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4743
HOUSING FINANCE COMMISSION (WA STATE)
Downpayment Assistance House Key Plus
CDBG
LEG 12-1
07/21/2008
06/15/2010
See section 21 for Term of Agreement; Survival
Review date for tracking only
AGREEMENT REGARDING DOWNP A YMENT ASSISTANCE
HOUSEKEYPLUSBREMERTONPROGRAM
THIS AGREEMENT REGARDING DOWNPAYMENT ASSISTANCE, dated as of
July 21, 2008 (the "Agreement"), is made and entered into by and between The City of
Bremerton, Washington, a Washington municipal corporation (the "City") and the Washington
State Housing Finance Commission, a body corporate and politic and an instrumentality of the
State of Washington (the "Commission").
RECITALS
WHEREAS, the City has long recognized the importance of single-family home
ownership to the development and stabilization of healthy communities; and
WHEREAS, the demand for single-family housing within the City has driven the cost of
such housing beyond the means of many working individuals and households; and
WHEREAS, while many potential home buyers may be able to make monthly mortgage
payments especially at a time of relatively modest interest rates, a primary obstacle to
homeownership remains the ability of working individuals and households to amass adequate
funds for downpayment and closing costs; and
WHEREAS, the Commission has developed a program to provide financial assistance to
single-family homebuyers in the form of second, subordinate loans to provide downpayment and
closing cost assistance in cooperation with local mortgage lenders, the Federal National
Mortgage Association and the Federal Housing Administration; and
WHEREAS, the City desires to provide additional funding to the program of the
Commission in order to expand the availability of the Commission's downpayment assistance
program to low-income residents of Bremerton; and
WHEREAS, the City and the Commission intend to establish the House Key Plus
Bremerton Program ("the Program") as a pilot program with an initial commitment of $180,000
from the City in funds from the federal HOME Investment Partnerships Act ("HOME") and an
initial commitment of $60,000 from the Commission, with the intent that additional funding to
extend the Program will be determined based upon the results of an analysis and evaluation of
the Program and upon the availability of the Commission and City funds.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements hereinafter contained,
the parties hereto agree as follows:
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1. Definitions
1.1 "Annual Income" means "annual income" as defined at 24 CFR Section
5.609, as estimated by projecting the prevailing rate of income at the time when a determination
of income eligibility is made or required. Annual Income shall include income of all Household
members, except as excluded by laws, regulations or HUD interpretations applicable to income
determinations under that Section.
1.2 "Approved Housing Counseling Agency" means an agency pre approved by
the City of Bremerton that specializes in budget and housing counseling and provides these
services without charge to their clients, including potential homebuyers who may apply for a
Second Mortgage under this program.
1.3 "Approved Housing Counselor" means a counselor from an approved agency
as described in Section 1.2 that has received formal training in housing and budget counseling.
1.4 "Certificate of Completion for Homebuyer Education Seminar" means the
certificate provided by the seminar leaders to a potential homebuyer upon the completion of a
Commission sponsored Homebuyer Education Seminar.
1.5 "Certificate of Completion for One-on-One Pre Purchase Housing
Counseling" means the certificate provided by the Approved Housing Counselor to the Lender
upon the completion of One-on-One Pre Purchase Housing Counseling by the Eligible
Homebuyer( s).
1.6 "City Contribution" means, at any time, the cumulative amount of funds
disbursed by the City to or for the benefit of the Commission under this Agreement, between
July 1, 2008 and June 30, 2009 for the purchase of the City's interest in Second Mortgages
pursuant to subsection 20.C. hereof.
1.7 "City Loan Amount" means, for each Second Mortgage purchased by the
Commission, (a) the total amount paid by the Commission, consistent with this Agreement, to
acquire such Second Mortgage, minus (b) the Commission Loan Amount, not to exceed Twenty
Five Percent (25%) of the total Second Mortgage loan amount, and provided that the City Loan
Amount for any Second Mortgage shall not exceed Seventy Five Percent (75%) of the total
Second Mortgage Amount.
1.8 "City Payment" means, for any calendar quarter, the sum, for all Second
Mortgages for which the Commission shall receive repayments of Loan Receipts in respect of the
Second Mortgage, multiplied by the participation ratio as defined in Section 7.
1.9 "Commission Contribution" means the excess of (a) the total amount of
money expended by the Commission to acquire Second Mortgages between July 1, 2008 and
June 30, 2009, that become part of the Loan Pool, minus (b) the City Contribution.
1.10 "Commission Loan Amount" for any Second Mortgage listed in a request for
reimbursement hereunder, means the total amount of the Second Mortgage minus the City Loan
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Amount, not to exceed Seventy Five Percent (75%) of the total Second Mortgage Loan amount
and, provided that the Commission Loan Amount does not exceed Twenty Five Percent (25%) of
the total Second Mortgage Loan Amount, as specified in Section 7 of this agreement.
1.11 "Commission Payment" means for any calendar quarter, the sum, for all
Second Mortgages for which the Commission shall receive repayments of Loan Receipts in
respect of the Second Mortgage, multiplied by the participation ratio as defined in Section 7.
1.12 "Deed of Trust" means a deed of trust securing a Second Mortgage loan.
1.13 "Eligible Homebuyer" means one or more adult members of a Household
who sign the Deed of Trust, related Promissory Note and other documents required for a Second
Mortgage, who have completed a Homebuyer Education Program, completed 1: 1 Pre Purchase
Housing Counseling from an Approved Housing Counseling Agency and has scheduled and
agreed to attend Post Purchase Housing Counseling, and whose Household has an Annual
Income (as of the date of signing the purchase agreement in the case of new home being
constructed, or as of the date of purchase in the case of an existing home) that does not exceed
the lesser of:
(a) eighty percent (80%) of the median family income for the Silverdale-
Bremerton Metropolitan Statistical Area, as then most recently published by
HUD, adjusted downward in the case of a Household size of less than four
persons, and adjusted upward in the case of a Household size of more than four
persons, in each case by the same percentages as are applied by HUD to adjust
eligible income levels for occupancy of public housing; and
(b) the maximum income level permitted by federal regulations applicable to
loans of HOME Funds for home buyer assistance.
1.14 "Household" has the meaning set forth for "family" in 24 CFR Section 5.403,
or successor provision, and includes an individual person.
1.15 "Home buyer Education Program" means a Commission approved program of
education for persons intending to become first time home buyers conducted by a nonprofit
housing counseling agency, Real Estate Professional, or Mortgage Lender The Commission-
sponsored seminars taught by Real Estate Professionals, Mortgage Lenders and nonprofit
housing providers are approved for the Program as "Homebuyer Education Programs".
1.16 "HOME" means the federal HOME Investment Partnerships Act Program.
1.17 "HOME Funds" means funds derived from the federal grants to the City
under HOME, including program income as defined in HUD regulations for HOME and
American Dream Downpayment Initiative (ADDI) funds.
1.18 "HUD" means the United States Department of Housing and Urban
Development or any successor to its functions.
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1.19 "Loan Documents" means, with respect to any loan, each original document
evidencing or securing the loan (or any part thereof), and all documents incidental or collateral to
the loan, including without limitation, the note or notes evidencing the loan, the deed of trust, each
guarantee securing the loan, all applications, loan commitments, reports, security and loan
agreements, disclosure statements, appraisals, loan settlement statements, title evidence, title
insurance, hazard insurance, flood liability insurance, and all other insurance policies and any
assignments thereof, correspondence applicable to the loan, and all other documents relating to the
loan, all as the same may be amended, and all such documents or instruments subsequently
executed and delivered.
1.20 "Loan Pool" means all Second Mortgages that are purchased by the
Commission for which the Commission receives a reimbursement from the City under this
Agreement, and replacements, substitutions, or property received in place of, or in respect of the
rights of the holder pursuant to, any Second Mortgages, but shall not include any Second
Mortgage after it shall have been removed from the Loan Pool pursuant to the terms of this
Agreement.
1.21 "Loan Receipts" means, for any period after July 1, 2008, all payments and
collections actually received by or for the benefit of the Commission or its Servicer on account
of any Second Mortgages and other assets in the Loan Pool, including without limitation
payments on account of principal, interest, shared appreciation, and insurance proceeds.
1.22 "Loan Receipts Account" means a separate account maintained by the
Commission or the Servicer, acceptable to the City, for the deposit of all payments on Second
Mortgages and any other obligations, instruments, securities or other property in the Loan Pool.
1.23 "Modest Housing" means the housing has a purchase price for the type of
single-family housing that does not exceed the Single Family Mortgage Limits under Section
203(b) of the National Housing Act (12 U.S.C. 1709(b), as provided annually by the Seattle
office of HUD.
1.24 "Mortgage Lender" means a bank or other financial institution approved by
both the Commission and the City to originate Second Mortgage loans for purchase under this
Agreement. Lenders who have completed House Key training requirements and are eligible to
originate House Key loans will be eligible to originate House Key Bremerton Second Mortgages.
1.25 "COB CDBG" means The City of Bremerton Community Development
Block Grant office and any other office or department that shall succeed to its functions with
respect to single-family housing financing.
1.26 "One-on-One Pre-Purchase Housing Counseling" means face to face
counseling completed by the Eligible Home Buyer(s) in a private session with an Approved
Housing Counselor at an Approved Housing Counseling Agency. This counseling is to take
place prior to approval of the Second Mortgage and include items described in Appendix D. A
Certificate Of Completion will be provided by the Approved Housing Counselor to the Lender.
