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90-1212 NHS RESOLUTION AUTHORIZING EXECUTION OF A RENTAL REHABILITATION ADMINISTRATION AGREEMENT WITH NEIGHBORHOOD HOUSING SERVICES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Larry L. Rice, City Manager, and Dolonna Mecum, City Clerk, be and are hereby authorized and directed to execute a Rental Rehabilitation Administration Agreement agreement on behalf of the City of Elgin with Neighborhood Housing Services for the administration of the Rental Rehabilitation Program, a copy of which is attached hereto and made a part hereof by reference. s/ George VanDeVoorde George VanDeVoorde, Mayor Presented: December 12, 1990 Adopted: December 12, 1990 Vote : Yeas 7 Nays 0 Recorded: Attest: s/ Dolonna Mecum Dolonna Mecum, City Clerk AGREEMENT FOR THE ELGIN NEIGHBORHOOD HOUSING SERVICES HOME IMPROVEMENT LOAN PROGRAM THIS AGREEMENT, made and entered into this first day of July, 1990, by and among Union National Bank and Trust Company of Elgin (hereinafter referred to as "Lender") , the Neighborhood Housing Services of Elgin, Inc. (hereinafter referred to as "NHS") , and the City of Elgin, a municipal corporation (hereinafter referred to as "City") . WITNESSETH: WHEREAS, the City supports and encourages the rehabilitation and improvement of housing and the environment in an area of the City, designated as the Neighborhood Housing Services Area, more particularly illustrated in Exhibit "A" attached hereto; and WHEREAS, the City, NHS, and the Lender desire to continue providing housing rehabilitation services and loan assistance to qualified property owners in the NHS Area; and WHEREAS, the City is committing funds to support the provision by lending institutions in the City of loans to property owners in the NHS Area for the rehabilitation and improvement of residential properties; and WHEREAS, the NHS is committing funds to provide interest subsidies to support the provision by the Lender of loans to property owners in the NHS Area for the rehabilitation and improvement of residential properties; and WHEREAS, it is the objective of the City and NHS to assure that every NHS Area residential property be improved to the extent that, at a minimum, the requirements of the BOCA Basic Property Maintenance code as adopted are met and the health and safety of the residents of the NHS Area are protected and enhanced; and WHEREAS, the Lender, the NHS and the city believe that the Elgin Neighborhood Housing Services Home Improvement Loan Program will be successfully implemented through the cooperation of the undersigned parties pursuant to the terms of this agreement; and WHEREAS, the Lender agrees to participate in the Elgin Neighborhood housing Services Home Improvement Program through the approval, processing, lending and servicing of home improvement loans to property owners in the Neighborhood Housing Services Area; and WHEREAS, the City, the NHS and the Lender recognize that the purpose of this program is to provide assistance to moderate income, low income and normally unbankable (ineligible for a market rate loan under standard underwriting practices) property owners who would not ordinarily qualify for home improvement loans; and WHEREAS, the Lender is granting preferred terms to the borrowers participating in the Elgin Neighborhood Housing Services Home Improvement Loan Program in consideration for the loan guarantee offered by the City; and 1 NOW THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS: I. Commitment of Resources A. The City agrees to continue to obligate a letter of credit in favor of the lender in the amount of $30, 000 or 10 percent of amount of this agreement, as a loan guarantee fund. This letter of credit, backed by the U.S. Treasury Department is for the purpose of guaranteeing defaulted loans. The loan guarantee fund is committed with Community Development Block Grant Funds. This commitment to provide funds shall be limited to this identified source of funds. No other City revenues may be used nor shall the City have any further liability. B. NHS agrees to affirmatively market the Loan Program within the bounds of NHS Service Area. C. The Lender agrees to allocate loan funds totalling $100,000. dollars from its home improvement loan funds for NHS Area housing improvement loans, subject to the approval of such loans by the Lender, and in consideration of commitments by the City and NHS, for the period of 1 (one) years for the date of this agreement. D. The purpose of the loan guarantee fund is to guarantee the repayment of the outstanding principal of rehabilitation loans made to property owners by the Lender. The loan guarantee fund will guarantee default losses to maximum total of $50, 000 for all loans combined. (i.e. loans committed prior to June, 1989 totalling $134,799 plus $100, 000 committment in this agreement) II. Loan Applications A. The Lender agrees to review and consider loan applications referred to the Lender by the NHS, to act on such loan applications within fourteen (14) working days of receipt, and to provide written notification of its action and the reasons therefore within twenty one (21) working days of receipt to the NHS and the City. B. Loan applications referred to the Lender by the NHs will include or be accompanied by the following information: 1. The borrower/applicant(s) name(s) , address, telephone number, and the address and legal description of the property; 2 . Outstanding mortgages and notes on the subject property including balances and monthly payments; 3 . Borrower/applicant(s) income and sources of income, major debts and monthly payments; 2 4. Purpose of loan, including a summary of work to be done for improvement of the property and estimated costs based upon a reasonable estimate obtained from qualified contractors, material suppliers, etc. ; 5. Original purchase price of the property and date of acquisition by applicant; 6. The recommendation of the NHS of the type of loan incentive and amount of the loan and the eligibility of the borrower/applicant for the loan, including recommended loan terms and monthly payments and the estimated Rebate to be received through the Elgin Residential Rehabilitation Rebate Program, if applicable; III. Loans in the Neighborhood Housing Services Area A. The Lender shall require that all loans through the Elgin Home Improvement Program, in conjunction with the Residential Rebate Program, shall meet the following requirements: 1. The property shall be examine by the City to determine home improvement needs and building code deficiencies; 2 . The borrower/applicant must give priority to elimination of building code deficiencies before making any other kind of improvements. B. The Lender shall notify the NHS of the receipt and approval of loan applications for property improvements in the Neighborhood Housing Services Area not referred by NHS, with the consent of the borrower or applicant. C. No loan shall be foreclosed by the Lender unless an attempt is made, jointly with the City and NHS, to first resolve the related financial problems of the borrower. Resolution may entail the restructuring of the loan, an increase in the loan payment schedule or other mechanisms that may be available and appropriate. D. Upon approval by the Lender of a loan application referred by the NHS, the principal of the loan shall reflect the costs of the preliminary title report and credit report to the Lender. If the loan is denied the applicant shall reimburse the Lender for such costs. IV. Loan Guarantee Fund A. Upon written notification of a defaulted loan made within the guidelines of this agreement, the City and NHS will make efforts to resolve, the defaulted loan. If such resolution is not imminent within 120 days, the Lender will request, in writing, funding of letter of credit, from City. 3 V. Terms and Conditions of Loans The NHS, City, and Lender agree that all loans provided to eligible homeowners pursuant to this agreement shall be subject to the following terms and conditions: A. Terms of loans shall not exceed 10 years. B. The maximum loan for a single family residence shall be $15,000.00. For multiple family dwelling units which are owner occupied, up to a maximum size of four units, the maximum loan shall be $7, 500 per unit. For loans to multiple family dwelling units the loan amount will be mutually agreed upon by the Lender and NHS. C. All work must be completed and approved by the City and/or NHS within one year of the loan closing. D. Repayment of any loan shall commence no later than 45 days after the date of the loan closing. E. Total property debt, including loans provided pursuant to this agreement, shall not exceed 115 percent of the post- rehabilitation estimated value of the property as determined by the Lender, and/or NHS. F. Only those persons unable to qualify for conventional bank loans shall be considered for loans under this program. G. The minimum payment on any loan shall be at least $30.00 per month. H. The Lender shall not impose any prepayment penalties for loans guaranteed under this program. I. For owner occupied home improvement loans (whether single family or multiple family) the Lender shall type on the face of each Deed of Trust or Mortgage the following statement: "Upon sale or other transfer, whether by operation of law or otherwise, of the above mentioned real property, or in the event that the borrower ceases to use the above described property as his primary residence, the entire loan amount will become immediately due and payable. " J. Loans shall carry a rate equivalent to the 10 year Treasury rate plus four percent (4%) . This will be a fixed rate for the loans made hereunder. From time to time the rate will be adjusted to reflect accurately the prime and loan rates. 