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HomeMy WebLinkAboutCC RESO 2016-42 Agreement with Springboard CDFI - HOME Programgrant; and RESOLUTION NO. 2016 42 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY ADOPTING THE FIRST-TIME HOMEBUYER PROGRAM MANUAL, AND AUTHORIZING THE CITY MANAGER TO EXECUTE A SUBRECIPIENT AGREEMENT BETWEEN THE CITY OF NATIONAL CITY AND SPRINGBOARD CDFI TO ADMINISTER THE FIRST-TIME HOMEBUYER PROGRAM WHEREAS, the HOME Investment Partnerships Act, Title II of the Cranston - Gonzalez National Affordable Housing Act `42 U.S.C. 12701), as enacted and emended by the Congress of the United States and promulgated by feaerai rules and reguiations, hereinafter called the "HOME program", provides entitlement funds to states and local governments to expand the supply of affordable housing, and make housing more sff rdabl; : to very -low and low-income families; and WHEREAS, the City Council has appropriated $200,000.00 in Fiscal Year 2016 to assist low-income First -Time Homebuyers at or under 80% of Area Median Income by providing assistance in the form of a silent second mortgage loan up to $70,000; and WHEREAS, the City of National City has developed program guidelines that comply with HOME program regulations and provide the policies and procedures for the loan program; and WHEREAS, the HOME program allows units of general local government to enter into an agreement with a subrecipient to administer HOME program funds; and WHEREAS, the City of National City solicited applications for the HOME Program WHEREAS, Springboard CDFI, responded to the grant application and was selected as the First -Time Homebuyer Program Administrator for their qualifications and experience in homebuyer education and counseling, down payment, and closing cost loan and grant assistance programs. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of National City hereby adopts the First -Time Homebuyer Program Manual ("Attachment I"). BE IT FURTHER RESOLVED that the City Council of the City of Nations! City authorizes the Mayor to execute a Subrecipient Agreement between the City of National City and Springboard CDFI, for the administration of the First -Time Homebuyer Program. The Subrecipient Agreement is on file in the offife of the City Clerk. PASSED and ADOPTED this 15'-'' day of I'viaroh ATTEST: ,-(20 Michael R. Della, Ci Clerk on Morrison, Mayor City Attorney Passed and adopted by the Council of the City of National City, California, on March 15, 2016 by the following vote, to -wit: Ayes: Councilmembers Canc, Mendivil, Morrison, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY- RON MORRISON Mayor of the City of National City, California II' C erk of the City C ty of ational City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2016-42 of the City of National City California, passed and adopted by ttie Coun a of said City on March 15, 2016, City Clerk of the City of National City, California By: Deputy Attachment No. 1 20 First -Time Home Buyer Program Manual Effective March 2016 (Subject to periodic updates) HOME Investment Partnership U.S. Department of Housing & Urban Development Lead Agency: City of National City, Housing, Grants, & Asset Management Department 140 E. 12th Street, National Ciity, CA 91950 Attachment No. 1 21 • Attachment No. w 22 Table of Contents PURPOSE OF THE PROGRAM MANUAL I GENERAL DEFINITIONS 1 SECTION I: BORROWER ELIGIBILITY REQUIREMENTS 4 A. ELIGIBLE BORROWERS 4 B. INCOME CRITERIA 6 C. HOUSEHOLD ELIGIBILITY REQUIREMENTS 8 D. CREDIT WORTHINESS 8 E. ELIGIBLE PROPERTIES 9 F. MAXIMUM PURCHASE PRICE 9 G. LOAN PROCEDURES AND TERMS 9 SECTION II: PROGRAM ADMINISTRATION AND PROCEDURES 12 A. LENDER ELIGIBILITY 12 B. LOAN ORIGINATION AND PROGRAM APPLICATION 13 C. CITY APPLICATION PACKET 14 D. CITY PROCESSING IS E. PROPERTY SELECTION 16 F. PROPERTY INSPECTION 17 G. LOAN CLOSING 19 H. CANCELLATION AND COMMITMENT EXPIRATIONS 20 SECTION III: CHANGES PRIOR TO CLOSING 21 APPENDIX A-"APPI-ICAT!ON, AFFIDAVIT, Oh RELEASE OF INFORMATION" APPENDIX B-INCOME CALCULATIONS APPENDIX C-SUBSIDY LAYERING ANALYSIS APPENDIX D-SEQUENCE OF LOAN PROCESS APPENDIX E-CITY LOAN QUALITY COMMITMENT POLICY APPENDIX F CODE AND PROPERTY STANDARDS (PS) APPENDIX G-"CODE/PS INSPECTION" FORM APPENDIX H-SAMPLE "HOME FIRST-TIME HOMEBUYER REGULATORY AGREEMENT" APPENDIX I -SAMPLE "DEED OF TRUST" APPENDIXJ-SAMPLE "PROMISSORY NOTE" APPENDIX K-CITY LOAN DISCLOSURE APPENDIX L-ERROR AND OMISSIONS/COMPLIANCE AGREEMENT Attachment No, 23 PURPOSE OF THE PROGRAM MANUAL the purpose of this Program Manual is to describe the program in accordance with 24 CFR Part 92. This document contains a description of the City of National City HOME First -Time Homebuyer (FTHB) Program requirements, processing procedures and program administration. Loan processing forms are contained in a separate document. The City may revise these guidelines from time to time, terminate and/or place the program on hold at the City's sole discretion. The City encourages all eligible homebuyers to apply. Participating lenders are expected to be well informed about all the restrictions contained in this manual so that both applicants and sellers are aware of these restrictions before the application is accepted. The Program Manual serves as a guide, all final approvals and interpretation of the regulations are at the discretion of the City's Housing, Grants, and Asset Management Department. The City is currently funding the First -Time Homebuyer Program using the U.S. Department of Housing and Urban Development (HUD) HOME program. Lenders are also expected to be informed of HUD's Technical Guide for Determining Income and Allowances to determine income. The Program Administrator/City will reject those applications where the information submitted indicates that the applicant does not qualify for the program. GENERAL DEFINITIONS AFFIDAVIT: A deposition filed in connection with the program made under oath and subject to penalties of perjury. AFFORDABILITY PERIOD: The use of National City First -Time Homebuyer Program require that the property remain affordable for a period no less than fifteen (15) years as recorded through the HOME Promissory Note, Deed of Trust, and Regulatory Agreement or at time of sale or transfer, as approved by the City of National City. However, the loan term for repayment is 30- yea rs. APPLICANT: Any person within the household whom applies for City loan assistance. ARMS LENGTH TRANSACTION: A transaction in which the buyers and sel!crs of a product act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self-interest and are not subject to any pressure or duress from the other party. ASSETS: Cash or a non -cash item that can be converted to cash. Assets exclude necessary personal property. BORROWER: Any person meeting the criteria as set forth in this manual. HOME First -Time Homebuyer Program Manual 1 Attachment No. 1 24 CITY: The City of National City Housing, Grants, and Asset Management Department. COMMITMENT: A document which is originated by the Program Administrator once a purchase contract has been approved and shall be valid for 60 days. ELIGIBLE DWELLING: Real property located within the City of National City. The unit must be designed as a residence for one household and must meet property standards and criteria as set forth in this manual with no outstanding cavil penalties against the property. HOME PROGRAM (Home): The City's First -Time Homebuyer Program utilizes HOME program regulations. HOME regulations under the U.S. Department of Housing and Urban Development (HUD), are under 24 CFR Part 92, as amended. HOMEOWNER INVESTMENT: Homeowner's initial down payment. HOUSEHOLD: All persons whom will reside in the residence and function as a cohesive unit. INCOME: The gross amount of ail income for all mortgagors and adult household members that is anticipated to be received during the coming twelve (12) months, as defined in 24 CFR Part 5. All income derived from any source, including income from wages (gross pay), overtime, pensions, veteran's compensation, bonuses, public assistance, alimony, income, dividends and interest, etc. must be included. ISSUER: City of City National through the Housing, Grants, and Asset Management Department. LENDER: A financial institution, whether broker, retail, or wholesale, licensed to provide mortgage loans in the State of California. The institution must meet all the requirements established by the City in order to participate as a lender in the City program. LOAN: An extension of credit provided to an Eligible Borrower to finance he purchase of an Eligible Dwelling. LOW-INCOME: A household with income not greater than 80% of the median income as established by the U.S. Department of Housing and Urban Development (HUD). Every 12-18 months, these figures are updated by HUD. LI zc kD .A` SF`FS: The total amount of funds that are in the form of cash or can quickly be converted to cash. These include (1) cash; (2) demand deposits; (3) time and savings deposits; and (4) investments (i.e. most stocks, money market instruments and government bonds) capable of being quickly converted into cash without significant loss, either through their sale or through the scheduled return of principal at the end of a short time remaining to maturity. NET PROCEEDS: Sales price minus loan repayment and closing costs. Home First -Time Homebuyer Program Manual Page 1 2 Attachment No. 1 25 OWNERSHIP INTEREST: Any of the following interests in residential property: fee simple interest; joint tenancy; tenancy in common; interest of a tenant -shareholder in a cooperative; life estate; interest held in trust for the Applicant that would constitute a present ownership interest if held by the Applicant. Ownership interest may not exceed 1/12th interest. PRE-COMMTMENT: A document which is originated by the City of National City and issued through the Program Administrator based on preliminary review of the application package and lender's certification that the requirements necessary for issuance of a City loan have been met. A pre -commitment of funds will be valid for 60 days. An extension of an additional 30 days may be granted under extenuating circumstances at the sole discretion of the City. PRINCIPAL RESIDENCE: Residence must be occupied as the primary home of the buyer and be defined as one of the following types of residences: 1) single-family house; 2) condominium unit; 3) town home unit. PROHIBITED MORTGAGE: Second mortgages and any liens superior to the City First -Time Homebuyer loan(s), other than the new first Trust Deed. PROGRAM ADMINISTRATOR: The City of National City Housing, Grants, and Asset Management Department administers the City's First -Time Homebuyer Program, including but not limited to review of all income documentation, eligibility determinations, set-up, underwriting, and servicing of the City's second loan. The Program Administrator has authority to request any additional required documentation to ensure program compliance. PROPERTY STANDARDS: Minimum performance standards a property must meet for program eligibility. PROPERTY VALUE: The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Property/market value must be identified through an appraisal and provide to the Program Administrator prior to the city's Voluntary Acquisition issuance. PURCHASE PRICE: Cost of acquiring the residence, excluding usual and reasonable settlement or finance costs, and the value of services performed by mortgagor in completing the acquisit oft. RELATED PERSON: Allied by nature, origin, kinship, marriage, etc. RESIDENT"_AL PROPERTY: Property which is zoned for single-family homes, multi -family apartments, townhouses, and/or condominiums. Interest in residential property may not exceed 1/12th for time share arrangements. SINGLE-FAMILY RESIDENCE: Housing unit intended and used for occupancy by one household. Home First -Time Homebuyer Program Manual P c: 11 3 Attachment No. 1 26 VOLUNTARY ACQUISITION: A requirement of Home funds is to provide notification to the seller of their rights as described in compliance with federal regulations. SECTION I: BORROWER ELIGIBILITY REQUIREMENTS Both federal and state law sets borrower eligibility requirements. Income guidelines are modified based on federal and state directives every twelve to eighteen months. The City will notify the Lenders when those changes take place, including the effective date of each change. In an attempt to assure that all requirements are clear, the First -Time Homebuyer Application and Affidavit are required to be signed by each Applicant and must be included in the Application Package submitted to the Program Administrator, reference Appendix A. A. ELIGIBLE BORROWERS 1. Qualified applicants must be first-time homebuyers. The Applicant may not have held an ownership interest (that exceeds 1/12th) in Residential Property within the past three years. This timeframe includes those 36 months previous to the date the mortgage is executed. In the case of a married couple, both parties must meet this requirement. The buyer, spouse and any other parties who will reside in the property must meet this requirement. The Lender must verify this through his/her examination of the Applicant's federal tax returns for the preceding three years, credit reports, and other relevant documentation. The Applicant(s) cannot have claimed a deduction for mortgage interest or taxes on real property. 