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1.27 "One-on-One Post Purchase Housing Counseling" means face to face
counseling completed by the Eligible Homebuyer(s) not less than 3 months, but no more than 6
months after closing, in a private session with an Approved Housing Counselor at an Approved
Housing Counseling Agency. If possible, this counseling session should take place with the
same housing counselor as completed the One-on-One pre-purchase housing counseling. The
session will include items described in Appendix D.
1.28 "Origination Agreement" means an agreement among the Commission,
Servicer and a Mortgage Lender with respect to the participation of the Mortgage Lender in the
Program.
1.29 "Participation Ratio" means, the following fraction, rounded to the closest
hundredth of one percent, determined as of June 30, 2009: (a) the City Contribution, divided by
(b) the total amount paid by the Commission for the purchase of Second Mortgages that are part
of the Loan Pool between July 1, 2008 and June 30, 2009. The Participation Ratio shall be
calculated as Seventy Five Percent (75%) City Funds and Twenty Five percent (25%)
Commission funds based on total Second Mortgage Loan amount never to exceed $15,000 and
$5,000 respectively as defined in Section 7E of this agreement.
1.30 "Program" means the House Key Plus Bremerton Program as established by
this Agreement, as more particularly described in the Program Manual attached hereto as Exhibit
A.
1.31 "Program Manual" means the manual for the Program attached to this
Agreement as Exhibit A, including all attachments, as such manual and attachments may be
modified from time to time with the express written consent of the City and the Commission.
1.32 "Promissory Note" means the written instrument executed to evidence the
Mortgagor's obligation to repay the Second Mortgage.
1.33 "Qualifying Home" means a legal dwelling unit in the City of Bremerton,
where Jurisdiction is Bremerton and Zoning is City, as described by the Kitsap County Assessor,
that, as of the date of purchase by an Eligible Homebuyer:
(a) is "Modest Housing";
(b) satisfies federal Housing Quality Standards as defined in 24 CFR Section
982.401, and satisfies all other applicable standards in the Program Manual; and
(c) may legally be sold separately from any other dwelling unit or structure,
whether as a separate lot or condominium unit.
Where a dwelling unit is in a detached single-family residence or townhome on its own lot, the
"Qualifying Home" includes such lot and any appurtenances. Where a dwelling unit is a
condominium unit, the "Qualifying Home" includes all rights in common elements and other
rights appurtenant to the condominium unit. A "Qualifying Home" may be a manufactured
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housing unit that meets the Manufactured Home Construction and Safety Standards established
in 24 CFR Part 3280.
1.34 "Second Mortgage" means a loan purchased by the Commission for inclusion
in the Loan Pool, and the note, deed of trust and other loan documents evidencing and securing
such loan.
1.35 "Servicer" means a financial institution now or hereafter under contract with
the Commission to administer and service the Second Mortgages in the Loan Pool. At the time
this Agreement is executed, the Servicer is identified Countrywide Bank, N.A.
2. Program and Funding; Schedule; Budget. The Program will provide downpayment
and closing cost assistance to Eligible Homebuyers (herein described as Second Mortgage(s))
acquiring homes in Bremerton. Subject to the terms and conditions of this Agreement: (a) the
City will provide funds ("City Contribution") in the amount of $180,000 to finance, in part,
qualified second mortgages for downpayment and closing costs assistance for low-income home
buyers; and (b) the Commission will contribute funds ("Commission Contribution") from its
Program Investment Fund in the net amount of $60,000. The Commission shall submit its first
request for reimbursement hereunder as of July 1, 2008, no later than thirty (30) days following
the end of 3rd quarter 2008 (September 30, 2008), and its final request no later than July 30,
2009. The Commission shall have no right to disbursement except for amounts covered by
requests complying with this Agreement that are submitted on or before that date.
3. Commission Purchase of Second Mortgages. The Commission will purchase from
Mortgage Lenders for the Loan Pool only Second Mortgages that represent loans made to
Eligible Homebuyers for purposes of acquiring Qualifying Homes, and the Commission will
request reimbursement from the City for 75% ofthe cost of each such Second Mortgage.
4. Origination of Second Mortgages. The Commission has entered into Origination
Agreements with certain Mortgage Lenders in Kitsap County and may enter into additional
Origination Agreements with Mortgage Lenders. The Commission shall ensure that, prior to
origination of any Second Mortgage to be purchased for the Loan Pool, there shall be an
Origination Agreement in effect with a Mortgage Lender making such loan that is consistent with
this Agreement, including Exhibit A, the Program Manual. The Commission shall provide to the
City, promptly upon request, a copy of each Origination Agreement and any amendments thereto.
No Origination Agreement shall purport to impose any obligation or liability on the City. The
Origination Agreements shall provide that the Mortgage Lenders will originate FHA or
conventional, primary mortgage loans to Eligible Homebuyers and in conjunction therewith will
originate and close amortizing, second lien loans evidenced by a note and deed of trust ("Second
Mortgages"). Each Mortgage Lender will originate, close, and sell the Second Mortgages it
originates for sale to the Commission in accordance with the Origination Agreement.
5. Reimbursement of the Commission from City Funds.
A. Requests and City Reimbursements. The Commission shall submit to the
City, within 30 calendar days after the end of each calendar quarter, beginning with July 2008, a
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request for reimbursement in the form of Exhibit B to this Agreement, covering all Second
Mortgages purchased for the Loan Pool during such quarter. Subject to the terms and conditions
herein, the City shall disburse to the Commission after the receipt of a timely and complete
request for reimbursement, within 20 calendar days or the City's completion of the
Environmental Review as described in Section 15A of this Agreement, which ever is later, the
amount approved by the City, according to Exhibit B, Form of Request for Reimbursement, as
the City Loan Amount for each Second Mortgage covered by the request for reimbursement that
satisfies all of the requirements of this Agreement. The Commission may not request
disbursement of funds until the funds are needed for payment of eligible costs. The amount of
each request must be limited to the amount needed. No reimbursement shall be made for any
quarter until the City Payment due with respect to such quarter, if any, shall have been paid.
B. Limits on City's Obligation. The City's obligation to disburse funds
hereunder is limited to the maximum amount stated in Section 2 above and is subject to the
availability to the City of sufficient funds from HUD under the HOME Program, not otherwise
encumbered. The City may, in its discretion, use funds other than HOME Funds to fulfill any
portion of the City's commitment hereunder. In such event all of the terms and conditions hereof
shall apply as if the City had provided HOME Funds, unless expressly otherwise agreed in
writing by the parties. In the event of either (a) any determination by the City or HUD that any
disbursement of funds requested by the Commission hereunder, or any portion thereof, would be
inconsistent with federal law or regulations applicable to HOME funds, or (b) any suspension or
termination of this Agreement by the City under Section 19, the City shall not be obligated to
make such disbursement, or such portion thereof.
6. Loan Receipts Account. All Loan Receipts shall be promptly deposited and held by
the Commission or its Servicer in the Loan Receipts Account, which may be a non-interest-
bearing account, separate from any other funds. No disbursements shall be made from the Loan
Receipts Account except as authorized in this Agreement.
7. City Interest in Loan Pool and Loan Receipts Account.
A. City's Undivided Interest. The parties agree that the City (i) at all times from
July 1, 2008, shall hold a 75% percentage interest in each Second Mortgage in respect to which
the City shall have made full or partial reimbursement to the Commission hereunder (City Loan
Amount), and (ii) at all times from and after July 1, 2008 shall hold a percentage share of
beneficial interest, equal to the Participation Ratio, in the Loan Pool, and in each Second
Mortgage and any other obligations or other property in the Loan Pool, including all proceeds
(except as otherwise expressly provided in subsection 16.1. hereof) and all security, and all other
rights associated with such Second Mortgages, obligations and other property. The City's
interest includes in each case an undivided interest in each Second Mortgage, which interest shall
include an undivided interest in all Loan Documents delivered at any time in connection with such
Second Mortgage, all monies received pursuant to such Loan Documents, all funds or accounts
maintained in connection with such Loan Documents, all security, and all claims, causes of action,
rights and remedies related to each Second Mortgage, and all substitutions, proceeds, replacements,
renewals, extensions and amendments for and of any of the foregoing.
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B. Assets Held in Trust. The Commission agrees that, pending disposition as
authorized hereunder, the Commission shall hold in trust for the City, or shall cause its Servicer
to hold in trust for the City, to the extent of the City's interest under subsection A of this section,
the Loan Pool and all such property and rights therein or associated therewith. The Commission
further agrees that pending disbursement as authorized herein, it shall hold in trust for the City,
or shall cause its Servicer or other financial institution, to hold in trust for the City, to the extent
of the City's interests as described herein, all rights in and to the Loan Receipts Account.
C. Equal Priority. The City's and the Commission's interests in the Loan Pool and
each Second Mortgage therein, and in the Loan Receipts Account, shall have equal priority.
D. Financial Records. The Commission's financial records and reports shall
appropriately reflect the City's interest in the Loan Pool and Loan Receipts Account.
