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7.4. HRSR 06-01-2020 �� Request for Action Elk River To Item Number Housing and Redevelopment Authority 7.4 Agenda Section Meeting Date Prepared by General Business June 1, 2020 Amanda Othoudt,ED Director Item Description Reviewed by Subordination Request for 602 Gates Avenue NW Cal Portner, City Administrator Reviewed by Action Requested Approve,by motion,the Subordination Agreement between Northport Funding,LLC., and the Housing and Redevelopment Authority. Background/Discussion On March 20, 2015,Jayme Swenson received a loan from the HRA in the amount of$25,000 to make improvements to the property located at 602 Gates Avenue NW through the HRA's Rehabilitation Loan program. Ms. Swenson is in the process of refinancing a 30-year-fix-rate conventional mortgage with Northport Funding,LLC. Northport Funding,LLC will be taking a first lien position on the new loan. Northport Funding,LLC has requested that the Housing and Redevelopment Authority hold a subordinate position. CEE completed the review of the package and the information from both Jayme and her Loan Officer and recommend approval of the Subordination. • Their review shows a new appraised value of$240,000.00 and a new combined Loan to Value (CLTV) ratio of 67.23% for a new loan for$143,000.00. • Per the documentation, even though the refinance is classified as a Cash-Out Refinance, there is no actual cash going to the borrower and that it is classified as such per Fannie Mae guidelines because the closing fees are being financed. • The HRA's position on the lien is not compromised and will be raised from third to second as a result of the refinance. • Taxes are current and there are no delinquencies, therefore there is no risk of a potential foreclosure or action against the property by the first lien holder. • The terms of the new loan will extend the term of the current note on the first mortgage, but will reduce the interest rate and the monthly installment. • The terms of the new loan do not challenge or conflict the HRA's interest on the title. Based on those results, CEE is confident that the recommendation to approve the subordination is in the best interest of the HRA. The Elk River Vision A Y�elcoming community nvith revolutionary and spirited resourcefulness, exceptional p D W E H E D D Y service, and community engagement that encourages and inspires prosperity ,g /` UR It has been common practice for the HRA to take a subordinate position on rehabilitation projects that utilize the HRA's Rehabilitation Loan program. Ms. Swenson plans to close on the new loan on September 3, 2020. Financial Impact N/A Attachments ■ Subordination Review Document ■ Subordination Agreement ■ Mortgage and Repayment Agreement CEE LOAN NUMBER: 19-015216 BORROWER NAME: JAYME SWENSON PROPERTY ADDRES: 602 GATES AVE NW PROPERTY CITY: ELK RIVER PROPERTY STATE: MN PROPERTY ZIP CODE: 55330 ORIGINAL LOAN AMOUNT: $25,000.00 CLOSING DATE: 9/3/2015 PROGRAM:ELK RIVER RESIDENTIAL ORIGINAL CLTV:N/A CURRENT UPB:$18,353.39 MATURITY DATE: 9/3/2030 # DOCUMENT NAME PROVIDED? NEEDED FOR DECISION? DATE RECEIVED 1 WRITTEN REQUEST YES YES 5/21/2020 2 CURRENT APPRAISAL YES YES 5/25/2020 3 TITLE INSURANCE YES YES 5/25/2020 4 NEW LOAN APPLICATION YES YES 5/25/2020 5 BILLING STATEMENT NO NO 6 LO CONTACT INFO YES NO 5/22/2020 7 SUBORDINATION FEE NO NO N/A SUBORDINATION REVIEW # DECISION TOOL VALUE 1 NEW LIEN TYPE MORTGAGE 2 NEW APPRAISED VALUE 240,000.00$ 3 NEW LOAN AMOUNT 143,000.00$ 4 NEW CLTV 67.23% 5 IS THERE A CASH-OUT? NO 6 CURRENT POSITION THIRD 7 NEW POSITION SECOND 8 LAST DELINQUENT N/A 9 DATE PRIOR SUBORDINATION N/A 10 TAX PAYMENT STATUS CURRENT SUBORDINATION RECOMMENDATION APPROVAL CEE OFFICER REVIEWING: DATE:5/26/2020 Signature: NOTE FOR REVIEWING OFFICER: Please print a copy of this decision spreadsheet and attach it to the original file. MARCO F LANDONI SUBORDINATION REVIEW WORKSHEET DATE: 5/27/2020 FOR VALUABLE CONSIDERATION, the undersigned hereby subordinates the lien on real property in Sherburne County, Minnesota, legally described as follows: All of Lot 19 and the South 31 feet of Lot 18, Walker’s Addition Revised, Elk River, Sherburne County, Minnesota, which is evidenced by a Repayment Note and Grant of Mortgage on Real Property dated 3/20/2015 , and recorded on 9/14/2015, as Document No. 51587 in the Office of the Registrar of Titles of Sherburne County, Minnesota, to a subsequent lien evidenced by a Mortgage from JAYME M. SWENSON to CITIZENS BANK NA, ITS SUCCESSORS AND/OR ASSIGNS AS THEIR INTEREST MAY APPEAR, in an amount not to exceed One Hundred Forty Three Thousand Dollars ($143,000.00) and recorded on ____________, as Document No. ______________ in the Office of the Registrar of Titles of Sherburne County, Minnesota. Housing and Redevelopment Authority in and for the