2. To demonstrate compliance with this requirement, Applicants must complete and sign the First-time Homebuyer Application and Affidavit and provide copies of their last three (3) years signed federal tax returns (or acceptable alternative exhibits). a) The Applicant(s) can provide the signed 1040A, 1040EZ, or 1040 federal income tax forms for the preceding years, including all schedules. These forms shall be submitted to the Lender and forwarded to the City with the completed loan application. The tax returns must be signed and dated in ink by the Applicants. b) if the Applicant(s) has, have filed thc short form, 1040A or 1040EZ for the last ihree (3) years, compietes and signs the required affiaavits, but is unable to produce copies of the signed returns, the City will accept a completed copy of IRS Letter Form 1722 in lieu of actual returns. The Applicant may request this letter, free of charge, from the local IRS Office. The Letter 1722 must include the signature of a representative of the IRS. Letter Form 1722 should include the following information: Home First -Time Homebuyer Program Manual Attachment No. 1 27 i. Name and social security number ii. Type of return filed iii. Marital status iv. Tax shown on return v. Adjusted gross income vi. Taxable income vii. Self-employment tax viii. Number of exemptions c) In the event the Applicant(s) or any adult household member (excluding dependents listed on another household member's Tax Return) was not obligated to file federal income tax returns for any of the preceding three (3) years, it will be necessary for the Lender to obtain a completed and signed IRS Form 4506-T from the Applicant or any adult household member, which is required in place of the above. This document is to be forwarded to the City with the application package. d) If neither copies of the required tax returns or the 1722 Form can be obtained, the Lender may be able to help the Applicant establish first-time homebuyer status with copies of utility bills and a signed and notarized statement from the Applicants landlords for the previous three years. e) When the Commitment is issued during the period between January 1 and February 15 and the Applicant has not yet filed his/her/their Federal Income Tax Return for the preceding year, the City may rely on an affidavit. The affidavit must affirm that the Applicant is not entitled to claim deductions for taxes or interest on a principal residence for the preceding year. After February 15, a tax return will be required. 3. Any Applicant with the marital status of "divorced" or "separated" must provide legal documentation that specifies: a) They no longer have ownership interest in any real property; b) Will not be residing mutually; and c) If claiming a child under the age of 18 as part of the household, legal custody of at least 50% and claim any related child support and/or income. 4. Upon close or escrow, the buyer must occupy the home as their Principal Residence. 5. Applicant(s) must be a U.S. citizen or eligible immigrants. Legal resident aliens are eligible to apply but must show proof of status. 6. Priority is given to current residents of the City of National City and households who are employed in businesses within the City of National City at the time of application. 7. City of Nationai City employees (except for certain employees of the Housing, Grants, and Asset Management Department) are eligible to participate and may require HCD approval. Home First -Time Homeouyer Program Manual ge.I5 Attachment No. 1 28 B. INCOME CRITERIA 1. Income must be below 80% of the currently published San Diego County median income, adjusted for household size. income limits have been established by the U.S. Department of Housing and Urban Development (HUD) and published by HUD, and are adjusted annually. in accordance with this requirement, applicants may not obtain "stated income" loans. The true income must be a qualifying factor in loan approval. Household Size 60% - 80% Annual Income 1 person $34,050-$45,400 2 people $38,900-$51,850 3 people $43,750-$58,350 4 people $48,600-$64,800 5 people $52,500-$70,000 6 people $56,400-$75,200 7 people $60,300-$80,400 8 people $64,200-$85,500 Effective: June 1, 2015 2. Gross income is calculated by taking the Applicant's anticipated adjusted gross monthly income, at the time of application, and multiplying it by twelve. Adjusted gross income includes the gross amount of all taxable income, before payroll deductions of: wages, salaries, commissions, fees, tips and bonuses, alimony, public assistance, etc. The adjusted gross income also includes the income earned on assets, such as dividends earned on stock, winnings, and interest earned on savings and checking. The adjusted gross income qualification is pursuant to the 24 CFR 92.203(b)(3) for reporting under the !R5 Form 1040 series for individual federal annual income tax purposes. Gross income includes the combined taxable adjusted gross income of al! mortgagors and all other adult members of the household. a) Self -Employed or Seasonal Employees: The formula that the Lender uses to determine the anticipated gross monthly income of self-employed and/or seasonal workers is acceptable provided that all income as described in this manual is included in the calculation. b) Co-Borrower/Co-Mortgagor/Household: All household income must be included in determining eligibility for the program. The IRS regulation states "income to be taken into account in determining gross income is income of the mortgagor(s) and any other person who is expected to both live in the residence being financed and to be secondarily liable on the mortgage." Home First -Time Homebuyer Program Manual Page 16 Attachment No. 1 29 c) Spouses: Married couples are treated as co -applicants, whether: 1) they are separated; 2) either spouse is applying for the loan; or 3) either spouse plans to be named on title. d) Computing income i. Program computation vs. Mortgage Underwriter's Computation: The City loan figure represents ANTICIPATED income, while the Lender's figure represents income AVERAGED over the last few years and the City program requires that every source of taxable and non-taxable income be listed on the Income Computation Worksheet, however, non-taxable income should be bracketed and not added into the maximum annual family income calculation. The household income is calculated using HUD's Technical Guide for Determine Income and Allowance under the HOME Program. nttp://portai.hud.gov/hudportal/HUD?src=/program offices/comm plannin g/affordablehousing/library/modelguides/2005/1780 ii. income Parameters: See Appendix B of this manual for examples of sources of income, which must be considered in computing buyer income. iii. Military Pay: See Appendix B of this manual for Military Pay explanations. iv. Self -Employed: Year-to-date profit and loss statement and three prior year's tax returns are required. v. Other Income: Sources of income other than wages must be documented by third party verifications. In cases where the third party fails to respond, acceptable alternative sources of documentation can be determined on a case -by -case basis and should follow standard FNMA income verification guidelines. vi. Documentation: In cases where the Applicant is employed, acceptable sources of documentation used to verify income include a recent pay stub with year-to-date earnings and an employer Verification of Earnings statement (VOE). If the application is taking place during the first four months of the year, a year-to-date total may be insufficient. The Lender must supplement the pay stub information with the prior year W-2 statement and/or tax returns. On some pay stubs, the year-to-date earnings include pay from the last part of the prior year. If this is determined to be the case, request that the employer submit a signed statement of verification of exact year-to-date income. Miscalculation can result in the determination of excess income and disqualification of the buyer. vii. Income Verification: The Fender bears the burden of proving that the Buyer's income is within the program guidelines. The computation should be clear, complete, and documented by third party verifications, to the greatest extent possible. viii. No Income: Adult members, 18 years and older, of the household who have no income must complete and sign the Declaration of No Income form. ix. Part or Full Time Students: Adult members (18 and older) enrolled in a vocational, community college or university must provide evidence of current Home First -Time Homebuyer Program Manual Page 1 7 Attachment No. 1 30 enrollment status and a copy of their Financial Aid Award letter. See Appendix B of this manual for student income explanations. x. Dependants: Any persons claimed on federal tax returns within the past three years and not identified as a member of the applying household must provide a Declaration of Household size and affidavit that those person(s) will not be residing as a member of the household. C. HOUSEHOLD ELIGIBILITY REQUIREMENTS 1. Households shall have sufficient income and credit -worthiness to qualify for primary financing from a participating lender. 2. Households shall have income that is verifiable by using Third Party verification. 3. Households will be required to provide a down payment or cash investment. A minimum contribution of 2% of the total purchase price of the property will be required from the borrower's personal funds and must be used for down payment, closing costs, or cash reserves. If the borrower completes a Financial Fitness class, they City may reduce this amount to 1.5%. The maximum amount of the contribution used towards cash reserves must equal the minimum reserves required by the Lender of the first mortgage. Cash gifts up to $50,000 may be given towards down payment assistance in addition to the 2% owner contribution, but must be identified as part of the subsidy layering analysis, reference Appendix C. 4. Maximum liquid assets after FTHB assistance may not exceed $25,000 (not including retirement accounts, i.e. IRA's, 401(k), etc). Should an applicant be over this threshold at time of application, the applicants buying power will be calculated based on the qualifying first mortgage amount plus the City's gap financing threshold minus the overage amount (thereby considering the overage as a down payment and lowering the City's gap assistance). A woi;kshteet of all assets and income shall be included in the application package submitted to the City, reference Appendix B. The combined income of all memo rs of the household who are currently living together as a gamily and wiii be living in the property must be included in the determination of income. The household income must be projected as annual income. All income sources must be disclosed. D. CREDIT WORTHINESS 1. Households must have a minimum credit score of 620 Home First -Time Homebuyer Program Manual Rage i c Attachment No. 1 31 2. Borrowers with a foreclosure within the last five years must provide a letter of explanation and substantial back-up documentation as to the cause of the foreclosure. 3. A credit report for the non -borrowing spouse is required. All debt of the non -borrowing spouse will be used in the debt to income ratio calculations. 4. All collections and judgments must be paid in full, no exemptions 5. Bankruptcy within the last three years will result in a denial of assistance. 5. Child Support payments must be current and with no arrears. E. ELIGIBLE PROPERTIES 1. Properties must be located within the City of National City limits. 2. Properties must be one (1) unit property that includes single-family homes, including detached homes, condominiums or townhouses. Manufactured/mobile home, duplexes, triplexes or four-plexes do not qualify as eligible properties. 3. All types of sales are eligible under the program with up to $70,000 available in city gap Home financing. 4. Properties cannot have any outstanding civil penalties with the City of National City. F. MAXIMUM PURCHASE PRICE The maximum purchase price cannot exceed 95 percent of the median purchase price for the area, as determined by HUD. Condominiums and Townhomes: The 95% limit is $390,000 for existing townhomes ($428,000 for new construction), condominiums and single family homes). This limit is effective 4/13/2015. https://www.hudexchange.info/resource/2312/home-maximum-purchase-price- after-rehab-value/ . LOAN P zurg RES AND TERMS 1. 