E. Determination of Participation Ratio. For Eligible Households that qualify for
City funds for a Second Mortgage loan; loan will be funded from City HOME funds based on a
Participation Share of Seventy Five percent (75%) City funds and from Commission funds based
on a Participation share of Twenty Five Percent (25%) Commission funds, never to exceed
$15,000 from the City 1$5,000 from the Commission
8. Payments to City and the Commission. The Commission shall disburse, or cause the
Servicer to disburse, to the City, no later than 30 calendar days after the end of each calendar
semi-annual year (6 months) beginning with the semi-annual year in which this Agreement is
executed, the City Payment for such semi-annual year. After payment to the City of the City
Payment for any calendar semi-annual year, the Commission or Servicer may disburse or transfer
from the Loan Receipts Account, for the Commission's own benefit, the Commission Payment
for that semi-annual year.
9. Requirements for Second Mortgages. In order to qualify for financing by the City
under this Agreement, each Second Mortgage loan shall be:
(a) made only in the amount required by the Eligible Homebuyer to close the
primary loan, in accordance with procedures set forth in the Program Manual;
(b) for a principal amount not to exceed $20,000, with a maximum of 75% or
$15,000 from the City which includes, $250 that shall be payment to an Approved
Housing Counseling Agency for providing One-on-One Pre and Post Purchase
Housing Counseling paid during the escrow transaction at the time of closing, , and
a maximum of 25% or $5,000 from the Commission;
(c) made to an Eligible Homebuyer;
(d) for the purchase of a home to serve as the Eligible Homebuyer's principal
residence, for a total purchase price not to exceed the lesser of the maximum
determined pursuant to the Program Manual or the maximum permitted by HOME
regulations for the type of property;
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(e) used for (i) downpayment assistance, (ii) closing costs with respect to the
primary loan and the cost of recording the deed of trust with respect to the Second
Mortgage, and (iii) counseling fees to an Approved Housing Counseling Agency in
an aggregate amount that does not exceed applicable guidelines, if any, established
with respect to the primary mortgage loan, all as permitted by Fannie Mae or FHA
(HUD) guidelines, as applicable;
(t) made in connection with the origination of a first lien mortgage consistent with
the Program Manual, without any fees or charges by the Mortgage Lender to the
Eligible Homebuyer for the Second Mortgage, and with no more than reasonable
and customary fees and charges by the Mortgage Lender to the borrower for the first
lien loan;
(g) evidenced by a properly executed and delivered promissory note and secured by
a second deed of trust, each in the form contained in the Program Manual;
(h) for a principal amount reserved to the originating Mortgage Lender In
accordance with procedures set forth in the Program Manual;
(i) sold to the Commission at a price of par, at the same time that the related
primary mortgage is purchased by the Commission, such sale to be completed and
fully documented as specified in the Program Manual, including without limitation
the delivery to the Commission of all required documentation;
G) made to an Eligible Homebuyer(s) who has successfully completed, as certified
by the provider, a Homebuyer Education Program;
(k) Made to an eligible homebuyer who has completed the Homebuyer Education
Program, as defined in 1.13 and One-on- One Pre Purchase Housing Counseling, as
defined in 1.24, and has committed to completing One-on One Post Purchase
Housing Counseling as defined in 1.25. Pre Purchase counseling must include a full
budget review and analysis with the borrower(s), credit report education and
discussion of borrower( s) credit report, discussion and education on the different
types of home loans and predatory lending.
(1) noted on the title policy with respect to the corresponding primary loan as a
subordinate lien.
10. Counseling Fee to Approved Housing Counseling Agencies: The City and the
Commission will require the Eligible Homebuyer(s) to complete One-on One Pre Purchase
Housing Counseling. Upon the Eligible Homebuyer(s)' completion of One-on-One Approved
Housing Counseling, the Counseling Agency will provide to the Lender a Certificate of
Completion. Prior to the closing of the 2nd mortgage, the lender will provide a copy of this
certificate in the closing packet. At Closing, the title company will then provide payment to the
Housing Counseling Agency of Two Hundred and Fifty Dollars ($250). This counseling fee will
come directly from the City's portion of the Second Mortgage Loan.
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11. Public Information. The City shall prepare and distribute general information
regarding the Program. Prior to distribution of any informational material, the City shall provide
a draft to the Commission for review. Except as may be required pursuant to requests made
under applicable law, the City shall not distribute printed materials regarding the Program that
have not been approved by the Commission staff.
12. Training. The Commission shall be responsible for training Mortgage Lenders and
nonprofit housing counseling agency personnel with respect to the Program.
13. Reports and Records. The Commission shall provide quarterly reports to the City,
not later than 30 days after the end of the preceding quarter setting forth the following
information as of the last day of the prior quarter, substantially in the form of Exhibit C. This
information shall be presented a on per loan basis as required for the City to complete Home
Completion Reports:
(a) the principal amount of the Second Mortgages in the Loan Pool, and accrued and
unpaid interest;
(b) the breakdown of City Loan Amount and Commission Loan Amount in the Loan
Pool, and accrued and unpaid interest.
(c) the number and amount of Second Mortgages that have been purchased by the
Commission and the intended allocation of those Second Mortgages to the City
Contribution and the Commission Contribution;
(d) geographic, economic and demographic characteristics of the Eligible
Homebuyers;
(e) price and structure characteristics of the houses financed;
(f) Second Mortgage loan production of each Mortgage Lender;
(g) delinquency rates on the Second Mortgages; and
(h) such other information as the City may request from time to time.
The Commission shall maintain complete and accurate records of all transactions and accounts
related to the Program. The Commission shall permit the City, HUD, and their agents and
auditors, to inspect and copy all such records, including without limitation records maintained in
electronic format, at such times as the City or HUD may request. The Commission shall, upon
request of the City or HUD, promptly provide access to any and all records, including without
limitation records maintained in electronic format, related to the Program or any Second
Mortgage, that are or shall be maintained by any Servicer or Mortgage Lender. If so requested by
the City or HUD, the Commission shall cause such records or copies thereof to be delivered to
the offices of the City or HUD.
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14. Program Evaluation. The City and the Commission will jointly analyze the Program and
evaluate it for its efficiency and effectiveness by May 1, 2009, unless such date is extended by
mutual written consent, or at the time the City's funds committed in this Agreement are fully
disbursed, whichever occurs first. If the Commission's funding is fully originated prior to the
City's both parties agree to continue funding loans with the City's funding while the analysis
occurs. Upon analysis, it will be determined whether to continue the Program, at what funding
levels, and if the repayments will be used to purchase new loans. An extension of the Program
may require revisions to the Program terms and conditions to simplify the Program.
15. HOME Requirements.
A. Subrecioient Status; Uniform Administrative Requirements. The Commission
understands and agrees that it is a "subrecipient" of HOME Funds under this Agreement, and
shall comply with all requirements applicable to such subrecipients. The Commission shall carry
out the Program in compliance with all Federal laws and regulations described in subpart H of24
CFR Part 92, except that the Commission does not assume the City's responsibilities for
environmental review under 24 CFR Section 92.352 and the intergovernmental review process in
24 CFR Section 92.357 does not apply. The City is responsible for environmental review under
24 CFR Section 92.352 and must complete this review prior to issuing payment to the
Commission under Section 5A of this Agreement. Without limiting the foregoing, the
Commission shall comply with applicable uniform administrative requirements as described in
24 CFR Section 92.505(b) for a subrecipient of HOME Funds, and shall cause to be performed
for each year while this Agreement is in effect, and timely provide to the City, an audit report in
compliance with 24 CFR Section 92.506.
B. Eligibility of Homes. The Commission shall ensure that all homes that are the
subject of Second Mortgages included in the Loan Pool meet requirements of federal laws and
regulations for the HOME Program, including 24 CFR Sections 92.217 and 92.254, and that all
Second Mortgages purchased for Loan Pool involve loans made to Eligible Homebuyers and are
consistent with all such laws and regulations.
C. Review of Documentation Prior to Loan Origination. The Commission shall
require, as a condition to purchase a Second Mortgage for the Loan Pool, that the Mortgage
Lender shall provide to the Commission prior to the closing of the Second Mortgage all
information necessary for the Commission to verify the eligibility of the Second Mortgage for
funding under this Agreement, and the Commission shall review such information and advise the
originating Mortgage Lender prior to the date set for such closing of any deficiencies in such
information.
D. Program Income. The City and the Commission acknowledge that the terms
hereof, in particular the provisions for periodic remittance to the City of the City Payment, are
intended to conform to HUD requirements by generally requiring all "program income" as
defined under HOME regulations and all amounts that constitute recapture of HOME Funds
under such regulations to be remitted to the City for deposit in the City's HOME account.
HOME regulations, 24 CFR Section 92.2, provide in part that payments of principal and interest
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on loans made using HOME Funds are program income, and that when program income is
generated by housing that is only partially assisted with HOME Funds or matching funds, the
income shall be prorated to reflect the percentage of HOME Funds used. The parties
acknowledge that the Commission's funds are not intended to be matching funds under HOME
regulations. If HUD shall determine that the terms of this agreement are not sufficient to comply
with HOME regulations with respect to program income or recaptured funds, the City and the
Commission agree to execute and implement an amendment hereto satisfactory to HUD,
including any retroactive adjustments that HUD shall deem necessary to conform to such
regulations.
