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 522 S. Lyman Avenue (FHAP-022)
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Overview
Overview
The loan recipient is requesting a subordination of a First Time Homebuyer Assistance Program Downpayment/Closing-Cost Loan to a refinance first mortgage. The Village remains secure in a 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 Village's general fund. Staff time in document preparation, which is a regular part of loan portfolio management, is the only cost.
Background
On January 31, 1995, the Village of Oak Park approved an $8,500 loan to the owner of 522 S. Lyman Avenue. The loan is supported by a trust deed which was recorded against the property. The trust deed was recorded as a second mortgage on the property with the purchase loan mortgage being first. The homeowner is seeking a refinance of the existing purchase mortgage.
Loans made under the First Time Homebuyer Assistance Program provided downpayment /closing-cost loans to low to moderate income families with a dependent child. These 30-year loans 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 all of the foolowing are true:
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, ...
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