3% interest deferred payment loans have a term of 30 years. No monthly payments of principal or interest are required. When the buyer sells the property and wants to pay the loan in full, in addition to the principal balance, the buyer must pay all the accrued interest. 2. The Deed of Trust contains an acceleration clause, which will call the entire loan due and payable upon certain events, including the following: • Transfer or sale of the property • If the borrower no longer occupies the property • Discovery of willful misrepresentation or fraud in connection with any aspect of the Deferred Payment 3% interest loan program o Renting of the property Home First -Time Homebuyer Program Manual P gP19 Attachment No. 1 32 Uncured default by borrower on the first trust deed note, or deed of trust, or any other senior or junior loan or encumbrance on the property. 3. The maximum loan amount shall not exceed $70,000 for households purchase 1 unit properties (i.e. condominiums, townhemes, or detached single family home). The total gap subsidies (inclusive of other sources) shall not exceed 40% of the purchase price, subject to the condition of the property, qualifying factors and staff assessment. The City loan may be used toward the required down payment, reasonable closing costs, principal write -down assistance, an interest rate buy -down or any combination thereof, but serves as gap financing and must be determined through a subsidy layering analysis, see Appendix C. 4. The maximum CLTV (combined loan to value) of the City and the new 15t Trust Deed loans shall not exceed the maximum approved CLTV required by the 1st mortgage lender. 5. No non -occupant co -borrowers shall be allowed. 6. Total housing ratio (PITI) cannot exceed 38% of Applicant(s) gross monthly income or be less than 30%. The City may make exceptions on a case by case basis. Total debt -to -income ratio may not exceed 45% or 41% if obtaining an FHA loan. a. All debt shall be counted, inclusive of any debt that the applicant has co -signed for or identifies as a debt being paid by another party. 8. No prepayment penalty allowed. 9. Maximum fees to the Applicant of 2% origination, discount points for below par pricing only, and $350 processing are acceptable for the purchase transaction. No other Broker or Admin type fees allowed. Other third party fees that are reasonable and customary are allowable, but total origination fee shall not exceed 2%. 10. No Origination fees may be charged to a family for the portion of the Home Homeownership Assistance. 11. If the !ender is also the City Program Administrator (that is receiving Home assistance), the City must verify that the borrower is iow-income and must inspect the housing unit for compliance with the property standards. Home First -Time Homebuyer Program Manual r' a a e ; 10 Attachment No. 1 33 12. Any fees and/or commissions shall be customary and reasonable. 13. The terms of the City's Home second trust deed are designed to encourage long-term residency in the program -assisted home. The loan term is 3% deferred calculated using the simple interest method. 14. The loan shall become due and payable at the time of the property's transfer of title, refinance (except as earlier defined), rental or sale. 15. Second and subsequent mortgages to the new First Trust Deed, except for this City Loan, and a City HOME Loan, are not permitted. 16. Borrower can apply for CalHome funds as well as City HOME Investment Partnership Act (HOME) Funds. However, the City reserves the right to limit the HOME funds. Total combined assistance shall not exceed $126,000 ($56,000 CalHome, and $70,000 HOME). Each program may require a separate application process. Each program requires its own set of loan documents. 17. The loan is not assumable. 18. A Promissory Note, Deed of Trust, and Regulatory Agreement will secure the loan. 19. The City Loan can be used with conventional, FHA, VA, and other loans issued be a qualified lender, except adjustable rate mortgages with less than five years fixed, negative amortization and stated income mortgages. 20. The Program Administrator shall underwrite the City's loan. The City of National City's Housing, Grants, and Asset Management Department does not underwrite the loans, but :i l".".11 review at their discretion for First -Time Homebuyer Program requirements. Lenders will process the underlying mortgages using standard procedures, with adjustments to those procedures to conform to the City loan guidelines. 21. The Program Administrator shall handle all the appeals process for applicants who have been denied program participation. Applicants who are denied for being over -income must wait "cooling off period" 6-months before re -applying. Home First -Time Homebuyer Program Manual P = R j ii Attachment No. 1 34 SECTION II: PROGRAM ADMINISTRATION AND PROCEDURES Eligible Applicants will apply for the City of National City's First -Time Homebuyer Program in conjunction with normal mortgage loan application procedures. The City loan application must be filed with an application for a mortgage to a Participating Lender. The City loan processing procedures are designed to coincide with the standard mortgage loan processing and underwriting criteria that are in place at most mortgage lending institutions, although there are some City restrictions that must supersede normal processing and underwriting criteria. Recognizing that there are procedural variations among participating lenders, the steps outlined here are meant to serve as sequential guidelines, reference Appendix D for a summary of the process and summary sheet to be included in each packet. Please note, however, that all elements of the processing sequence must be completed at some point. A. LENDER ELIGIBILITY Lender is defined as a financial institution, whether broker, retail, or wholesale, licensed to make first mortgage loans in the State of California. All Lenders who wish to participate in the City program must be enrolled as a participating lender. To enroll and maintain active status a lender must: 1. Attend a lender certification course by the City's Program Administrator. 2. Agree to adhere to Quality Commitment Policy. Please refer to Appendix E. 3. Designate a contact person for the program. 4. Pay any associated lender certification fees as determined by the Program Administrator. All lending personnel involved with the City program must attend City training sessions and study a n: apply procedures listed in the Lender Training Handbook. Provide the First -Time Homebuyer Program Manual and Lender Training Handbook to all loan processors. Home First -Time Homebuyer Program Manuai 112 Attachment No. 1 35 7. Cooperate with City Housing staff in providing the best possible service to the Applicants. The Lender will be required to submit certification that no material misstatements appear in the application and program documents. if the Lender becomes aware of such, whether negligently or willfully made, he/she must notify the City immediately. The Lender should also be aware and inform the Applicant of penalties provided by California law if a person makes a false statement or misrepresentation for the sole purpose of participating in this program. Housing staff will take all lawful actions to correct or mitigate the problem. B. LOAN ORIGINATION AND PROGRAM APPLICATION 1. Borrower applies to the Lender for a mortgage. Lender performs standard underwriting procedures to qualify Applicant for a first mortgage, utilizing the City's required underwriting requirements in lieu of certain standard criteria. 2. Lender describes parameters of the City program to Applicant and determines eligibility based on a review of income, prior homeownership and all other factors listed in this manual. 3. Lender obtains three prior year's tax returns from Applicant and prepares to have the Seller Affidavit forwarded with instructions to the seller. 4. Lender gives the Applicant a copy of the City's First -Time Homebuyer Application, Affidavit, and Release of Information. This document serves as the formal application to the City and contains the required certifications below: FA . That the residence will be used as the Principal Residence and that the Applicant must notify the City when the home ceases to be the Principal Residence. b. That the Applicant has not had an ownership interest in a Property during the three year period prior to the date of application. c. That this is mortgage loan*. d. That the loan applied for does not constitute a prohibited mortgage**. e. That the Applicant was not forced to apply through a particular Lender. f. That the Applicant's gross annual household income does not exceed permitted income limits. g. That no interest, commission or other fee is being paid to a related person. h. Acknowledgment that any material misstatement or fraud is made under penalty of perjury. Home First -Time Homebuyer Program Manual Page 113 Attachment No. 1 36 City's loan application matches vesting on 15t Mortgage. City will not allowed vesting as married but sole and separate property. However, if borrower provides a letter from the 15t lender showing the difference in interest rate as justification for allowing sole and separate property, City and its Program Administrator may consider such request at its discretion. City staff and Program Administrator will review these on a case by case basis. In circumstances, where co -borrower has derogatory credit, the City will deny the request for sole and separate property. If co -borrower has no credit lines, then the City will review the interest rate variation and make a determination to allow for a change in vesting. *New Mortgage Requirements: The Lender and the Applicant, using the Program Affidavits, state that the mortgage being acquired in connection with the loan will not be used to acquire or replace an existing mortgage or land contract. **Prohibited Mortgages: Any liens superior to the City First -Time Homebuyer Loan, other than the new first Trust Deed, are not allowed under any circumstances. C. CITY APPLICATION PACKET Applicant/Lender transmits an application packet to the City's Program Administrator that includes the following City forms and additional documentation as required: 1. City First -Time Homebuyer Application*, see Appendix A 2. Authorization for Release of Information Form*, see AppendixA 3. Complete copy of Lender's First Mortgage Loan Application 4. Income Computation Worksheet and all supporting documentation*, see Appendix B 5. Subsidy Layering Analysis, see Appendix C 6. Two most recent 30-day bank statements & income documentation as described in application 7. Three years of Federal Income tax Returns and/or Declaration of No Income Affidavits* for a three-year period S. Certificate of Completion for First -Time Homebuyer Education Training Course Once property has been selected: 1. Purchase Contract and all Addendums signed by all parties 2. Program Administrator issued commitment letter 3. Lead -Based Paint Disclosure* 4. Appraisal and Third Party Inspection 5. Property Standard (PS) Checklist 6. Copy of Signed Receipt of Disclosures 7. Copy of Title Report Home First -Time Homebuyer Program Manuai Page 1 14 Attachment No. 1 37 8. Funding Request and Escrow Information Sheet* 9. Letter of Assignment (if the Funding Lender is different than the Originating Lender: A copy of the Notice of Transfer signed at closing or a letter on company letterhead with the name, address, phone and fax number of the Funding Lender along with the date the assignment is being made will be sufficient) 10. Signed and executed copy of the Power of Attorney if applicable * City Forms are to be completed as high quality copies of the original documents. Updated forms will be provided to participating lenders as they are revised and may be ordered by contacting the City's Program Administrator. Please note that all documents must be submitted in hard -copy form and are not accepted by facsimile. All applicants must provide a release to the City, HCD and the Program Administrator, allowing of review of any documents to provide proof of employment and earnings, current occupancy, and other related information, see Appendix A. Mail the APPLICATION PACKAGE to the Program Administrator: City of National City Housing, Grants, and Asset Management Department 1243 National City Boulevard National City, CA 91950 Submission of the above mentioned forms/documents to the Program Administrator constitutes completion of the APPLICATION PACKAGE. Technically, the originating broker's role is finished and the funding lender is responsible for submitting the final Close of Escrow Package. However, it is advisable for the broker to discuss with the funding lender their role in submitting the closing package, a failure to meet the Commitment expiration deadline can result in additional work and costs to both the broker and funding lender D. CITY PROCESSING 1. Program Administrator accepts and reviews the Application package and makes a determination as to completeness and accuracy. The City will also review the Application and make a final determination to eligibility. Final determinations for eligibility and all interpretations of the regulations shall be at the discretion of the City's Community Development Manager. a. Approvals - Once approved, the City will issue a pre -commitment of funds for a 60 day period. After the pre -commitment period funds will be released back into the FTHB Program. One extension may be granted of up to 30 days due to extenuating circumstances and at the discretion of the City. b. Denials — Should an application be deemed ineligible for any reason once submitted by the Program Administrator to the City, the City will issue a denial Home First -Time Homebuyer Program Manuai P a g e 115 Attachment No. 1 38 letter and such applicant will be required to submit a new application in entirety. After the initial application, denials may be issued due to any household changes, including but not limited to, changes in household size, debt, assets, or income. in such cases, the applicant may be required to submit proof of the change for a period of time (as identified in the denial letter), dependent on the reason for the change and at the discretion of the City's Housing, Grants, and Asset Management Department. 