TO: Mayor and Commissioners
FROM: David Weatherspoon, Interim Director, NCS
THROUGH: George Gretsas, City Manager
DATE: May 5, 2020
Title
REQUEST FOR SUBORDINATION OF SECOND MORTGAGE FOR 49 NW 13th AVENUE
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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 $23,100 for the property located at 49 NW 13th Avenue.
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Background:
Mr. Guy Edmond Sr. and Gerecia Jackson-Edmond participated in the City's State Housing Initiative Partnership Program (SHIP) in November 2018. Subsidies provided for the purchase assistance program through the Neighborhood Services Division are secured by a 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 have a recapture period of fifteen (15) years.
Mr. Guy Edmond Sr. and Gerecia Jackson-Edmond has secured a new mortgage company and is approved to modify the current loan by reducing the interest rate from 5.5% to 4.25%, increasing the monthly payment (including taxes and insurance escrows) from $937.65 to $1,157; however, reducing the total interest to be paid over the term of the loan by $33,866.60.
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”. The action before City Commission is authorization and approval to subordinate its existing second mortgage loan to Mrs. Edmond’s new loan, thereby enabling Mr. Guy Edmond Sr. and Gerecia Jackson-Edmond to modify their mortgage to reduce the interest rate 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. 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.