E. Relocation and Acquisition. The Commission represents, warrants and agrees
that it has taken and shall take all reasonable steps to minimize the displacement of persons
(families, individuals, businesses, nonprofit organizations, and farms) in connection with the
Program. The Commission represents and warrants that in connection with each Second
Mortgage the Commission shall ensure that prior to the execution of a purchase and sale
agreement, the borrower clearly advises the owner in writing that it lacks the power of eminent
domain and therefore is unable to acquire the property in the event negotiations fail to reach an
amicable agreement, and informs the owner in writing of what the borrower believes to be the
fair market value of the property. If any transaction financed by a Second Mortgage involves the
temporary and/or permanent displacement of persons, the Commission represents, warrants and
agrees that the Commission shall provide, at a minimum, all relocation assistance required by 24
CFR Section 42; the federal Uniform Relocation Act and regulations thereunder, 49 CFR Part 24;
24 CFR Section 92.353 and any other applicable federal laws or regulations, and shall maintain
complete and accurate records demonstrating such compliance. The Commission agrees that any
determination by City of the amount of relocation assistance due to any person shall be final and
binding upon the Commission, unless a different determination is made by HUD at the request of
such person, in which case the HUD determination shall be final and binding on the Commission.
The Commission represents, warrants and agrees that no Second Mortgage will involve the
purchase of any property if, in connection with such purchase and the financing thereof with
HOME Funds, any tenant or former tenant would be considered a "displaced person" within the
meaning of applicable federal regulations or guidelines. If the City or HUD determines that with
respect to any Second Mortgage any person reasonably may be considered a displaced person, then
the City may, at its option, provide relocation assistance directly to such person, and such amount
shall be immediately due and payable by the Commission to City, at City's demand, in addition to
all other amounts to which the City is entitled hereunder. The Commission shall maintain and
provide to City on request data indicating the race and ethnicity of households (and gender of single
heads of households) displaced in connection with the Program and the address and census tract of
the housing to which each displaced household relocated. Such information shall be used only as a
basis for further investigation as to compliance with nondiscrimination requirements.
F. Lead-Based Paint. The Commission shall comply with all applicable
requirements of federal, state, and local laws and regulations with regard to lead-based paint,
including without limitation 24 CFR Part 35, and 24 CFR Sections 92.355 and 982.4010), to the
extent applicable. The Commission shall be responsible for ensuring that all required testing and
abatement activities are performed, and all disclosures made and acknowledged, as required by
such regulations or other applicable laws. The Commission shall require, in connection with any
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July 21,2008
Second Mortgage to be acquired for the Loan Pool, if any part of the home being purchased was
constructed prior to 1978, that any defective lead-based paint surfaces are abated in full compliance
with all applicable laws, regulations, HUD guidelines and prudent practices.
G. Lobbving. The Commission hereby certifies and agrees as follows, m
accordance with 31 U.S.C. Section 1352, to the best of its knowledge and belief:
(1) No Federal appropriated funds have been paid or will be paid, by or on
behalf of the Commission, to any person for influencing or attempting to influence an
officer or employee of any agency, a member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with the awarding
of any Federal contract, the making of any Federal loan, the entering into of any
cooperative agreement, and the extension, continuation, renewal, amendment, or
modification of any Federal contract, grant, loan, or cooperative agreement;
(2) If any funds other than Federal appropriated funds have been paid or will be
paid to any person for influencing or attempting to influence an officer or employee of
any agency, a member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress in connection with this Federal contract, grant,
loan, or cooperative agreement, it will complete and submit Standard Form-LLL,
"Disclosure Form to Report Lobbying," in accordance with its instructions; and
(3) It will require that the language of this subsection G be included in the
award documents for subawards at all tiers (including subcontracts, subgrants, and
contracts under grants, loans and cooperative agreements) and that all subrecipients
shall certify and disclose accordingly.
(4) This certification is a material representation of fact upon which reliance
was placed when this transaction was made or entered into. Submission of this
certification is a prerequisite for making or entering into this transaction imposed by
section 1352, title 31, U. S. Code. Any person who fails to file the required
certification shall be subject to a civil penalty of not less than $10,000 and not more
than $100,000 for each such failure.
H. Conflict of Interest.
1. No officer, agent, employee, consultant or elected or appointed official of
The City or of any subrecipient (as defined in 24 CFR Part 92) receiving HOME Funds who
exercises or has exercised any functions or responsibilities with respect to activities assisted by
HOME Funds or who is in a position to participate in a decisionmaking process or gain inside
information with respect to these activities, shall obtain any financial interest or benefit, for himself
or herself or those with whom he or she has family or business ties, in the activity funded under this
Agreement or in any contract or subcontract or agreement with respect thereto or the proceeds
thereof; nor shall (s)he for one year after completion of his or her tenure with the City or such
subrecipient obtain any such financial interest or benefit. The Commission shall incorporate in all
such contracts or subcontracts a provision prohibiting any such interest. In addition, no owner,
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July 21, 2008
developer or sponsor of a project assisted with HOME Funds (or officer, employee, agent, elected
or appointed official or consultant of the owner, developer or sponsor) may occupy a HOME-
assisted housing unit. No person providing consultant services in an employer-employee type
relationship shall receive more than a reasonable rate of compensation for personal services paid
with HOME Funds, and in no event shall such compensation exceed the limits in effect under any
applicable law. All such consultant services shall be evidenced by written agreements that detail
the responsibilities, standards and compensation {24 C.F.R. Sections 92.356, 92.358}
2. In the procurement of supplies, equipment, construction or rehabilitation
and services the Commission shall ensure compliance with the provisions of24 CFR Section 84.42.
The Commission shall incorporate in all contracts or subcontracts using HOME Funds a provision
prohibiting any conflict of interest prohibited by this subsection.
3. No HOME Funds shall be lent to any officer, director, or person serving
in a similar capacity for the Commission, or to any member of the immediate family of any such
person, nor shall any loan of HOME Funds be made for the purchase of any property, or of a loan
secured by any property, in which any such person or family member has (or had, prior the
purchase of such property with the proceeds of such loan) an interest, or in any transaction in
which any such person acts as a real estate broker or agent, mortgage broker, or in any similar
capacity.
I. Reversion of Assets. Upon expiration of this Agreement, the Commission
must transfer to the City any HOME Funds on hand at the time of expiration and any accounts
receivable attributable to the use of HOME Funds.
J. Agreements with Others. If the Commission provides HOME Funds to for-
profit owners or developers, nonprofit owners or developers, subrecipients, homeowners,
homebuyers, tenants receiving tenant-based rental assistance, or contractors, the Commission
must have a written agreement that meets the requirements of24 CFR Section 92.504.
K. Flood Insurance Protection. If any property for which a Second Mortgage is
purchased is in a special flood hazard area as identified by the Federal Emergency Management
Agency, then the Commission shall ensure that flood insurance is and shall remain in effect, in
accordance with Section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. Section
4001).
L. Affirmative marketing. The City is responsible for affirmative marketing, in
particular to Bremerton residents consistent with 24 CFR Section 92.351 and the City's
Consolidated Plan.
16. Commission's Right to Relv; Program Manuals
A. House Kev Plus Bremerton Program Manual. For purposes of its
duty to comply with HOME regulations, the Commission shall have the right to rely on the
Program Manual (updated as provided below) and this Agreement as incorporating or describing
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July 21, 2008
the HUD conditions and requirements made applicable by reason of the use of HOME funds, and
to rely:
1) on the income limits and property purchase price limits as set forth in the
Program Manual, until the Commission shall receive notice than an
amendment to the Program Manual revising such limits is required; and,
2) on the forms contained in the Program Manual, as provided or approved by
the City and as now or hereafter revised as may be required by written notice
from the City to the Commission, as sufficient, when properly and timely
completed, signed and delivered, and unless the Commission shall have
knowledge or notice contrary to the information stated therein, to satisfY the
requirements for documentation of compliance with the particular regulations
or requirements for which the forms are designed, provided that the forms
used are all of the forms applicable to the facts of the particular loan pursuant
to the terms of the Program Manual.
B. Notice from the City. The Commission shall, promptly upon
written notice from the City of the changes required, revise the Program Manual (including any
forms attached thereto) and provide such revisions to Mortgage Lenders.
C. General House Kev Program Manual. The parties acknowledge that
some requirements of the HOME Program are intended to be satisfied by compliance with the
terms of the more general House Key Manual of the Commission as now in effect, as
incorporated by reference in the Program Manual (to the extent not inconsistent therewith), and
are therefore not described specifically herein or in the House Key Plus Program Manual.
17. Second Mortgage Servicing and Administration.
A. Direct Servicing or Servicing Agreement. So long as this Agreement remains
in effect, the Commission shall either (a) maintain in effect a servicing agreement with a
Servicer, consistent with the terms of this Agreement and without cost to the City, for the
servicing and administration of all Second Mortgages in the Loan Pool; or (b) directly administer
and service such Second Mortgages consistent with the terms hereof. If there are any assets in
the Loan Pool other than Second Mortgages, the Commission shall have the responsibility to
service and administer such assets. In any agreement with a Servicer, the Commission shall
ensure that the obligations and authority of the Servicer are consistent with those of the
Commission under this Section 16, and that the Servicer performs and observes such provisions.
The Commission may delegate any of its authority under this Section 16 to the Servicer, and may
satisfY any obligation under this Section 16 by causing the Servicer to perform, unless otherwise
expressly stated herein or in the Program Manual. The Commission shall provide to the City at
least ten (10) days prior to execution any proposed contract with a Servicer and any proposed
amendment thereto. The Commission shall not enter into a contract with a servicer, or
amendment, if the City reasonably objects to the qualifications or record of the Servicer, or to
any terms of the proposed contract or amendment.