2. All applications received are subject to the availability of funds. The City has sole discretion to terminate or suspend the program at any time. 3. The City will maintain a cumulative total of loan amounts reserved. When program funds are about to be depleted, the Program Administrator will notify all participating Lenders. 4. A commitment of funds will be issued by the Program Administrator for a 60 day period at receipt of the purchase contract. If the purchase contract falls through, the City will have sole discretion to release the funds back into the FTHB Program or issue an extension of the pre -commitment. 5. Lender will complete the remainder of the standard mortgage application process. 6. Program Administrator/City Package Turn -Around: The Program Administrator shall date -stamp packages and review in order of receipt. Turn -around time for reviewing and sending a loan commitment or denial letter to the Lender is 6 business days from the receipt of a complete* package. 7. RUSH: Packages marked "RUSH" or "SUPER RUSH" etc. i i9' not be processed ahead of other pending packages. 8. Incomplete Packages: Incomplete packages may delay the approval and subsequent issuance of the City Commitment Approval Letter. * Complete packages must include those items listed under Section II.D, E. PROPERTY SELECTION 1. Once a property has been selected an initial purchase offer can be issued contingent on a certified licensed third party appraisal and property meeting inspection requirements, per Section F and G. Home First -Time Homebuyer Program Manual P a g e 116 Attachment No. 39 2. An appraisal to establish the property value as determined by a certified state licensed appraiser must be completed and provided to the City, as well as a third party inspection and all lead certification requirements as specified in Section F. 3. Prior to the presentation of the final purchase offer, adjusted based on the licensed appraisal, a voluntary acquisition notice shall be given to the owner of record. The City shall provide the acquisition notice directly to the owner of record ensuring that it complies with Program requirements, reference example "Voluntary Acquisition" notice in Appendix D. All applicants shall submit a "Request for Issuance of the Voluntary Acquisition", see Appendix D. The acquisition notice must be placed on top of a purchase offer that is to be presented to the seller. The acquisition notice will include the following: a. The participant has power of eminent domain, but will not acquire the property if negotiations fail to result in an amicable agreement ("Voluntary Acquisition"); b. An estimate of the property value of the property as determined by a state licensed appraiser and paid for by the Applicant, conducted within 60 days of said purchase offer and acquisition notice; c. Seller certifies that the property has not been occupied by a tenant within the last four months (with the exception of the potential buyer) and that no tenant has been forced to move within the last four months. In addition, seller warrants that no rent is being received for the property, and further certifies that no occupants of the property pay rent to reside there; d. Since the purchase is voluntary, the seller is not eligible for relocation payments, or other relocation assistance; and, e. If an acquisition notice is not provided to the seller containing the above disclosures prior to submitting the purchase offer, a provision that the seller may withdraw from the agreement atter this information is provided. All purchase offers shall be reviewed by the City and/or Program Administrator prior to submittal to the seller to ensure the appropriate contingency clauses are contained in the document regarding inspections, tenant -occupancy, loan approvals, and other necessary items to compiy with these guidelines. Only after a participant has accepted purchase contract shall the commitment letter be issued by the Program Administrator and an allocation of funds can be reserved for the City second loan. F. PROPERTY INSPECTION 1. All applicants are required to obtain a housing inspection from a certified independent third party. Home First -Time Homebuyer Program Manual P a g e 117 Attachment No. 40 2. All properties built prior to 1978 must meet new HUD regulations for notification, inspection, reduction/abatement and clearance of lead -based paint hazards under Title X of the Housing and Community Development Act of 1992 (effective September 15, 2000). if subject property was constructed prior to 1978, during the due diligence period, the Lender must request that an Independent Certified Risk Assessor (or certified equivalent) conduct a property inspection and Risk Assessment in compliance with the Home Program. The following Table demonstrates the steps necessary in evaluating and correcting lead - based paint in relation to the dollar amount spent on the rehabilitation of the property. rba try ea Hazard Evaluation and Reduction Notification Lead Hazard Evaluation Lead Hazard Reduction Ongoing Maintenance ESL Options, Do no harm es $5,0001 5;OOO- 525,000 Identify and control lead hazards Yes Paint testing of surfaces to be disturbed by rehabilitation • Repair surfaces disturbed during rehabilitation • Safe work practices • Clearance of work site For HOME rental Programs Funded • Paint Testing of surfaces to be disturbed by rehabilitation • Risk Assessment • Interim controls Safe work practices 4 Clearance of unit Properties only By Other No No © Presume lead -based paint • Use safe work practices on all surfaces Presume lead -based paint and/or hazards Use standard treatments If a determination is made by the Certified Risk Assessor (or equivalent per HUD protocol), that Lead -Based Paint i-iazards are present on the subject property, the City shall notify Buyer, Lender arsri Fscro%A, within 15 days of such Pdeterrninati,nn and provide those parties with a copy of any and all Risk Assessment Report(s). The Lender will be notii'led of work needed to cure defects, if any. if defective paint surfaces are found, seller must properly abate the painted surfaces or the home shall be ineligible for purchase. Seller and purchaser will be required to sign a disclosure form prior to the close of escrow. 3. The written report(s) of findings must be provided to the City's Program Administrator. The Program Administrator will review the reports and conduct a physical inspection to Home First -Time Homebuyer Program Manual p a g e) 18 Attachment No. 1 41 ensure the subject property meets HUD"s Property Standards and HUD lead -based paint regulations. The City and/or Program Administrator may also request an inspection be conducted by the City's Code Enforcement or Building Department to ensure the property meets City building standards, inclusive of all required permits. 4. The City loan may be funded upon the completion of the repairs and clearance from the Risk Assessor and the City Program Administrator. Properties must meet minimum health and safety standards upon occupancy, as inspected by the Program Administrator. In some cases, the City may authorize occupancy or escrow closing prior to all repairs being completed, should the applicant apply for a FHA 203K loan. See Appendix F for detailed Property Standards (PS) and Appendix G for the PS Inspection Form. 5. VA or FHA -insured First Mortgages: In cases where the buyer obtains said mortgage, the City may substitute the VA or FHA property inspection for the third party property inspection, however the Program Administrator and/or City Staff must still conduct the PS inspection as described previously. The FHA inspection does not, however, satisfy HUD lead -based paint regulations unless no lead -based paint hazards are found and are fully noted on the FHA inspection report. G. LOAN CLOSING 1. Program Administrator partially completes the Closing Affidavit. 2. Lender and City forward loan documents to selected escrow officer with instruction for closing the loans. The buyer signs the City loan documents. The escrow officer forwards the copies of the executed Loan Documents back to the Program Administrator. 3. Before the expiration of the 60-day commitment and prior to recordation the Lender and Escrow send the Close of Escrow documents to the Program Administrator. These documents include: a. Signed copy of City Deed of Trust and Homeowner's Regulatory Agreement for the HOME program participation (Escrow sends original Deed of Trust and Agreement to County Re ordei"'s Office), original PP'r omissor y Note, Truth in Lending Statement, Escrow Instructions and all amendments and copy of estimated HUD 1 Statement, see Appendices H-J for samples of the Regulatory Agreement, Deed, and Note. b. City Loan Disclosure, see Appendix K. c. City Error and Omission/Compliance Agreement d. Closing Affidavit signed by the Applicant(s) at the time of the loan closing. e. All outstanding loan conditions listed on the Commitment letter and/or Instructions to Escrow. Home First -Time Homebuyer Program Manual Page 119 Attachment No. 1 42 f. City reviews Closing Package and checks the file to ensure all necessary documents have been submitted. 4. City ioan documents are only good during the month that they are drawn and any delays may require the preparation of all City final loan documents with a corrected date. There will be no funding into the month. 5. Program Administrator will transfer funds by wire as instructed on the Funding Request and Escrow Information Sheet located in the forms section of this Manual. Any secondary wires that are issued due to errors on behalf of the Lender, Escrow or Title Company will require an additional $35.00 re -wire fee and shall be paid by the party at fault. Lenders must adhere to the time frame for the City and the Program Administrator processing period, promptly notifying the Program Administrator in writing of any loan cancellations and/or request for reservation or commitment extensions. If the Lender assigns responsibility of execution of City loan forms to Escrow or Title Office personnel, the Lender assumes full responsibility for training the personnel to comply with the requirements of this Manual. H. CANCELLATION AND COMMITMENT EXPIRATIONS 1. Cancellations: When a decision is made not to continue with the City application, written notice must be received at the office of the Program Administrator prior to the expiration of the Commitment. The notice must include the reason for the cancellation and the signatures of both the Lender and the Applicant. 