City of Elk River, Minnesota STATE OF MINNESOTA } } ss. COUNTY OF SHERBURNE } The foregoing instrument was acknowledged before me on ______________________, by __________________________________, the ______________________________ and authorized signer for the Housing and Redevelopment Authority in and for the City of Elk River, a Minnesota body corporate and politic. ____________________________________ NOTARIAL STAMP OR SEAL (or other Title or Rank) THIS INSTRUMENT WAS DRAFTED BY: Housing and Redevelopment Authority in and for the City of Elk River, Minnesota 13065 Orono Parkway, Elk River, MN 55330 ______________________________ (Signature) By:___________________________ (Name of authorized signor) ________________________________ (Title of authority) Signature of Notarial Officer taking acknowledgement SUBORDINATION AGREEMENT DocuSign Envelope ID: AECBC3A8-1A8C-4DB3-81AF-4CF996AA1616 EXEMPT FROM REGISTRATION TAX. SHERBURNECOUNTY /a,U�i I R TREASURER Office of the Registrar of Titles Sherburne County, MN Doc. No. 51587 Certified, filed, and/or recorded on September 14, 2015 2:40 PM Cert.: 7177 Michelle `Assh,,e,,�Registrar of Titles By-t'�11 , Deputy Fees: $46.00 I IIIIII VIII VIII VIII VIII IIII IIII 51587 Mortgage and Repayment Agreement (Elk River HRA Owner -Occupied Housing Rehabilitation Program) This mortgage is exempt from Mortgage Registration Tax imposed by Minnesota Statutes, §287.035, pursuant to Minnesota Statutes, §287.04, because the principal amount of the mortgage loan referred to herein is made under an affordable housing program and the mortgagee is the Housing and Redevelopment Authority in and for the City of Elk River, a Minnesota body corporate and politic. THIS MORTGAGE AND REPAYMENT AGREEMENT (this "Mortgage"), is made and entered into this V J 201" day of March. 2015 (the "Effective Date"), by and between Javme M. Swenson and Chad M. Swenson, Za married couple (the "Owner") the owner of the property located at 602 Gates Avenue NW, Elk River, MN W 55330 and legally described as set forth in the attached Exhibit A (the "Property") and the Housing and Redevelopment Authority in and for the City of Elk River, (the "HRA"), having its principal office at 13065 Orono Pkwy NW. Elk River, MN 55330 O NOW THEREFORE, in consideration of the Installment Loan described below and for other good and valuable consideration, the parties do hereby agree as follows: 1. In accordance with the Elk River Owner -Occupied Housing Rehabilitation Policies and Procedures (the "Procedures") and the Owner's Application dated June 19th 2014 (the "Application"), both of which are incorporated herein by reference as if fully set forth herein, the HRA has agreed to make to Owner a Housing Rehabilitation Loan, (the "Installment Loan"), relating to the Property, in the amount of Twenty -Five Thousand and 00/100 ($25,000.00) Dollars. The Installment Loan shall be disbursed directly to the contractor performing the work on the Property described in the Application in accordance with the Procedures. The Owner agrees to repay to the HRA in the Installment Loan plus interest thereon at the rate of 3.25% per annum in installments of principal and interest of $175.67 per month, beginning on October 1". 2015 through and including September 1" 2030 (the "Final Maturity Date") in accordance with the amortization schedule and the Truth in Lending Statement signed by Owner both attached as Exhibit B. The Owner may prepay the Installment Loan in whole, together with accrued interest thereon, to the HRA on any business day. 2. Owner covenants and agrees with the HRA that if the Property is transferred or otherwise conveyed, voluntarily or involuntarily, either while the Owner is living or by reason of the death of the Owner prior to the Final Maturity Date, the Installment Loan and all accrued interest thereon shall be immediately due and payable and shall be repaid in full to the HRA. 3. As security for Owner's obligation to repay the Installment Loan and accrued interest thereon, and the cost, including reasonable attorney's fees, of collecting the same, and subject to the terms and conditions of this Mortgage, Owner hereby grants, and HRA shall and hereby does have, a statutory mortgage on the Property in accordance with Minnesota Statutes, Section 507.15. 4. The Owner covenants with the HRA the following statutory covenants; a. To warrant the title to the Property; subject to permitted encumbrances as set forth in Exhibit C. b. To pay the indebtedness as herein provided. c. To pay all taxes. d. That the Property shall be kept in repair and no waste shall be committed. e. That the whole of the principal sum shall become due after default, in the payment of any installment of principal or interest, or of any tax, or in the performance of any other covenant, at the option of the HRA. f. To pay principal and interest on prior mortgages. 