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B. Fees or Compensation. The Commission may charge Eligible Homebuyers a
one-time fee, not to exceed $40.00, to recoup its costs of administering the Program. The
Commission shall not be entitled to any fee for acting as servicer, and all costs and expenses
incurred by the Commission in performing its obligations pursuant to this Agreement shall be at the
Commission's sole cost and expense, except and to the extent otherwise provided in this
Agreement. No costs or fees of a Servicer shall be deducted from any payments on Second
Mortgages, except late charges if so provided.
C. General Duty to Service; Acceleration on Certain Events. The Commission
shall be generally responsible for loan administration and servicing for the life of each Second
Mortgage. The Commission shall administer and service the Second Mortgages in accordance with
all applicable laws and regulations and in a manner consistent with prudent loan servicing practices
for similar loans. Without limiting the foregoing, (a) the Commission shall proceed diligently to
collect all payments due under the terms of each Second Mortgage as they become due, and shall
perform such other customary duties, furnish such other reports and information and execute such
other documents in connection with its duties under this Agreement as the City may from time to
time reasonably require; and (b) to the full extent permitted by applicable law, upon any event
described in the Loan Documents for any Second Mortgage upon which the principal balance may
be declared due and payable when the property or an interest therein is transferred or the property is
no longer the principal residence of the Eligible Homebuyer to whom the Second Mortgage loan
was made, the Commission shall promptly declare the principal balance due and payable in full and
shall diligently seek to collect all amounts owing on the Second Mortgage.
D. Records and Files. The Commission shall maintain, or cause the Servicer to
maintain and shall deliver to the City promptly on request, all records necessary to satisfY the
requirements of 24 CFR Section 92.508 with respect to the Second Mortgages and the activities
conducted under this Agreement. Without limiting the foregoing, the Commission shall maintain
or cause the Servicer to maintain a separate file for each Second Mortgage. The file must contain
the property address and census tract number; number of bedrooms in unit; owner name, address,
and phone number; form of ownership; type of project; number of units if not single-family; and
household characteristics including income, family size, racial and ethnic group of household
members and whether there is a single head of household (including sex thereof), disability if
information is volunteered by an applicant, and a listing of all costs and sources of funds related
to the purchase. Each file must contain all of the following except as specifically noted below:
Loan Application
Copy of Purchase Agreement
Copy of Promissory Note (original shall be kept in a fireproof safe)
Deed of Trust
Accurate Truth-in-Lending Statements with acknowledgements of receipt by
all borrowers
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Appraisal of home purchased and evidence of borrower's receipt of a copy
thereof
Credit Report
Closing statement for purchase of home (HUD-l form)
Title Insurance Policy in favor of the Commission or Mortgage Lender in the
principal amount of the Second Mortgage (Lender's Extended Coverage,
showing no liens for money owing, except governmental charges, prior to the
Deed of Trust except as permitted under this Agreement)
Lead-based paint report for the home (if any portion was built before 1978)
Income and family size certification, and supporting documents
Disclosure statement signed by the home buyer concerning lead-based paint
poisoning if the building in which the purchased unit is located was
constructed wholly or in part prior to 1978.
Records demonstrating that the purchased unit meets applicable housing code
and housing quality standards.
Documents showing that the combination of federal assistance and any other
subsidy is not any more than is necessary to provide affordable housing.
Documents demonstrating compliance with federal displacement, relocation,
and acquisition requirements.
All information and data required for the City to complete the HOME
Completion Report (HUD-40096).
E. Transfer of Second Mortgages. The Commission shall not, without the
express written consent of the City, sell, assign, or encumber any Second Mortgage or any
interest therein.
F. Notices of Foreclosures or Legal Actions. If the Commission shall provide
any statutory notice to commence foreclosure proceedings, or any notice of trustee's sale, or if
the Commission shall commence any legal action against a borrower or for foreclosure, or if the
Commission shall receive any notice of such action by any other holder of a lien on the property
subject to any Second Mortgage in the Loan Pool, the Commission shall provide a copy of such
notice, or the complaint in case of any legal action, to the City at the same time as it is first
provided or sent to the borrower or property owner, recorded, or filed with a court, whichever is
earliest. If the Commission shall receive notice from any other holder of a lien on any home for
which a Second Mortgage loan is made, of any intent to foreclose, trustee's sale, or legal action
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July 21,2008
to foreclose such lien, the Commission shall promptly provide a copy of such notice to the City.
If so requested by the City, the Commission shall provide copies to the City of further documents
in any proceeding of the type referred to in this subsection, promptly upon the Commission's
receipt or delivery thereof, as applicable.
G. Monitoring, Enforcement, Modifications and Forbearance. The Commission
shall monitor compliance with, and enforce, as permitted by applicable law and in accordance
with reasonable policies of loan administration generally prevailing in the single family mortgage
industry, the terms of the Second Mortgages in the Loan Pool. Except as expressly authorized
herein or in the Program Manual, the Commission shall not, without the written consent of the
City: (i) agree to the modification, waiver, or release of any provisions of a Second Mortgage; (ii)
take or omit to take any action that would release any obligor or any other person from any liability
for the payment of money or the performance of any material obligation under any Loan Document,
other than waiver of late charges and/or default interest; (iii) release or subordinate any security
securing any of the obligations of any obligor under a Second Mortgage, except for release upon
full payment, or payment of an amount determined by the Commission or Servicer in good faith to
be at least as much as could reasonably be collected from enforcing its rights in such security for the
Second Mortgage, (iv) finally settle, compromise or adjust any insurance claim that is more than the
unpaid balance of the Second Mortgage; (v) bid for, purchase or acquire any property subject to any
Second Mortgage, whether by conveyance in lieu of foreclosure, by purchase at foreclosure or
creditor's sale, or otherwise, or (vi) consent to or approve any sale, transfer or conveyance of all or
any part of the real property subject to a Second Mortgage, or any assumption of any Second
Mortgage. The Commission shall have the right, without notice to or consent from the City, to
grant to any Eligible Homebuyer, in the exercise of the Commission's reasonable judgment, any
extension of time or forbearance for the performance of any obligation or condition under a Second
Mortgage, and to allow any reinstatement or plan of cure, to the extent consistent with the Program
Manual, provided that l)without the written consent of the City, the Commission shall not waive,
release, or fail to enforce within a reasonable time provisions for acceleration of a Second
Mortgage if the home ceases to be the principal residence of the Eligible Homebuyer and 2) it
does not extend beyond the original term of the loan and if so, the Commission must address the
statuatory limits on collection of a loan as mandated by Washington State Law. The
Commission may waive late charges, or default interest, or both, on condition that some or all
past due installments be paid.
H. Property Insurance. The Commission shall ensure that the property subject to
each Second Mortgage is at all times insured by a property insurance policy providing coverage in
an amount not less than required by the loan documents, in which the Commission is named a loss
payee pursuant to a standard mortgage clause or its equivalent. If the borrower shall fail to maintain
such insurance, then unless the first lien lender shall promptly "force place" replacement property
insurance, the Commission shall, or shall cause the Servicer to, "force place" replacement property
insurance at the borrower's expense.
I. Compliance with Statutes and Regulations. The Commission shall obey all
laws of the United States, the State of Washington and the ordinances, regulations, and codes of
The City.
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18. Nondiscrimination.
A. Federal Requirements. No person shall on the grounds of race, color, national
origin, religion or sex be excluded from participation in, be denied the benefits of, or be subjected
to discrimination under any program or activity funded in whole or in part with HOME Funds. The
Commission shall comply fully with the requirements of the Fair Housing Act (42 US.C. Sections
3601-20) and implementing regulations at 24 CFR Part 100; Executive Order 11063, as amended
by Executive Order 12259 (3 CFR, 1958-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307)
(Equal Opportunity in Housing) and implementing regulations at 24 CFR Part 107. The
Commission shall comply fully with all requirements of Title VI of the Civil Rights Act of 1964, 42
US.c. 2000d et seq., which provides that no person in the United States shall on the ground of
race, color or national origin, be excluded from participation in, denied the benefits of, or be
subjected to discrimination under any program or activity receiving Federal financial assistance;
and with HUD regulations implementing such requirements, 24 C.F.R. Part 1. {24 C.F.R. Section
92.350(a)}
The Commission shall ensure compliance with Executive Order 11246, entitled
"Equal Opportunity" (3 CFR, 1958-1963 Comp., p.339), as amended, and the regulations issued
pursuant thereto, 41 C.F.R. Part 60, which provide that no person shall be discriminated against
because of race, color, religion, sex or national origin in all phases of employment during the
performance of federal contracts and subcontracts, and The Commission shall take affirmative
action to ensure fair treatment in employment, upgrading, demotion or transfer, recruitment or
recruitment advertising, layoff or termination, rates of pay, or other forms of compensation and
selection for training or apprenticeship.
The Commission shall comply fully with all of the requirements and prohibitions
of the Age Discrimination Act of 1975 (42 U.S.c. Sections 6101-07) and implementing regulations
at 24 C.F.R. Part 146 and those of Section 504 of the Rehabilitation Act of 1973 (29 US.C. Section
794), and implementing regulations at 24 C.F.R. Part 8.
B. Equal Employment Opportunity. The Commission shall comply, and shall
require all Mortgage Lenders, contractors and subcontractors to comply, with all applicable equal
employment opportunity and nondiscrimination laws of the United States, the State of Washington,
and The City of Bremerton, including the Bremerton Municipal Code ("BMC"), notably BMC Ch.