2. Expiration of Commitment: Before the Commitment has expired, the Lender must either: a. Submit the closing package; b. Submit written notice of loan cancellation; or c. Request a 30 day extension in writing with expianation of extenuating circumstances. Upon expiration of the Commitment, the Lender must do one of the following: a) if the loan has not ciosed, the Lender must submit a request for extension and provide estimate of closing date to the Program Administrator. Home First -Time Homebuyer Program Manual 120 Attachment No 1 43 b) If 60 days has passed since the Commitment was issued and no extension was requested, the Lender must submit an entirely new Loan Application with current income verification with a letter of explanation for the delay. c) If the loan was canceled, the Lender submits a cancellation notice as described above. In all cases, expiration of the Commitment without the required action by the Lender will result in the Lender being placed on "Inactive Status", and the Lender may submit no new City applications until the issue has been resolved. Failure to comply may result in the Lender's removal from the Certified Lender Partner List and program. SECTION III: CHANGES PRIOR TO CLOSING Program Administrator issues a loan Commitment based on the Applicant's and Seller's Affidavits and the Lender's certification that the City's Program requirements have been met. The Lender must immediately notify the Program Administrator in writing of any change that could affect the Applicant(s) eligibility for the loan. If a change in the circumstances of the Applicant is such that he/she no longer meets program requirements, the Commitment is automatically revoked, reference "Denial" Section D.1.b. 1. Income: The eligibility of the Applicant for a City loan is based on the Applicant's anticipated taxable income. Program Administrator will issue the Commitment based on the household income as of the date the Commitment is issued. The income verified for the Commitment is valid as long as the loan closes within four months after the financial information was originally submitted and there have been no changes which effect previously reported income. If the loan does not close within three months, all applicable City documentation must be submitted and income must be re -verified. Marital Status: If the Applicant gets married after issuance of the Commitment and prior to closing, the spouse. rnwt satisfy the prior homeownership requirements contained in the First -Time Homebuyer Application and Affidavit and the Closing Affidavit. The Lender must also notify the Program Administrator program administrator. Any increase in the household income because of the new spouse must also be considered and may affect re -issuance of a new Commitment. 3. Acquisition Cost: If a change in acquisition cost occurs after the Commitment and prior to dosing, the Lender will be required to originate and submit a new version of: a. First -Time Homebuyer Loan Application and Affidavit b. Amended Escrow Instructions c. Seller Affidavit d. Voluntary Acquisition Form e. All other documentation that may be applicable as listed previously in this Manual Home first -Time iHomebuyer Program Manual Page 121 Attachment No. 44 4. Loan Amount: Any changes to the loan amount which occur after the Commitment has been issued and prior to closing must be reported to the City immediately by phone, followed up with a written confirmation along with ail appiicabie documentation iisted in this Program Manual. Upon receipt of revised/updated documentation, a revised Commitment may be issued. Home First -Time Homebuyer Program Manual Attachment No. ' 45 APPLICATION FOR NATIONAL CITY HOME FIRST-TIME HOMEBUYER PROGRAM Dear Applicant: Thank you for your application to the City of National City First -Time Homebuyer (FTHB) Program. The successful completion of the application process may result in your receiving a City loan. Therefore, it is very important that you take the time to read and complete each page of this application before the lender sends it to our office. You will be certifying that you understand and meet the Program Guidelines. If you have any questions about the guidelines please contact your Certified Lender Partner. (1) ADULT Hfi_POE the househol( lI-iZAO C+ HOUSEHOLD) (ii d pacer for rn.r:e 'Olaf; ? itct.Lilt If First Name Address: Middle Last Name Social Security Number D.O.B Phone Number: Occupation: Employer Name and Address: Work Phone: Home Phone/ Cell Phone ( ) - (1a) Marital Status (check one) Single Divorced Married Gender (check one) Male Female First-time Buyer (check one) Yes No Citizenship (check one) U.S. Citizen Permanent Resident Alien (1 b) Roco (check one) White Black/African American Asian American Indian/Alaskan Native _ i\rzt,'ve tiavialianiCkther Pacific i$ia+ide American Indian/Alaskan Native & White Asian & White Black/African American & White American Indian/Alaskan Native & Black/African American Other; Hispanic Ethnicity (check one) Yes No Attachment No. 1 46 (2) ADULT HOUSEHOLD MEMBER #2 Relationship to Primary Applicant Address: Phone Number: Occupation: Etirtployer Name and Address: Work Phone: Home Phone/ Cell Phone ( ) (2a) Marital Status (check one) Single Divorced Married ufei iuek (check one) Male Female First-time Buyer (check one) Yes No Citizenship (check one) U.S. Citizen Permanent Resident Alien (2b) Race (check one) White Black/African American Asian American Indian/Alaskan Native Native Hawaiian/Other Pacific Islander Hispanic Ethnicity (check one) Yes No American Indian/Alaskan Native & White Asian & White Black/African American & White American Indian/Alaskan Native & Black/African American Other: Relationship to Primary Applicant Address: Phone Number: Occupation: Employer Name and Address: Work Phone: Home Phone! Cell Phone ( ) (2a) Marital Status (check one) Singie Divorced Married Gender (check one) Male Female First-time Buyer (check one) Yes No Citizenship (check one) U.S. Citizen Permanent Resident Alien (2b) Race (check one) White Black/African American Asian American Indian/Alaskan Native Native Hawaiian/Other Pacific Islander Hispanic Ethnicity (check one) Yes No American Indian/Alaskan Native & White Asian & White Black/African American & White American indian/Alaskan Native & Black/African American Other: Attachment No. s 47 (3) HOUSEHOLD INFO{ fiv1ATION; List all MINOR household members (UNDER THE AGE OF 18) that will be part of your household. Total # of persons in Household Name Name Name Name Name Name Name D.O.B. MIF Total yearly Household income $ D.O.B. M1F Relationship to Head of Household D.O.B. M/F Relationship to Head of Household D.O.B. M/F Relationship to Head of Household D.O.B. MIF Relationship to Head of Household D.O.B. M/F D.O.B. MIF Relationship to Head of Household Relationship to Head of Household - (4) EMPLOYMENT: Must Member: If an adult is 1. List.each..person in .1. Last Name, . . _-. provide mostcurrent3 . ontlis not working please list N/A. your household who wor or expects pay stubs for each to he working' Sel#- Employed? ❑ Yes ❑ No job reported below icireaCh Date Employment Starts _-- - - adult household Occupation First Name ..Weekly Hours Worked Hourly Pay -Rate . $ Weekly TipslBonus $ How often paid? Employer's dame • -i, Employer's Address ;Street, City, State, Zips Employer's Phone # ( ) Employer's Fax # ( ) .E Last Name, First Name .elf- ❑ Yes LlNo Date Employment Starts Occupation .1.Weekly Hours Worked Hourly Pay Rate ! Weekly [fipsIBonus How often paid? _ _ Employer's Name d Employer's Address (Street, City, State, Zip) —I Employer's Phone* I ( ) -Employers Fax # ,( ) J. Last Name, First Name Self Date Employment Starts Employed? ❑ Yes ❑ No Occupation .-Weekly Hours Worked Hourly Pay -Rate $ Weekly How often Tips/Bonus paid? Employer's Name 1 Employer's Address (Street,.City, State, Zip) - _ 1 Employer's Phone #t j Employer's Fax Attachment No. 1 48 -7t 1( ? 1 (5) INFORMATION ON OTHER INCOME: EACH QUESTION MUST BE ANSWERED (NO EX FT1•ONS) Must provide current proof (most recent 2 statements) of any income reported below. C ieck YES or NO next to Type of Income. If YES, complete all information for income received or expected to receive byres' for any houseit OM member, including children. If necessary, report any other additional sources on a separate sheet of paper. Type of Income Yes Who Receives Funds Monthly Amount Name and Adaress of Provider Social Security Benefits — SSA orland SSI CALWORKS Food Stamps State Disability Worker's Compensation $ Unemployment Benefits Veteran's Benefits $ Military PaylAllotment $ Pensions or Retirement Child Support $ $ Spousal Support Contributions $ Gifts or Loans $ $ Rental Property Income $ School Financial Aid $ Any other additional sources of income reported on a separate sheet of paper attached? DYes ❑No (6) AS' ET INFO ,h6IA I II:7c Must provide -current proof of asset (most recent 2 statements, i.e. bank statement, etc.) listed below! Check YES or NO next to Type of Asset_ If YES„ complete all information for any asset owned of held by or for any housohodd irrenrher, including children. If necessary, report any other additional accounts or sources on a' separate sheet of PaPe Type of Aaset Yes Cash No Names) on Account Balance/Value AccOdnt!POiicy1 Name arid Add vss fit institution Checking Account Savings Account Other Accounts (i.e. Attachment No. 1 49 401k, IRAs, stocks, bonds, etc.) T- f $ Any other additional sources of asset reported on a separate sheet of paper attached? ❑Yes UNo REASONABLE ACCOAiiiiviODA T iOiv DO YOU REQUIRE A SPECIFIC ACCOMMODATION TO FULLY UTILIZE OUR AGENCY'S SERVICES? ❑Yes UNo If YES, please specify haw we may accommodate your disability: Attachment No. ' 50 CERTIFICATION OF THE APPLICANT acknowledge and understand that this Affidavit, as completed above, will be relied on for determining my eligibility for a City of National City First Time Homebuyer (FTHB) Assistance Loan using federal HOME funds from the U.S. Department of Housing and Urban Development. I acknowledge that a material misstatement negligently made by me in this Affidavit or in any other connection with my Application for a City (FTHB) Loan will constitute a violation punishable by a fine and possible criminal penalties imposed by law, and will result in the cancellation or revocation of the Loan. I acknowledge that any false statement or misrepresentation or the fraudulent use of any instrument, facility, article, or other valuable thing or service pursuant to my participation in the City Program is punishable by fine. BUYER DATE BUYER DATE BUYER DATE BUYER DATE CERTIFICATION OF THE LENDER Based upon reasonable investigation, the Lender has no reason to believe that the Applicant has made any negligent or fraudulent material misstatements in connection with the application for a City Loan and submits he completed information above as accurate and true to the best of the Lender's knowledge. Furthermore, the lender has determined that the applicant has been approved for a maximum primary mortgage amount of $ . Their credit, income and assets have been reviewed and deemed acceptable to the Underwriters of (bank/lender) for the loan terms in compliance with those acceptable to the First -Time Homebuyer (FTHB) Program. Based on the FTHB Guidelines for calculating income, the applicant's anticipated annual income is $ , and is therefore eligible for a loan of up to $70,000 through the FTHB. ORIGINAL SIGNATURE OF OFFICER APPROVING THE LOAN DATE PRINT NAME t r - PHONE EMAIL Attachment No. 1 51 FIRST-TIME HOMEBUYER PROGRAM AFFIDAVIT By signing below applicant(s) makes the following certifications: i, the undersigned, as part of my application for a shared equity assistance loan through the City of National City First -Time Homebuyer Program (the "Program"), and in connection with a purchase of a single-family home (the "Residence") and an application for a mortgage loan (the "Mortgage Loan") from a lender (the "Lender") of my choosing, do hereby state that I have carefully reviewed this document. I understand and agree with the answers provided in my application, and do furthermore certify the following (please initial each line item): 1. That those people who I expect to initially share occupancy of the Residence with me are listed in the First Time Hornebuyer Application. (initial) 2. That all adults, whether on title or not, are considered an Applicant (over age of 18) for the Program and must sign this Application. (initial) 3. That I am a first-time homebuyer, who has not had an ownership interest in a residential property within the three years immediately preceding the date of this application, and I do not and will not have an ownership interest in a residential property prior to the date of loan closing. (initial) 4. That I will submit true and complete copies of my actual signed federal tax returns for the preceding three tax years, or such other written verification that is acceptable to the Program. (initial) 5. That the Residence will be occupied and used as my principal place of residence within 30 days of the date of Mortgage Loan closing. (initial) 6. That the Residence will not be used as an investment property, vacation home or recreation home. (initial) 7. That real estate investment is a risky endeavor, and there is no guarantee of future return on the initial investment. (initial) 8. That I will notify the Program in writing if the Residence ceases to be my principal residence. (initial) 9. That I will be contacted by the City and/or the contracted loan servicer on an annual basis to confirm occupancy of the Residence and furthermore, both parties have the right to inspect the property for conformance with loan requirements upon notification. (initial) 10. That the Mortgage Loan is a first mortgage, not a replacement mortgage. (intial) 11. That my income does not exceed the program income limits as explained to me by Mortgage Lender. Pir'it a!) 12. That no person related to me has, or is expected to have, an interest as a creditor in the Mortgage Loan being acquired for the Residence. (initial) 13. That the City Loan is issued on my behalf and may not be transferred. 