4 VI. Payments to Contractors Payments from loan proceeds, in excess of $5, 000, shall be limited to a maximum of three payouts. Loan proceeds of less than $5, 000 will be limited to a single payout. A procedural guide for inspections, work verification and payouts will be developed jointly by the NHS, the Lender and the City. VII. Definition of Default Default for the loan guarantee program is defined as the failure of the borrower to make payments on his loan for 90 consecutive days, wherein the Lender has made at least five (5) attempts by phone, registered mail or by personal contact to collect such payments. All collection attempts shall be documented or certified by the Lender. The Lender shall immediately notify the City and NHS of any loan payment which is more then 30 days overdue. VIII. Reports A. The Lender shall provide a semi annual report to the City and NHS which summarizes for the NHS Area the following: 1. The number of loan applications received and the number of loan applications approved. 2 . Principal and interest payments and balances on each outstanding loan for guaranteed and reduced interest loans. B. The NHS and the City shall provide a semi annual report to the Lender for the NHS Area, which summarizes the following: 1. The number of loan applications received and processed. 2 . The number of buildings and housing units which have been examined and which are being rehabilitated under the program. 3 . The number and loan amounts for loans to low and moderate income households as defined by the U.S. Department of Housing and Urban Development. IX. Truth in Lending The Lender agrees to meet the requirements of the Truth in Lending Act in connection with all loans approved by and for the Home Improvement Program. X. Discrimination The Lender, City and NHS shall not discriminate against any borrower because of race, color, creed, age, sex, national origin, marital state or other criterion not clearly related to eligibility or capacity to repay the loan applied for. 5 • XI. Term of Agreement All other provisions of this agreement relating to loan servicing default procedures, and withdrawals and deposits shall remain in effect until all loans granted during the aforementioned period shall have been paid or defaulted, but not to exceed 10 years from the date on which the last loan in this program shall have been made. The term of this Agreement may be extended upon mutual consent of the City, the NHS and the Lender. XII. Disposition of Deposit Accounts Upon Termination In the event of termination of this agreement or, if funds are exhausted and the Home Improvement Program is discontinued by the City and NHS the following disposition shall be made of the funded portion of the letter of credit with the lender. 1. Loan guarantee deposits which are in excess of the required guarantee amount shall be paid to the City by the Lender. XIII. Limitation In no event shall the City's total obligation herein exceed $50, 000, relative to this agreement and previous agreements signed by the aforementioned parties to this agreement. 6 CITY OF ELGIN LARR - CE CITY MANAGER UNION NATIONAL BANK AND TRUST COMPANY OF ELGIN ‘2,/44'a ii2k4 410 Ate MARIANNE NELSON ASSISTANT VICE PRESIDENT NEIGHBORHOOD HOUSING SERVICES OF ELGIN ED SCHOCK PRESIDENT 7 El • �n Agenda Item No. November 20, 1990 MEMORANDUM TO: Mayor and Members of the City Council FROM: Larry L. Rice, City Manager SUBJECT: Rental Rehabilitation Program - Proposed Agreement for Administrative Services Purpose: To consider the attached proposed administration agreement for the Rental Rehabilitation Program. Background: In October the City Council approved a lump sum payment to Neighborhood Housing Services for the administration of the Rental Rehabilitation Program. The request of payment was made both by the Department of Commerce and Community Affairs and Neighborhood Housing Services. The attached agreement formalizes the conditions regarding the lump sum payment of $10 ,000 and additional payments to come due of $5 ,000 . The attached agreement has been approved by the Neighborhood Housing Services Board of Directors and has been reviewed by the city' s Corporation Counsel. Financial Impact: The $10 ,000 already distributed was provided by the Department of Commerce and Community Affairs. The $5 ,000 in additional payments is an approved budget item in the 1989 Community Development Block Grant Program. Recommendation: It is recommended that the City Council approve the attached agreement. If approved, a resolution will be prepared authorizing the City Manager to execute the agreement. i ' etc y L. Ri , City Manager r