TO: Mayor and Commissioners
FROM: Michael Coleman, Director, Community Improvement
THROUGH: Donald B. Cooper, City Manager
DATE: July 5, 2016
Title
REQUEST FOR SUBORDINATION OF SECOND MORTGAGE FOR 2115 SW 13TH STREET
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Recommended Action:
Recommendation
Motion to Approve a request for the City to subordinate its second mortgage position in the amount of $8,344.95 for the property located at 2115 SW 13th Street.
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Background:
Mr. Bennett of 2115 SW 13th Street, participated in the City's State Housing Initiatives Partnership Program (SHIP) under its Subrecipient Housing strategy in August 2015. Subsidies provided for purchase assistance through the Neighborhood Services Division are secured by a mortgage and promissory note. All deferred payment loans require the applicant to maintain ownership/residence for a specified period according to the amount of the grant. Loan amounts less than $35,000 per unit have a recapture period of fifteen (15) years.
Mr. Bennett's mortgage company has agreed to modify the current loan by reducing the interest rate from 4.25% to 3.25% and by reducing the remaining loan term by 12 months, increasing the monthly payment (including insurance and tax escrows) from $1,249.00 to $1,309.57; but, reducing the total interest to be paid over the term of the loan by $26,543.48 The action before City Commission is authorization and approval to subordinate its existing second mortgage loan to Mr. Bennett's new loan, thereby enabling Mr. Bennett to modify his mortgage to reduce the interest rate, term, and total interest obligation. If approved by the Commission, the City will continue to be in the second secured position behind the new first mortgage loan.
The City’s decision whether or not to subordinate is rendered on a case-by-case basis with the primary objective being “increasing the affordability of housing”. This request maintain's the City’s mortgage in second position and allows Mr. Bennett to refinance the current first mortgage. There is no debt consolidation or cash-out involved in this refinancing; the lower interest rate will increase the affordability of his home which meets the intent of the program.
City Attorney Review:
Approved as to form and legal sufficiency.
Finance Department Review:
Finance recommends approval.
Funding Source:
No funding is necessary.
Timing of Request:
This request is urgent to meet homeowner’s deadline to close on the refinance loan with lender.