14. That the loan I am applying is a shared equity loan for the first 15 years, in which the City has a declining interest in any accrued appreciation. (initial) 15. That the City loan is due and payable upon sale or transfer of the property. (initial) 16. That after 15 years only the principal is due and payable upon transfer. (initial) Attachment No. 1 52 17. That I may seek financing from any Lender of my choosing, and that I am in no way prohibited from seeking financing from any potential Lender, so long as the Lender executes and complies with the terms of the Lender participation Agreement and Program Guidelines. (initial) 18. Thai a requirerneni of funding through the FTHB is to receive both pre- and post -purchase counseling. (initial) 19. All transactions from Lending, Realty, and other services shall not constitute a conflict of interest. Please refer to CFR 24 CFR §92.355 20. All transactions must be Arm's Length. I understand that an arm's length transaction is one in which the buyer/tenant, Reaitor(s), and seller/owner act independently and have no relationship (by blood, marriage or unrelated business dealings) to each other, ensuring that all parties in the deal are acting in their own self-interest, are not subject to any pressure or duress from the other parties, and are dealing from equal bargaining positions. Two strangers with equal bargaining power and knowledge of the property are likely to agree upon a price that is close to market value, as the seller will strive for the highest price possible while the buyer is striving for the lowest price possible. It's assumed that an arm's length transaction will be fair and equitable to all parties involved and will result in a fair market sales price. CERTIFICATION OF THE APPLICANT I acknowledge and understand that this Affidavit, as completed above, will be relied on for determining my eligibility for a City Loan. I acknowledge that a material misstatement negligently made by me in this Affidavit or in any other connection with my Application for a City Loan will constitute a violation punishable by a fine and possible criminal penalties imposed by law, and will result in the cancellation or revocation of the Loan. I acknowledge that any false statement or misrepresentation or the fraudulent use of any instrument, facility, article, or other valuable thing or service pursuant to my participation in the City Program is punishable by fine. PRINT APPLICANT NAME E3. P E APPLICANT SEG.R'ATURE Attachment No. 1 53 AUTHORIZATION FOR RELEASE OF INFORMATION Each household member 18 years or older must read and sign this Authorization Form for Release of Information. I. (legal name), do hereby authorize any agencies, offices, groups organizations or business firms to release to SPRINGBOARD (SB) and the CITY OF NATIONAL CITY any information or materials which are deemed necessary to complete and verify my application for participation and/or to maintain my continued assistance under the First - Time Homebuyer Program (FTHB). The information needed may include verification or inquiries regarding my identity; household members, employment and income, assets, allowances or preferences I have claimed, and residency. These organizations are to include, but are not limited to: financial institutions; Employment Security Commission; educational institutions; past or present employers; Social Security Administration; welfare and food stamps agencies; Veteran's Administration, court clerks; utility companies; Workmen's Compensation Payers; public and private retirement systems; law enforcement agencies; medical facilities and credit providers. I understand that the U.S. Department of Housing and Urban Development (HUD), Springboard (SB), and/or the City of National City (City) may utilize third parties to verify information and other computer matching programs in order to verify the information supplied on my application. It is understood and agreed that this authorization or the information obtained with its use may be given to and used by HUD, City, and SB in the administration and enforcement of program rules and regulations and that HUD and/or SB and/or City may in the course of its duties obtain such information from other Federal State or local agencies, including State Employment Security Agencies; Department of Defense; Office of Personnel Management; the Social Security Administration; and State welfare and food stamp agencies. If there is a discrepancy between the information provided by the above sources and the information that I have provided, I understand that SB/City may take action to terminate my homebuyer assistance and make the loan due and payable including any accrued interest, and will require the repayment of benefits I was not eligible to receive. It is with my understanding and consent that a photocopy of this authorization may be used for the purposes stated above. This authorization is valid for the life of the loan. Address City State (_) Date of Birth Social Security No. Telephone Number Zip Signature Date Signed Attachment No. ' 54 DATE: ANALYST: REFERENCE NO.: Household Member Name: Source Document: Paid Hourly: $ base pay per hour x 2080 working hours per year = $ Annual Income YTD: $ ÷ = $ x 2080 hours = $ Dates covered Amount # of Days* Daily income Annual Income YTD: $ x 24 (bi-monthly) = $ Dates covered Amount # of Pay Periods or 26 (every 2 weeks) Annual Income Fixed Income: Pension / SSI I SSA (use GROSS from Letter or Paystub): $ x 12 = $ Annual Income Household Member Name: Source Document: Paid Hourly: $ base pay per hour x 2080 working hours per year = $ Annual Income YTD: $ = $ x 2080 hours = $ Dates covered Amount # of Days* Daily income Annual Income YTD: $ x 24 (bi-monthly) = $ Dates covered Amount # of Pay Periods or 26 (every 2 weeks) Annual Income Fixed Income: Pension / SSI / SSA (use GROSS from Letter or Paystub): $ x 12 = $ Annual Income Self Employment Income: 3-iousehoid member Name: Last Tax Return Schedule C Net Income: + Net Income from Profit and Loss covering period from end of last tax return through present + ALL Depreciation, One -Time Costs, Startup Costs, Expansion Costs, Amortization of Capital Indebtedness + $ TOTAL = $ TOTAL $ number of months cova-ed = $ x 12 = $ Monthly Income Annual Income *To annualize YTD: STEP 1: Establish number of days the information covers Computation: YR MO DAY end date of information - YR MO DAY start date of information Convert months to days (8 x 30 = 240), add any remainder days STEP 2: Divide YTD figure by calculated number of days to get daily Use a 30 day month and "borrow" months or days to calculate Example: 07 05 01 "borrow 1 month (days = 31) - 06 08 31 then `borrow" 1 year (months =16) 8 0 amount earned STEP 3: Multiply daily figure by 2080 hours if indication is that wages are earned 40 hours per week; adjust for other than 40 hour work week. This provides the annual figure. Appendix i3-2 Attachment No. 1 55 0 Borrower Name: Employer Name: ❑ Paystubs ❑ W-2s ❑ Tax Returns ❑ Other Dates Covered to 1 ❑ Paid every 2 weeks (26 pay periods) ❑ Paid twice a month (24 pay periods) ❑ Paid Monthly (12 pay periods) ❑ Year-to-date (YTD) annualized (instructions below) ❑ VOE Borrower Name: Employer Name: ❑ Paystubs ❑ W-2s ❑ Tax Returns ❑ VOE Other Dates Covered to ❑ Paid every 2 weeks (26 pay periods) LI Paid twice a month (24 pay periods) ❑ Paid Monthly (12 pay periods) ❑ Year-to-date (YTD) annualized (instructions below Borrower Name: Employer Name: ❑ Paystubs ❑ W-2s ❑ Tax Returns ❑ VOE ❑ Other Dates Covered to ❑ Paid every 2 weeks (26 pay periods) ❑ Paid twice a month (24 pay periods) ❑ Paid Monthly (12 pay periods) ❑ Year-to-date (YTD) annualized (instructions below) Borrower Name: Employer Name: ❑ Paystubs ❑ W-2s ❑ Tax Returns ❑ VOE ❑ Other Dates Covered to ❑ Paid every 2 weeks (26 pay periods) El Paid twice a month (24 pay periods) El Paid Monthly (12 pay periods) ❑ Year-to-date (YTD) annualized (instructions below) To annualize YTD: STEP 1: Establish number of days the information covers Computation: YR MO DAY end date of information - YR MO DAY start date of information Convert months to days (8 x 30 = 240), add any remainder days Divide YTD figure by calculated number of days to get daily amount earned Multiply daily figure by 2080 hours if indication is that wages are earned 40 hours per week; adjust for other than 40 hour work week. This provides the annual figure. STEP 2: STEP 3: Use a 36 day month and "borrow" months or days to calculate Example: 07 05 01 "borrow 1 month (days = 31) - 06 08 31 then "borrow" 1 year (months =16) 8 0 Signature Title Date Appendix B-1 Attachment No. - 56 APPENDIX C SUBSIDY LAYERING ANALYSIS The City's First -Time Homebuyer (FTHB) Program is funded through the U.S. Department of Housing and Urban Development's HOME Investment Partnership Act Program (HOME). HOME program m Administration Responsibilities states that before committing funds to a project, the participating jurisdiction must evaluate the project (subsidy layering analysis) in accordance with guidelines that it has adopted for this purpose and will not invest any more funds, in combination with other governmental assistance, than is necessary to provide affordable housing. In order to determine the `buying power' of an applicant for the FTHB Program, lenders shall provide evidence for financing of the maximum primary loan amount and determine eligibility for the City's program. The combined doilar amount of the qualifying first mortgage and maximum threshold of qualifying FTHB funding shall establish an estimated "maximum purchase price". This amount will be included in the City's 60-day pre -commitment letter in order to facilitate applicants in finding eligible properties under the FTHB Program. Once a property has been selected and the purchase price has been determined, a "gap" analysis shall be conducted to determine the exact dollar amount of the second mortgage with the City. The Lender must provide an analysis calculating cash available for all housing expenses* by taking the lesser of the housing ratio (PITI) to monthly income of 38% or debt -to -income ratio of 41% FHA/45% minus debt. The housing cash available will then be used to determine the amount of the primary loan and, ultimately, the Program subsidy amount required, bridging the gap between the purchase price (less down payment) and the amount of the primary loan. The Primary First mortgage must be a fixed rate loan. * Monthly housing costs include, but are not limited to, payments of principal and interest on the first loan, taxes (including mello roos), insurance (including mortgage insurance), homeowner association fees, and other appropriate expenditures. Following is a sample analysis, for illustrative purposes. Family of 4 earning $3,231/month, $38,775/annual Household Qualifies for up to $56,000 (80% AMI) ($20,000 HOME funds and $36,000 Cal HOME funds) Housing Payment 1008 form Borrower Income $3,231.26 monthly income Purchase Price of Home $170,000 Qualified for a 1st Mortgage of $122,000 Ratios: 32.146/44.9 70 flown Payment Assistance Available ($56,000) "Estimated Buying Power " Calculation Qualifying Mortgage $122,000 FTHB Threshold $ 56,000 "Maximum" Purchase Price $178,000 * Closing Costs may vary on each transaction depending on negotiated fees. Lender shall not reduce 1st mortgage amount to increase amount of gap financing. 1st lender shall maximize first mortgage using the maximum ratios (FHA/Conventional) "Gal," Calculation Purchase Price of Property $170,000 Less First Loan Amount ($122,000) Plus Closing Costs* ($7,201.91) Less Down Payment (2%) ($3,400) Estimated "Gap" Financing Needed $ 51,801 Ytr EFu �xElz EaUCAffeN1 a FJ+r Tirnp2 h(Irric. h''uver t. a l HI.I:.1 rCr irl wl� F$'I:AI I`.rlu.c4ltoi ii APPENDIX D Attachment No. ' 57 SAMPLE HOME- FIRST-TIME HOMEBUYER PROGRAM SEQUENCE OF LOAN PROCESS & SUMMARY SHEET PRIMnizY FINANCINci Rat -C UALW CATIDN {_nooF?. C:FAN C c r t«irrLI ..HHrid 2r E3tabiisri' s" mcars`- pagr SlµrJta11:'nlllx �.cify e]Iglhulry for AIL}' at! s-tance dr,mt-ifv mJ+'irmitn Gur•_hasa pn-_= J.r�ch.rt E EU.t6l_ PROPERTY fltl�f mIH n It= u I I OA 1c h4 5 mentattnrl . k:2^'r loan, IdS FTHL irsemunr ufTlO_:r r m „ry V 1. HOMEBUYER / LENDER • Completes Homebuyer Education course. • Applies to Participating Lender for financing. o Lender determines FTHB eligibility, including anticipated income. o Determines "gap" through subsidy layering analysis. o Estimates maximum purchase price. o Lender completes Summary Sheet. Complete City FTHB Application, including: Affidavit; Lender Certification; Release of Information, and other applicable declarations. 