2.28, and rules, regulations, orders, and directives of the associated administrative agencies and
their officers.
C. Fair Contracting Practices. Each party is required to comply with the
Bremerton Municipal Code Section 2.76 (Procurement and Disposal Code). Conduct made
unlawful by that ordinance constitutes a breach of contract. Engaging in an unfair contracting
practice may also result in the imposition of a civil fine or forfeiture under the Bremerton
Municipal Code as well as various civil remedies.
19. Indemnitv.
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A. By the Commission. The Commission agrees to indemnify and hold harmless
the City and its officers, employees and assigns, against any and all claims, costs, liability and
damage arising from the negligent or otherwise wrongful acts, or from omissions to perform acts
required of the Commission by this Agreement, by the Commission and its contractors and
subcontractors, and their respective officers or employees, in connection with the Program or
with the Second Mortgages. The Commission waives, solely with respect to the City, its
immunity under RCW Title 51, Industrial Insurance. The Commission and the City
acknowledge that this waiver has been specifically negotiated and that the City would not
enter into this Agreement absent this waiver. This indemnity provision shall survive any
termination or expiration of this Agreement.
B. By City. The City agrees to indemnify and hold harmless the Commission and
its officers, employees and assigns, against any and all claims, costs, liability and damage arising
from the negligent or otherwise wrongful acts, or from omissions to perform acts required of the
City by this Agreement, by the City and its officers or employees. The City waives, solely with
respect to the Commission, its immunity under RCW Title 51, Industrial Insurance.
Commission and City acknowledge that this waiver has been specifically negotiated and that
the Commission would not enter into this Agreement absent this waiver. This indemnity
provision shall survive any termination or expiration of this Agreement.
20. Remedies.
A. General. If either party shall fail to comply with any obligation of such party
under this Agreement, then such party shall be in default, and if such default is not cured within
thirty (30) days after written notice to such party, then the other party shall have the right to
enforce the terms of this Agreement by any remedies available at law or in equity.
B. Termination or Suspension by the City. In accordance with 24 CFR Section
85.43, in addition to any other rights and remedies, the City may suspend or terminate this
Agreement if the Commission materially fails to comply with any term of the Agreement.
C. The Commission's Purchase Obligation for Ineligible Loans or Failure to
Enforce Recapture. If after any Second Mortgage shall have been included in the Loan Pool,
either
(1) the City or HUD shall determine that such Second Mortgage was not eligible for use
of HOME Funds; or
(2) the Commission shall default on any of its obligations with respect to the
administration or servicing of a Second Mortgage and as a result of such default the
principal balance of a Second Mortgage cannot be declared due after, or cannot be
collected within one year after, an event upon which recapture of HOME Funds for the
Second Mortgage is required by HOME regulations,
then in either such case, except as otherwise provided below in subsection D of this Section,
upon thirty (30) days' notice from the City, the Commission shall purchase from the City the
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City's entire beneficial interest in such Second Mortgage for an amount determined as follows:
(i) if such repurchase obligation becomes payable on or after July I, 2008, an amount equal to the
product of the then outstanding balance of principal and interest of such Second Mortgage,
multiplied by the Participation Ratio. On the date when such amount becomes payable such
Second Mortgage shall be removed from the Loan Pool.
D. Ineligible Loans Where the Commission Not at Fault. In any case under
clause (1) of subsection C. of this Section in which the Commission gives written notice to the
City, within 15 days after notice to the Commission of a determination of ineligibility, that the
Second Mortgage was determined to be eligible by the Commission based upon false information
provided by the borrower or the originating Mortgage Lender, if the Commission shall not have
been negligent in purchasing the Second Mortgage for the Program, the Commission shall not be
obligated to purchase the City's interest from its own funds so long as the Commission shall
diligently pursue remedies against the originating Mortgage Lender and/or the borrower. If in
such case the originating Mortgage Lender shall repurchase the Second Mortgage, then the
Commission shall use the proceeds to purchase the City's interest as set forth above in subsection
C of this Section.
21. Term of Agreement: Survival. Unless earlier terminated by mutual agreement, or by
the City pursuant to Section 19, this Agreement shall remain in effect until ninety days after all of
the following shall have occurred: all Second Mortgages shall have been paid in full or otherwise
satisfied; all money to which the holder of any Second Mortgage is or may become entitled has
been collected by the Commission; any property other than money received by the Commission,
or to which the Commission may be entitled, in respect of any obligations or assets in the Loan
Pool or the security therefor, has been sold or otherwise disposed of, and the proceeds thereof
received by the Commission; the City has been paid the City Payment for all periods in which
any Loan Receipts have been collected; and the Commission has delivered to the City a final
accounting thereof. Notwithstanding expiration or other termination hereof, all provisions hereof
required by HOME regulations shall survive and remain in effect to the extent required by such
regulations, and all provisions requiring the maintenance of records and allowing access thereto,
shall remain in effect for 7 years after such termination.
22. No Partnership or Joint Venture.
A. Nothing herein is intended to create any partnership or joint venture, nor to
authorize either party to bind the other to any obligation in favor of any third party.
B. No officer, employee, agent or representative of the Commission shall
represent himself or herself to be an officer or employee of the City, nor as authorized to bind the
City, nor shall any such person make any claim, demand or application to or for any right or
privilege applicable to any officer or employee of the City, including but not limited to Worker's
Compensation coverage, Unemployment Insurance Benefits, Social Security Benefits or
retirement membership or credit. The Commission shall indemnify and hold City harmless from
any such claim or demand.
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July 21, 2008
C. No officer, employee, agent or representative of City shall represent himself or
herself to be an officer or employee of the Commission, nor as authorized to bind the
Commission, nor shall any such person make any claim, demand or application to or for any right
or privilege applicable to any officer or employee of the Commission, including but not limited
to Worker's Compensation coverage, Unemployment Insurance Benefits, Social Security
Benefits or retirement membership or credit. The City shall indemnify and hold the Commission
harmless from any such claim or demand.
23. No Third Party Beneficiaries. Nothing herein is intended to create any legal right or
remedy for any third party, except to the extent that the United States may have rights or
remedies related to the obligations of the Commission to comply with provisions, laws and
regulations applicable because of the use of HOME Funds.
24. Entire Agreement. Amendments~ No Waiver. This Agreement, including the
attachments hereto and documents incorporated by reference as provided herein, constitutes the
entire agreement of the parties with respect to the subject matter hereof. The parties hereto may
amend or modify the terms of this Agreement only by a written document signed by both parties.
No course of dealing shall be construed to alter any obligations, rights or remedies hereunder.
No waiver of any rights or remedies under this Agreement shall be valid unless in writing signed
by an authorized officer of the party granting such waiver, and any such waiver that may be
granted as to any particular breach hereof shall constitute a waiver as to any other breach. No
consent to, approval of, or failure to object to, any agreement or document with terms or
conditions contrary to the terms of this Agreement shall constitute, or be construed as, a
modification or waiver of any terms of this Agreement. No delay in taking any action or giving
any notice shall in any way impair any rights or remedies of either party.
25. Notices~ Designated Representatives. The City and the Commission designate the
following as their primary representatives and contacts with respect to the administration of this
Agreement and the Program. These designees may be substituted for by written notice to the
addresses below. Any notice under this Agreement shall be given to a party at the respective
address or facsimile number below, or at such other address or number as shall have been
provided by notice in accordance with this Section, and shall be effective two working days after
mailing, postage prepaid, or when received by facsimile during normal working hours.
City Representative:
Phedra Elliott
CDBG/HOME Coordinator
345 6th Street, Suite 600
Bremerton, W A 98337
Telephone: (360) 473-5211
Fax: (360) 473-5278
Email: phedra.elliott@ci.bremerton.wa.us
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Commission Representative:
Dee Taylor, Director
Homeownership Division
1000 Second Avenue, Suite 2700
Seattle, Washington 98104-1046
Telephone: (206) 464-7139
Fax: (206) 587-5113
Email: dtaylor@wshfc.org
26. Construction; Governing Law; Venue. This Agreement is the product of negotiation
and shall not be construed against any party as the drafter of any provision hereof. This
Agreement shall be construed, interpreted, and enforced in accordance with the laws of the State
of Washington and, to the extent applicable, federal law. If any provision hereof or of any
attachment hereto shall be determined to be invalid or unenforceable, the remainder of this
Agreement and any such attachment shall not be affected by such determination. If there shall be
any irreconcilable conflict between or among the following, this Agreement shall be interpreted
to give priority in the following order:
(a) Applicable federal laws and regulations;
(b) Applicable State laws and regulations;
(c) Applicable City ordinances;
(d) This Agreement, as it may be amended in writing;
(e) The Program Manual, as it may be amended with written approval of the City and the
Commission;
(t) Other documents that receive the written consent or written approval of the parties
pursuant to this Agreement.
Venue of any action arising out of this Agreement shall be exclusively in Kitsap County,
Washington.
Executed this 21 st day of July, 2008.
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July 21, 2008
G FINANCE COMMISSION
APPROVED AS TO FORM:
Bre1$i=Y^
By: zf"
,
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY. EXTEND
CREDIT. OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW
Exhibits:
Exhibit A: Program Manual, Attachments to Program Manual
Exhibit B: Form of Request for Reimbursement
Exhibit C: Quarterly Report Form
Exhibit D: Report of Half Yearly Principal and Interest Payments to the City
Exhibit E: Professional Services Agreement with Kitsap County Consolidated Housing
Authority and Professional Services Agreement with American Financial Solutions.
