mortgage(s), other than the Village's, and request that the Village maintain its subordinate position, the Village will agree to maintain its junior position if:
a. The terms of new first mortgage are more advantageous to the homeowner and are reasonable under current market conditions; and
b. There is adequate equity in the property to support the total proposed encumbrance, at least 15% equity (if necessary, homeowner(s) will submit an appraisal as proof of equity); and
c. The cost of the refinance is the only allowable equity taken out of the property.
In cases of extreme hardship, staff may recommend that the Board consider subordination when the ...
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