2. PROGRAM ADMINISTRATOR & CITY • Review application for FTHB and issue denial or approval. o If approved, City issues a 60 day letter of pre -commitment of funds. The letter will include the threshold the household has qualified for and the estimated "buying power'`/°`estimated maximum purchase price". 3. 1-10MEBUYER & REALTOR G Selects house that is eligible for the FTHB. c Places an initial purchase offer. • Choose a certified appraiser to conduct a third -party appraisal to determine Market Value of home and provides to City. • Conducts appraisai in accordance with FTHB requirements. • Realtor/lender submit initial offer, appraisal, Appraiser Certification, Appraiser Checklist, and Request for Issuance of Voluntary Acquisition to Program Administrator. 6. HOMEBUYER & REALTOR • Make Final Purchase Offer, accompanied by voluntary acquisition. Exhibit D Attachment No. 1 58 7. LENDER • Starts processing for mortgage loan and City loan. • Prepares and forwards update to application package to City, including Summary Sheet update. • Processes and underwrites Applicant for first mortgage. • Has an Independent Certified Risk Assessor (or certified equivalent) conduct a property inspection and Risk Assessment to ensure the subject property meets the City's Property Standards (PS) and lead -based paint regulations. Notifies lender, buyer and Escrow of work needed to cure defects within 15 days of lead -based hazard determination (if applicable), and provides Buyer, Lender, and Escrow a copy of arty/ail Risk Assessment Report(.).. 8. PROGRAM ADMINISTRATOR STAFF AND CERTIFIED LEAD BASED PAINT PROFESSIONALS • The Program Administrator issues a 60 day Commitment to Lender after approving the update to application package and verifying that the property meets minimum property standards, Property Standards, reference. (NOTE: The City may choose to issue a Commitment pending receipt of missing documentation and completion of work to cure property of code violations and/or lead -based paint hazards.) o Work to cure property defects and/or lead -based paint hazards takes place by Certified Lead -Based Paint Professionals (if applicable). o Re -inspection and clearance of property takes place to ensure Property Standards and elimination of lead -based paint hazards (if applicable). 9. ESCROW, LENDER & PROGRAM ADMINISTRATOR • Coordinates signing of all closing documents by Sellers and Borrowers, including the following City documents: o Deed of Trust, Promissory Note, and FTHB Regulatory Agreement. 10. LENDER • Sends Close of Escrow Package and all outstanding documentation (per the Commitment) to Program Administrator prior to Commitment expiration. • Program Administrator works with City to get necessary signature on HOME Agreement. • Funds loan through Escrow/Title and Escrow/Title Company and sends Deed of Trust and all recordable documents to the Ti. c Company or County Recorder's Cfflce (close of escrow). 11. PROGRAM ADMINISTRATOR • Receives and reviews Close of Escrow Package (outstanding documentation, original documents, and certified/executed copies). • Wires City loan funds through Escrow/Title and Escrow/Title Company sends Deed of Trust and all recordable documents to the Title Company or County Recorder's Office (close to escrow). fi Conducts random audit of Lenders records. 12. HOMERUYER • Receives City loan. • Signs an Annual Affidavit of Owner -Occupancy. • Provides evidence of Insurance Exhibit D Attachment No. 1 59 APPENDIX E CITY LOAN QUALITY COMMITMENT POLICY The City of National City Housing, Grants and Asset Management Department and the Program Administrator invites the entire mortgage lending community to participate in the First -Time Homebuyer Program. Participation will continue to be open to those mortgage lenders who uphold the following work standards: Lending company personnel receive training for the program before being assigned to prepare loan packages. This training includes: Program Administrator training sessions (if applicable); knowledge of training manual; knowledge of City -provided update letters. Each lender enrolled in the program designates a Program Administrator Contact Person for each participating branch. The Contact's responsibilities include: 1) making Lender Update letters (including attachments) available to all City loan -related personnel in a timely manner; 2) attending at least one training session per year (if applicable); 3) notifying Housing staff of any re -assignment of Contact person and/or changes in company location and or status. Expiration of a Loan Commitment without submission of the required paperwork must be addressed in a timely manner by; submitting the documents necessary to make the file current, close the loan, or canceling the pending loan with notification to the City. • The lender must obtain the Commitment to issue the loan before funding the loan. • Each funding lender ensures that the closing or funding department of their company is aware of their obligations under the city loan program and are prepared to submit all necessary closing documentation in a tirrieiy manner. a Buyers are treated fairly, receiving a full and accurate explanation about the city loan. For questions that the lender cannot answer, the buyer is referred to housing staff. Appendix E Attachment No. I 60 APPENDIX F PROPERTY STANDARDS (PS) The City's First -Time Homebuyer Program is funded through the U.S. Department of Housing and Urban Development's HOME Program. HOME program requires housing must "meet all applicable State and local code requirements and, if there are no such standards or code requirements, the housing must meet the housing quality standards in 24 CFR 982.401". The Acceptability Criteria listed with each section sets the minimum standards that must be met in all residential units. The Interpretation of Acceptability Criteria listed after those criteria are the standards that City feels should also be met if the property is to have long-term utility and contribute to the livability of the unit. ACCEPTABLE CRITERIA AND INTERPRETATIONS A. SITE AND NEIGHBORHOOD - The site and neighborhood shall be reasonably free from disturbing noises and reverberations and other hazards to the health, safety and general welfare of the occupants. ACCEPTABILITY CRITERIA - The site and neighborhood shall not be subject to serious adverse environmental conditions, natural or manmade such as: 1. Dangerous walks, steps or instability; 2. Flooding, poor drainage, septic tank back-ups, sewer hazards or mudslides; 3. Abnormal air pollution, smoke or dust; 4. Excessive noise, vibrations or vehicular traffic; 5. Excessive accumulations of trash; 6. Vermin or rodent infestation; 7. Fire hazards; INTERPRETATION OF ACCEPTABILITY CRITERIA 1. Ail steps and walks should be level, free from dangerous cracks, crumbling or breaks, tripping hazards, broken & missing materials, etc., and be provided with sufficient pitch to prevent water accumulation. 2. The lot should have positive drainage away from the dwelling and/or dwelling unit to prevent standing water at the foundation. 3. No additions. 4. No additions. 5. Any materials, which accumulate on a property in the neighborhood, should be removed or screened and arranged in a manner that does not detract from the general appearance of the neighborhood. 6. No additions — see #5 above — removal of trash, garbage, debris, etc., will significantly reduce infestation problems. Attachment No. 1 61 7. The site should be free from fire hazards, such as the storage of highly flammable materials, etc. B. ACCESS — The dweiiing/dwelling unit shall have adequate access for the occupants. ACCEPTABILITY CRITERIA 1. The dwelling/dwelling unit shall be usable and capable of being maintained without unauthorized use of other private properties. 2. The building shall provide an alternative means of egress in case of fire, i.e., fire stairs, egress through windows, etc. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. The property should be adjacent to an access street or road. 2. No additions. C. STRUCTURE AND MATERIALS - The dwelling/dwelling unit shall be structurally so as not to pose any threat to the health and safety of the occupants and so as to protect the occupants from the environment. ACCEPTABILITY CRITERIA I. Ceilings, walls (interior and exterior), floors, roofs, porches, etc., shall not have any serious defects such as severe bulging or leaning, large holes, loose surface materials, severe buckling or noticeable movement under walking stress, missing parts, or other serious damage. 2. The roof structure shall be firm and the roof shall be weather tight. 3. The exterior wall structure and the exterior and interior wall surfaces shall not have any serious defects such as serious leaning, buckling, sagging, cracks or holes, loose materials, loose siding or other serious damage. 4. The conditions and equipment of interior and exterior stairways, halls, porches, walkways, etc., shall be such as not to present a danger of tripping and/or falling. 5. Elevators shall be maintained in a safe operating condition. 6. in the case of a mobile home, the home shall be securely anchored by a tie -down device, which distributes and transfers loads imposed by the unit to appropriate ground anchors so as to resist wind, overturning and sliding. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. Where crawl spaces or basements exist: all first -floor structural wood members, including floor joists, plates, piers and pilings should be inspected for cracked, broken, rotten or otherwise damaged conditions. Damaged members should be repaired and/or replaced as required. The exterior/interior wails should be weather -tight in a manner that prevents heat loss in the winter (cooling loss in the summer) as much as possible. This includes the repainting and/or installations of siding to protect the exterior surface from the Attachment No. 1 62 elements. The interior walls should be repaired/replaced as required to facilitate this criterion. 2. The roof structure should be firm in that all roof -framing members should be free from cracks and rot. The roof sheathing should be solid and free from sagging, buckling, heaving, etc. If the roof appears to be well worn, it should be replaced. If possible, the best replacement will include stripping all the way down to the sheathing and replacing. If costs dictate, a second layer of roofing can be installed over the first layer. If there are already two or more layers of roofing materials, the roof should be stripped down to the sheathing, and if necessary, replace the sheathing and then install the new roof covering. 3. Concrete block or brick foundations, piers and pilings, should be inspected for loose mortar joints. All empty or cracked mortar joints should be tuck -pointed in an acceptable manner to match, as closely as possible, the rest of the structure. The joints should be recessed. The chimney should be inspected for loose mortar joints and proper height. All empty or cracked mortar joints should be tuck -pointed in an acceptable manner to match, as closely as possible, the rest of the chimney. The joints should be recessed. 4. All exterior steps, walkways and porches should be free of tripping hazards. Crumbling, cracked, broken, missing and/or uneven conditions should be repaired and/or replaced as necessary. The condition of all interior stairways should be such as not to present a danger of tripping or falling, see above. Handrails should be properly installed on all stairways. 5. No additions. 6. No additions. 7. The property should be inspected by a qualified extermination firm, and if necessary treated for vermin, rodents, termites and other wood -burrowing insects. 8. All outbuildings such as garages, storage sheds, etc., should be repaired to a usable condition or removed from the property. 9. The general appearance of the outside of the structure and the lot, after rehabilitation, should be such that it makes a significant contribution to the general appearance of the neighborhood. 10. installation of gutters and down spouts is strongly recommended in order to divert water away from foundations. D. LEAD -BASED PAINT — The dwelling unit shall be in compliance with the HUD Lead -Based Paint regulations. ACCEPTABILITY CRITERIA 1. The dwelling/dwelling unit shall comply with HUD Lead -based Paint regulations at 24 CFR Part 35, issued pursuant to the Lead -Based Paint Poisoning Prevention Act, 42 LiSC 4801. 2. The owner shall provide a certification that the dwelling is in compliance with such HUD regulations. Attachment No. 1 63 3. If the property was constructed prior to 1978, any in -place tenant/family shall be furnished a notice and pamphlet as required by the Lead -Based Paint regulations. Such notice shall inform them of the procedures regarding the hazards of lead -based paint poisoning, the symptoms and treatment of lead poisoning and the precautions to be taken against lead poisoning. