TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Kristin Retherford, Urban Development Director
SUBJECT:
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Subordination of federal HOME loan for single family property
Ward(s): Ward 2
Councilor(s): Andersen
Neighborhood(s): NEN
Result Area(s): Welcoming and Livable Community
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ISSUE:
Shall the City Council authorize the subordination of a federal HOME loan for Edmond D. and Shelley D. Chastagner, located at 265 24th Street NE?
RECOMMENDATION:
recommendation
Authorize the subordination of a federal HOME loan for Edmond D. and Shelley D. Chastagner, located at 265 24th Street NE.
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SUMMARY:
Approval of recommendation will authorize the subordination of a federal HOME loan, allowing Edmond D. and Shelly D. Chastagner (collectively the “Borrower”) to refinance their existing home mortgage loan to a lower interest rate.
FACTS AND FINDINGS:
Borrower received a federal HOME loan through the City of Salem for improvements to its home in March 2009, totaling $40,000.
Borrower is requesting a $46,900 loan from Boeing Employees’ Credit Union (BECU) in order to refinance their mortgage loan. Borrower is requesting the City subordinate to the new first mortgage holder.
By subordinating the City’s security interest, BECU will secure permanent financing on the property. The City is currently in second lien position and this subordination will not result in a drop in that position.
1. New total outstanding debt: $86,900
a. BECU $46,900
b. City of Salem $40,000
2. Rate/Term: 3.25%; 144 months (primary lender)
3. Loan to value: 37%
4. Fee simple appraisal: $235,000
5. Closing will occur at title, and all fees will be paid prior to recording of the City subordination.
6. Real estate taxes and insurance are current.
The current deferred payment loan will be repaid upon transfer of interest in the property. The appraised value of the property exceeds the combined total amount of outstanding loans resulting in enough equity to pay off all lenders in the event of foreclosure.
BACKGROUND:
HOME Investment Partnership Act funds affordable housing providing services to low-moderate individuals and families, including those experiencing homelessness.
Clint Dameron
Real Property Services Manager
Attachments:
1. None.