House Key Plus Bremerton Agreement
24
July 21, 2008
. " .J#__/'
Exhibit A - Program Manual
HOUSE KEY PLUS BREMERTON
DOWNPAYMENT ASSISTANCE PROGRAM
PROGRAM DESCRIPTION
House Key Plus Bremerton is a pilot downpayment assistance program for use with the House
Key first mortgage program. House Key Plus Bremerton was created from a partnership
between the Commission and the City of Bremerton's Community Development Block
Grant/HOME Program.
PROGRAM ELIGIBILITY
1. The first mortgage must be a 30 year Fixed MyCommunityMortgage, House Key
Teacher, Freddie Mac Home Possible, or FHA 203(b) or 234(c) House Key Loan.
2. The Borrower's income must not exceed the House Key Plus Bremerton requirements
(see limits in this Section).
3. The Borrower must not have owned a home at any time in the three years preceding the
closing of the Second Mortgage, unless the property is located in a House Key first
mortgage Targeted Area and a) any individual who is a displaced homemaker may not be
excluded because that individual, while a homemaker, previously owned a home with his
or her former spouse or partner; and b) any individual who is a single parent or guardian
of a minor child may not be excluded because that individual previously owned a home
with his or her spouse or partner.
4. The Borrower must demonstrate a need for assistance (see Calculating House Key Plus
Bremerton Income in this Section)
5. The property must be located within the Bremerton city limits, per the Kitsap County
Assessor.
6. The Borrower must attend a Commission-sponsored home buyer education seminar prior
to reserving funds.
7. The Borrower(s) must attend One-on-One Pre Purchase and Post Purchase Counseling
with an approved Housing Counselor from an approved Agency. Please see Appendix D
for details.
8. The Seller must sign the "Disclosure of HOME Program Requirements" form (#19.10).
(See House Key Plus Bremerton "Program Forms" at the end of this Section for all
program forms).
9. The Seller must sign the "Estimated Fair Market Value Notice" form (#19.11).
10. The property must comply with the U.S. Department of Housing and Urban
Development's (HUD) Lead Paint Safety Requirements and HUD Housing Quality
Standards. See Property in this Section for additional information.
(Rev. 04/25/08)
DOWNPAYMENTPROGRAMS 19.1
'1...... '..'
INCOME LIMITS
Households earning 80% or less of the Silverdale- Bremerton Metropolitan Statistical Area
median income, adjusted for household size, may qualify for a maximum loan amount of up to
$20,000. To be eligible for the Program, an applicant's Annualized Gross Household Income*
(as of the date of signing the purchase agreement, in the case of new home being constructed, or
as of the date of purchase, in the case of an existing home) must not exceed:
1 Person
$39,150
2 Person
$44,700
3 Person
$50,300
4 Person
$55,900
5 Person
$60,350
6 Person
$64,850
7 Person
$69,300
8 Person
$73,800
* Annualized Gross Household Income as of 3/2008. Subject to change, as updated.
COMBINED LOAN TO VALUE (CLTV)
FHA - Cannot exceed 100% of FHA's Acquisition Cost. FHA's Acquisition Cost does not
include Second Mortgage fees.
MyCommunityMortgage = 105%
Freddie Mac Home Possible - TL TV of 105%
BUYDOWNS
Buydowns are not allowed for House Key Plus Bremerton. Furthermore, if the Borrower's first
mortgage is an FHA temporary buydown, the buydown cannot be paid by the Borrower's assets
and must be paid for by the seller or the Mortgage Lender with documentation in the file. First
mortgage temporary buydown funds paid by the seller or the Mortgage Lender are not included
on the Subsidy Worksheet.
RESERVATIONS
Reservations for House Key Plus Bremerton Second Mortgages are made at the same time as the
House Key first mortgage loan reservation. Funds are reserved on a first-come, first-served
basis. Mortgage Lenders may reserve the maximum allowable House Key Plus Bremerton funds
for their Borrower since cash to close cannot be exactly determined at loan reservation. The
underwriter will complete the House Key House Key Plus Bremerton Subsidy Worksheet form
at underwriting approval to determine the exact amount of funds needed. Increases in the
reservation amount are subject to the availability of funds.
(Rev. 04/25/08)
DOWNPAYMENTPROGRAMS 19.2
.._--./
BORROWER'S CASH TO CLOSE
The Borrower's downpayment requirement is 1/2% of the purchase price or $1,000, whichever is
greater. Gifts are allowable up to 50% of the Borrower's portion of the required downpayment.
CALCULATING HOUSE KEY PLUS BREMERTON INCOME
The calculation used by underwriters to determine income for the House Key Plus Bremerton
Second Mortgage is the same as the calculation used to determine income for the House Key first
mortgage as shown in Section 3 of the House Key Manual. Please contact the Commission if
you need assistance calculating income.
After the applicant's income for the Second Mortgage has been calculated, refer to the income
chart in this Section to determine if the applicant is at or below 80% of area median income.
The House Key Plus Bremerton Second Mortgage loan amount is the amount of need as
established on the Mortgage Subsidy Worksheet form (#19.12.1-2).
The House Key Plus Bremerton Second Mortgage loan amount is the lesser of:
A) Amount of need as established by the Mortgage Subsidy Worksheet calculated
by the underwriter; or
B) $20,000 for families at 80% or less of area median income, adjusted for
household size.
On the Mortgage Subsidy Worksheet, if the Borrower's front-end ratio (PITI/Income) is less
than 25% based on household compliance income, the underwriter will decrease the amount of
subsidy to bring down the front-end ratio to acceptable assistance base levels for gap financing.
If the Borrower fails to meet the ratio test, then the underwriter can proceed using House Key
Plus.
The underwriter will calculate the House Key Plus Bremerton Mortgage loan amount using the
Subsidy Worksheet at underwriting approval to determine the exact amount of funds needed.
The forms should be completed using a current VOD or bank statements and should be adjusted
as the Borrower's situation changes.
The underwriter determines the amount of cash required by the Borrower to close the
transaction. Stocks, bonds, IRAs, 401(k)s, mutual funds, life insurance policies and annuities,
and liquid assets are not included in the calculation.
The Borrower may keep, but is not required to have, $5,000 or three month's payment for
Principal, Interest, Taxes and Insurance (PITI), whichever is greater, in reserves left after
closing. Subtract the proposed reserve amount from the total amount of verified assets available
at underwriting approval. If the amount is less than or equal to 0 enter "0" on the appropriate
form.
(Rev. 07/19/07)
DOWNP A YMENT PROGRAMS 19.3
.\ .
· House Key Plus Bremerton funds are used for down payment, closing costs, and pre-
paids.
. House Key Plus Bremerton funds cannot be used to buy either the first or second
mortgage down.
· House Key Plus Bremerton funds cannot be used to payoff bills or liens of the Borrower.
If the Borrower is required by underwriting to payoff these items, these items must be
satisfied prior to closing and verification of the Borrower's funds for the Subsidy
Worksheet form should be determined after the funds have cleared the Borrower's
accounts. House Key Plus Bremerton funds cannot be used to replenish the Borrower's
bank account if they do not have reserves in the bank after closing.
. House Key Plus Bremerton funds cannot be used to pay for repairs to the property.
Furthermore, if the Borrower chooses to pay for repairs from their own funds, escrow
holdbacks must be for an exact bid from contractor. In order to avoid cash back, escrow
cannot over collect Borrower funds (i.e., 1 ~ times). Please refer to Page 2.5 (Escrow
Holdbacks) and Page 4.2 (Acquisition Cost) of the House Key Manual.
In order to avoid cash back issues at closing, the Mortgage Lender should re-calculate the need
after receiving an estimated HUD-l closing statement from the escrow company. Adjustments
should be made to the loan amount if necessary prior to releasing loan documents. If in doubt, it
is always a good idea to reduce the loan amount slightly than risk the chance of the Borrower
receiving cash back.
CASH BACK
In no event will House Key Plus Bremerton funds result in cash back to the Borrower. Please
refer to Page 13.3 of House Key Manual for further instructions.
MORTGAGE DETAILS
Interest Rate
3.00% interest, amortized over 15 years, or due when the property is sold, transferred, or ceases
to be the borrower's primary residence.
Loan Term
15 years
Maximum Program Loan Amount
$20,000, based on need.
Shared Appreciation
Calculated by taking the amount of the House Key Plus Bremerton Second Mortgage and
dividing it by the purchase price. Resulting percentage is in full effect for the first year.
Beginning in Year 2 the percentage is reduced one-ninth (11.11 %) each year to 0%. The amount
of shared appreciation that the Borrower will owe will depend on the Borrower's net proceeds at
the time of sale. The repayment is then calculated as net proceeds multiplied by the shared
(Rev. 04/25/08)
DOWNPAYMENTPROGRAMS 19.4
'.. .'---"
appreciation percentage. Some exceptions to shared appreciation do apply at the discretion of
the City of Bremerton. Shared appreciation is subject to Washington State Maximum Usury
laws.
Assumptions
House Key Plus Bremerton loans are NOT assumable.
Late Charge
4%
PROPERTY
Purchase Price Limit
May NOT exceed $451,250.