5. If default be made in any payment or covenant herein, the HRA shall have the statutory power of sale, and on foreclosure may retain statutory costs and attorney's fees. 6. For the protection of the HRA, the Owner will, during all the time until the indebtedness secured by this mortgage is fully paid, maintain all risk property insurance, naming the HRA as an additional insured, in an amount not less than the full insurable replacement value of the Property. Said insurance shall be written by a company or companies licensed to do business in Minnesota and rated Class A -:VII or better by A.M. Best Company. The term "full insurable replacement value" shall mean the actual replacement cost of the Property (excluding foundation and excavation costs and costs of underground flues, pipes, drains, and other items customarily omitted from replacement cost valuation for insurance purposes), without deduction for depreciation. The Owner will assign and deliver the policies of such insurance to the HRA so and in such manner and form that the HRA shall at all times, until the full payment of said indebtedness, have and hold the said policies as a collateral and further security for the payment of said indebtedness, or at the option of the HRA will make such policies payable in case of loss to the HRA as its interest may appear and will deposit them with the HRA, and in default of so doing, that the HRA may, but has no obligation to, obtain such insurance from year to year, or for one or more years at a time, and pay the premiums therefor, and that the Owner will forthwith repay to the HRA the same, with interest at the mortgage rate, and that the same shall become a part of the debt secured by this mortgage in like manner as the principal sum. The Owner may retain any moneys received by him/her on the policies, but the same shall apply in part payment of this mortgage. 7. This Mortgage shall terminate and shall be of no further force or effect upon payment in full of the Installment Loan and accrued interest thereon. 8. The Owner will indemnify, save, and hold harmless the HRA, the City of Elk River, Minnesota, Central Minnesota Housing Partnership, Inc., their officers, agents, and employees, from and against any claim, cause of action, damage, liability, loss or expense, including attorney's fees incurred by the HRA, made by any party in connection with or arising from (i) the presence, if any, of hazardous wastes or pollutants on the Property; (ii) any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Property, (iii) the performance of, or failure to perform, this Mortgage. Nothing herein shall be deemed a waiver of any statutory limitations of liability or immunity. 9. This Mortgage shall run with the aforesaid real estate and shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, representatives, successors, and assigns. 10. Any forbearance by the HRA in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. 11. This Mortgage shall be governed by the law of the state of Minnesota. In the event that any provision or clause of this Mortgage conflicts with applicable law, such conflict shall not affect other provisions of this Mortgage which can be given effect without the conflicting provision. To this end, the provisions of this Mortgage are declared to be severable. 12. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument. In witness whereof the Owner has duly executed this Rehabilitation Program Mortgage and Repayment Agreement. Ownedand M. Swenson STATE OF MINNESOTA) )ss. COUNTY OF (5444Vv+ ) The foregoing instrument was acknowledged before me this *�.� day of jjd(Aj,1& 201x, by Javme M. Swenson and Chad M. Swenson, owner and mortgagor. BRIAN R BOETTCHER NOTARY NEW- MINNESOTA MY COMMISSION EXPIRES 01131/18 S-1 Notary u is Accepted and agreed to by: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF ELK U YER By Its ByArl its �KClJprotFi�i/BcIO/ STATE OF MINNESOTA) )ss. COUNTY OF The foregoing instrument was acknowledged before me t is 6 day of /'i 20 L5, by the //i� �­and the respectively, of the Housing and Redevelopment Authority in and for the City of Elk River, a body corporate and politic organized and existing under the Constitution and laws of the State of Minnesota, on behalf of said Authority n , Notary THIS INSTRUMENT DRAFTED BY: 104# DEBORAH KAY HUEBNER NOTARY PUM-tANNESOTA ?NCW0"MEVkWJWL31,2M; Housing and Redevelopment Authority for the City of Elk River 13065 Orono Pkwy NW Elk River, MN 55330 S-2 Exhibit A Legal Description of Property Real Property in Sherburne County, Minnesota, described as follows: All of Lot 19 and the South 31 feet of Lot 18, Walker's Addition Revised, Elk River, Minnesota, Sherburne County, Minnesota A-1 Exhibit B Amortization Schedule and Truth in Lending Statement M.