Lead-Based Paint and Housing Quality Standards
Mortgage Lenders must provide a copy ofHUD's "Lead Paint Safety" Field Guide (6/1999)
(HUD #1779-LHC) to appraisers and instruct them to specifically address the condition of the
paint and note any areas of deterioration. Mortgage Lenders are also required to have the
appraiser complete HUD's Housing Choice Voucher Program Inspection Checklist form HUD-
52580 (3/2001) to ensure the property meets HUD's Housing Quality Standards.
If the appraiser identifies areas of deteriorated paint, the Mortgage Lender must provide a written
letter to the Seller, notifying them that the paint deterioration must be corrected in a lead paint-
safe manner. Once the paint condition has been corrected, the appraiser must re-certify the
painted surfaces of the home.
Property Occupancy
Properties that are currently occupied by a tenant, other than the House Key Plus Bremerton
Borrower, are NOT eligible properties.
The Seller must sign the "Disclosure of HOME Program Requirements" form (#19.10) stating
that the property is not tenant occupied (other than by the Program borrower) and that no
displacement of an individual(s) has occurred or shall occur.
Seller Notices
Because federal funds are used in House Key Plus Bremerton, the Seller must be informed that
1) the Borrower does not have the power of eminent domain or condemnation to use to acquire
the property if negotiations between the Seller and the Borrower fail to result in an amicable
agreement and 2) prior to the closing of the sale, the Mortgage Lender must provide the Seller
with a written estimate of the fair market value of the property. The "Disclosure of HOME
Program Requirements" form (#19.10) is used to provide notice to the Seller of these
requirements.
(Rev. 04/25/08)
DOWNPAYMENTPROGRAMS 19.5
).- '; ','
Once the Mortgage Lender has the appraised value and before the loan closes, the Seller must be
notified using the "Estimated Fair Market Value Notice" form (#19.11). If the estimated fair
market value of the property is in excess of the contract price, the Seller may withdraw from the
selling agreement.
PRE-CLOSING COMPLIANCE REVIEW
Documents submitted to the Commission with the Pre-closing Compliance Review file:
1) Original of "Disclosure of HOME Program Requirements" form (#19.10).
2) Original of "Estimated Fair Market Value Notice" form (#19.11).
3) Original "House Key Plus Bremerton Subsidy Worksheet" form (#19.12.1-2).
4) Copy of page 1 of the property appraisal
5) Copy of completed HUD' s Housing Choice Voucher Program Inspection Checklist
(312001) (HUD-52580).
CLOSING AND DELIVERING THE LOAN
Program Application Fee
There is a $40.00 program application fee for House Key Plus Bremerton loans. This amount
will be subtracted from the amount reimbursed to the Mortgage Lender. This fee must be
disclosed on the Second Mortgage "Truth-in-Lending" form (#19.13.1-2) and the HUD-1
Settlement Statement.
Housing Counseling Fee
There is a $250 fee that will be provided to the Housing Counseling Agency that conducted the
One-On-One Pre Purchase Counseling and has committed to conducting the One-on-One Post
Purchase Counseling. This amount will be subtracted from the amount reimbursed to the
Mortgage Lender. This fee must be disclosed on the Second Mortgage "Truth-in-Lending" form
(#19.13.1-2) and the HUD-1 Settlement Statement. The Lender must provide the Certificate of
Completion at the time of closing, in order for this fee to be paid.
Document Submitted to the Commission with the Post-closing Compliance Review File
Accurate copy of the final "Truth-in-Lending" form (#19.13.1-2) for the Second Mortgage.
Funding
Mortgage Lenders fund the Second Mortgage at loan closing.
Documents submitted to Countrywide
1) Original accurate final "Truth-in-Lending for the Second Mortgage" (#19.13.1-2)
2) House Key Plus Seattle second mortgage notes and Deeds of Trust are originated under
the Commission's name;
3) The Master Servicer will purchase your loans with a copy of the Deed of Trust with the
original recorded copies to follow.
Please indicate marital status of Borrower on House Key Plus Bremerton Deed of Trust.
(Rev. 04/25/08)
DOWNP A YMENT PROGRAMS 19.6
,. . '...4.
INSURANCE REQUIREMENTS
Hazard Insurance
Hazard insurance is required sufficient to cover both the first and second mortgages, or the
maximum insurable value of the property whichever is less. The policy must contain a
guaranteed replacement cost endorsement. Binder must indicate the first loan be payable to
Countrywide Bank, FSB. using the standard Mortgagee clause as written as shown on Page 2.5.
Please refer to Page 2.4 for more information. Binder must indicate the second loan be payable
to the Washington State Housing Finance Commission, its successors and/or assigns, c/o
Countrywide Bank, FSB., P.O. Box 961206, FTWX-22, Fort Worth, TX 76161 .(use
Countrywide Bank, FSB, TPRP-220PS, P.O. Box 2962, Phoenix AZ, 85062-2962 if the
insurance carrier is Farmers, Safeco, State Farm, and Metlife).
Title Insurance
Title insurance coverage is required for the first mortgage only. The Second Mortgage appears
as a lien of record in second position when the policy is issued. As title insurance is not required
for House Key Plus Bremerton, the Mortgage Lender is not allowed to charge a title fee on the
Second Mortgage.
(Rev. 04/25/08)
DOWNPA YMENT PROGRAMS 19.7
~
.
,
HOUSE KEY PLUS BREMERTON
PROGRAM FORMS
ORIGINATION AND LOAN PRE-CLOSING
Name of Form, Date of Form, Page Number
Disclosure of HOME Program Requirements (3/31/04) (19.1 0).
Estimated Fair Market Value Notice (3/31/04) (19.11).
House Key Plus Bremerton Subsidy Worksheet (07/19/07) (19.12.1-2).
House Key Plus Bremerton Truth-in Lending (07/19/07) (19.13.1-2).
HUD's Lead Paint Safety Field Guide (6/1999) (HUD #1 779-LHC).
HUD's Housing Choice Voucher Program Inspection Checklist (3/2001) (HUD-52580).
Certificate of Completion for One-on-One Pre Purchase Housing Counseling
LOAN CLOSING
Name of Form, Date of Form, Page Number
House Key Plus Bremerton Promissory Note, (07/19/07) (19.14.1-8).
House Key Plus Bremerton Deed of Trust, 02/16/05) (19.15.1-15).
OTHER
Name of Form, Date of Form, Page Number
Lender Checklist (02/16/05) (19.16) - For lender use only
(Rev. 07/19/07)
DOWNP A YMENT PROGRAMS 19.8
Exhibit B
House Key Plus Bremerton
Reimbursement Request
Agency Name:
Washington State Housing Finance Commission
Agency Address:
1000 Second Avenue, Suite 2700
Seattle, W A 98104
Contact Person:
Dee Taylor
Director, Homeownership Programs
Telephone Number:
206.287.4413 Fax Number: 206.587.5113,
Request Number:
Period: to
Fund Program Amount Allocated Previous Balance
Amount this Request Reimbursements Remainin2
City
WSHFC /'
Total:
Total City funds requested this period:
Number of Loans this period:
Total number of program loans:
In accordance with the Agreement the following is attached to this request:
· The principal amount of the Second Mortgages in the Loan Pool, and accrued and
unpaid interest;
· Geographic, economic and demographic characteristics of the Eligible Homebuyers;
· Price and structure characteristics of the houses financed;
· Second Mortgage loan production of each Mortgage Lender; and
· Delinquency rates on the Second Mortgages.
Certification:
1, the undersigned, do hereby certify under penalty of perjury, that this request represents
eligible expenses incurred by the Agency to provide the services rendered in full
compliance with the Agreement in the amounts stated. I also certify that I am authorized
to authenticate and certify to said claim.
Dee Taylor
Director, Homeownership Programs
Signature
Date
House Key Bremerton
Reimbursement Request
"" .
7/15/2008
House Key Plus Seattle
Reimbursement Request
Exhibit C -Attachment
# Loan #
Last Name
Purch
Price
City
Contribution
Commission
Contribution
HK+ Seattle
2nd Mort
HK
1 st Mort
Int
Rate
Lender Name
Loan Officer
Income
INC Closing
GRP Date
Purchase Appraisal
Date Amount
Name
HH
Sz
# of Ethniclty
BDRM
Race
Head of
Household
- Those in red are add~ions from previous month's activ~ies
TOTALS $ $0.00 $0.00 $0.00 $0.00 0.00
AVERAGE #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O! #DIV/O!
AS OF 4101108
INCOME GROUP
*Annuallncome as % of Af1!a Median Income
1-0-30%
2- 31-50%
3- 51-60%
4- 61-80%
5- Over 80%
TERMS Round Allocations Total Amount Balance Max Loan Amt Bal City % 1 WSHFC %
7/15/2008
Male HOH
Sin Ie Married Elder!
Female HOH
Married Elder!
Parent
Female
Head of HsH
Pro e
Address
Ci
Census
Tract
House Key Plus Seattle
Reimbursement Request
ZIP
Code
Reimburse Int Acc.
Period at Relm.
Default Req Date
Status Relm.
Reim
Rec'd
Age of
PrIma
Construction Property
T e T e
Exhibit C -Attachment
7/15/2008
Servicer
House Key Plus Seattle
Reimbursement Request
Exhibit C -Attachment
Allocation
Date Reim
CW/US Bnk
Notes
Exhibit 0
House Key Plus Bremerton
Report of Principal & Interest
* The City of Bremerton and Washington State Housing Finance Commission will
develop this report in the future, once Principal and Interest payments begin to
be received by the Commission.
House Key Bremerton
Report of Principal & Interest