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. Compliance with the Lead -Based Paint regulations requires the following actions: o Notification to all occupants that the property may contain lead -based paint, if constructed prior to 1978, and the hazards, symptoms and treatment of such poisoning, including information on testing for elevated blood levels (EBL) for children. • All contracts shall include language prohibiting the use of lead -based paint. • The inspection for and elimination of "immediate hazards", which are defined as chipping, peeling, flaking, cracking or other defects in previously painted surfaces. 2. No additions. 3. No additions. Attachment No. 64 E. WATER SUPPLY ACCEPTABILITY CRITERIA 1. The dwelling/dwelling unit shall be served by an approved public or private sanitary water supply. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. The dwelling unit should have a water heater of sufficient capacity to serve present and anticipated future residents. Further, they should not be allowed in bathrooms, bedrooms, sleeping rooms or closets. 2. Hot and cold water should be supplied to all kitchens, baths and laundry facilities. 3. All water lines should be protected from freezing. F INTERIOR AIR QUALITY - The dwelling/dwelling unit should be free of pollutants in the air at levels that threaten the health of the occupants. ACCEPTABILITY CRITERIA 1. The dwelling/dwelling unit shall be free from dangerous levels of air pollution from carbon monoxide, sewer gas, fuel gas, dust and other harmful air pollutants. 2. Air circulation shall be adequate throughout the dwelling/dwelling unit. 3. Bathroom areas shall have at least 1 openable window or other adequate exhaust ventilation. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. All gas or oil fired appliances should have proper venting to the outside of the dwelling/dwelling unit for combustion gases. 2. All windows designed to open should be capable of being easily opened, provided with the proper window hardware to make them both operable and openable, and provided with screens properly installed and maintained. 3. Kitchen areas should also have proper ventilation. G. ILLUMINATION AND ELECTRICITY — Each room shall have adequate natural or artificial illumination to permit normal indoor activities and to support the health and safety of the occupants. Sufficient electrical sources shall be provided to permit use of essential electrical appliances while assuring safety from fire. ACCEPTS&SILJTY CRITERIA 1. Living and sleeping rooms shall include at least one window. 2. A ceiling or wall -type light fixture shall be present and working in the bathroom and kitchen areas. 3. At least two electric outlets, one of which may be an overhead light, shall be present and operable in the living area, kitchen and each bedroom area. INTERPRETATION OF ACCEPTABILITY CRITERIA Attachment No. 65 1. No additions not performed in a workmanlike manner. 2. A ceiling or wall fixture, operated by a wall switch should be present in the kitchen, bath and hallways. 3. All outlets installed as a result of the rehabilitation work should be of the grounded type. 4. Each unit should be provided with a least 100 amp service and a sufficient number of circuits to service present and anticipated future use of the: • There should be separate circuits for any air conditioners (including window type), furnaces, electric dryers, electric stoves, microwaves and any other special appliances. • There should be two separate 20-amp circuits (minimum) for the heavy workload area in the kitchen, and all kitchens should be wired to the National Electric Code (NEC), based on the size and layout of each individual kitchen. • With the exception of kitchens (see b. above), all other rooms should be assessed relative to their use of electricity and additional outlets and/or switches installed based on usage and safety factors. • Electrical outlets in the bathrooms and kitchens should have an overload switch. 5. Connection at the main service to the unit should be in an acceptable manner. • Placement of the connection should be out of the reach of children, • Proper anchoring should be used. 6 All defective exposed "knob & tube" wiring should be removed. It is recommended that any additional exposed "knob & tube" also be removed and replaced in conduit to prevent splicing and/or unsafe usage. 7 All hazardous conditions such as broken switches/outlets, missing covers, bare wiring, fixtures not properly installed/anchored should be repaired/replaced in an acceptable manner. It is recommended that all "pendant" type fixtures be replaced with an appropriate ceiling/wall fixture. 8. Although though a room may meet acceptability criteria #3 above, if the inspection reveals the use of octopus plugs, adapters, extension/zip cords and/or other unsafe practices, additional outlets should be installed. H. THERMAL ENVIRONMENT — The dwelling/dwelling unit shall have and be capable of maintaining a thermal environment healthy for the human body. ACCEPTABILITY CRITERIA 1. The dwelling/dwelling unit shall contain safe heating and cooling facilities, which are in proper operating condition and can provide adequate heat and/or cooling to each room in the dwelling/dwelling unit appropriate for the climate to insure a healthy living environment. 2. Unvented room heaters that burn gas, rail or kerosene are unacceptable. INTERPRETATION OF ACCEPTABILITY CRITERIA Attachment No. 1 66 3. All parts of the venting system for central heating/cooling units should be in proper working condition. For example: Vent pipes should be free of rust and be properly maintained. Where vent pipes are connected to a masonry chimney, that chimney should be properly maintained so that all mortar joints are tightly sealed. 4. No additions. 5. The attic should be insulated to a rating of R-30 with acceptable insulation material. Where cellulose is used, it should be tested for fire protection. Cellulose bags should be labeled with acceptable ratings derived from flame -spread tests. 6. Weather stripping should be applied as needed around al! doors and windows. 7. Storm windows and doors should be installed whenever possible. 8. Any inside walls that are on an exterior wall, if opened down to the studs during the course of the rehabilitation, should be fully insulated with an acceptable insulation material. 9. All joints in the building envelope should be caulked/sealed. All brittle or loose caulking should be replaced. 10. Supply and return heating/air-conditioning ducts should be insulated whenever they run through unheated areas/spaces. 11. It is strongly recommended that whenever space heaters and/or floor furnaces are used, they be replaced with a properly installed more efficient central heating/cooling system. I. SANITARY FACILITIES —The dwelling/dwelling unit shall include its own sanitary facilities, which are in proper operating condition, can be used in privacy, and are adequate or personal cleanliness and the disposal of human waste. ACCEPTABILITY CRITERIA 1. A flush toilet in a separate, private room; a fixed basin with hot and cold running water; and a bathtub and/or shower with hot and cold running water, shall be present in the dwelling/dwelling unit, and shall be fully operational. 2. These facilities shall utilize an approved public or private disposal system. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. The toilet, basin, and tub or shower should all be located in the same room, if at all possible. 2. Where a public sewage system is not used, documentation in the file should show where the appropriate health agency has approved the disposal system. J. SPACE AND SECURITY —The dwelling/dwelling unit shall afford the family adequate space and security. ACCEPTABILITY CRITERIA 1. A living room, kitchen area, and bathroom shall all be present. Attachment No. 1 67 2. The dwelling/dwelling unit shall contain at least one sleeping or living/sleeping room of appropriate size for each two persons. 3. Exterior doors and windows accessible from outside the unit shall be lockable. 4. Each dwelling/dwelling unit should have smoke detectors. Where bedrooms are located on more than one floor of a structure, smoke detectors should be installed on each floor. it is recommended that all smoke detectors be U.L. approved and be hard -wired. U.L. approved battery type or a combination electric/battery type may also be used. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. No additions K. FOOD PREPARATION AND REFUSE DISPOSAL — The dwelling/dwelling unit shall contain suitable space and equipment to store, prepare and serve foods in a sanitary manner. There shall be adequate facilities and services for the sanitary disposal of food waste and refuse, including facilities for temporary storage where necessary. ACCEPTABLE CRITERIA 1. The unit shall contain the following equipment in operating condition: 1) cooking stove or range, 2) refrigerator or appropriate size for the unit supplied by either the owner or the tenant/family, and 3) kitchen sink with hot and cold running water. 2. The sink shall drain into an approved public or private system. 3. Adequate space for the storage, preparation and serving of food shall be provided. 4. There shall be adequate facilities and services for the sanitary disposal of food waste and refuse, including facilities for temporary storage where necessary (i.e. garbage cans). INTERPRETATION OF ACCEPTABILITY CRITERIA 1. No additions made without City permits and not performed in a workmanlike manner. 2. Food storage space should be in the form of cabinets and/or pantry type storage. Food preparation space should be in the form of counters or other horizontal workspace. 3. No additions. L. SANITARY CONDITION - The unit and its equipment shall be in sanitary condition. ACCEPTABILITY CRITERIA 1. The unit and its equipment shall be free of vermin and rodent infestation. INTERPRETATION OF ACCEPTABILITY CRITERIA 1. No additions not made without City permits. Attachment No. 68 PROPERTY STANDARDS INSPECTION FORM A. Genera! Information: 1. Address of Inspected Unit: 2. Borrower Name: 3. Date of Inspection: 4. Inspector's Name: The following visual inspection is performed by the City of National City and is to be used as information purposes only. The City of National City is not a licensed inspection company and in no way is this to be construed as the borrower's Physical Inspection or due diligence inspection. This will only state the condition of the above referenced property at the time of inspection that the inspector can visually see, prior to the close of escrow. There are no invasive inspections performed nor will the City of National City determine the useful life of some of the mayor systems such as roofs, crawl spaces, plumbing, or other in depth testing or inspections. Should these items be of concern please be sure to contact a professional for those inspections or testing. If professional(s) is/are needed in cases of lead based paint testing, the City will require the borrower or the seller to pay for a third party inspector. Notes: BUILDING EXTERIOR Attachment No. 1 69 hescription PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the exterior maintained in good repair, structurally sound, and sanitary? 2. PROTECTIVE TREATMENT Are all exterior surfaces, other than decay -resistant woods, protected from the elements and decay? Is any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? is all siding, masonry, vinyl, wood, or other surfaces, maintained in good repair, weather resistant, and water tight? Are all metal surfaces treated to prevent rust and corrosion? 3. FOUNDATiON WALLS/SLABS Are all foundation walls/slabs maintained plumb and free from open cracks? Are foundation vents in good repair and kept in such conditions so as to prevent the entry of rodents and other pests? 4. EXTERIOR WALLS Are all walls free from holes, breaks, and loose or rotting materials and maintained weatherproof and properly surface coated where required to prevent deterioration? 5. SIDEWALKS & DRIVEWAYS Are sidewalks, walkways, and driveways in a proper state of repair and maintained free from hazardous (trip) conditions? 6. ROOF Is the roof and flashing sound, tight, and not have defects that admit moisture to the interior of the structure? GUTTERS & DOWNSPOUTS Are gutters and downspouts maintained in good repair and free from obstructions? 8. iltEMISE IDENTIFICATION Does the building have 4" high and Y" wide address numbers placed in a position to be plainly seen from street and contrast with the building background? 9. SOFFIT/FASCIA/DECORATIVE FEATURES / TRIM Are all soffit, fascia cornices, belt courses, corbels, terra cotta trim, wall facings, and other similar decorative features, and trim maintained in good repair, properly anchored, and in a safe condition? 10. STAIRWAYS, DECKS, PORCHES & BALCONIES Are all exterior stairways, decks, porches, & balconies, and all appurtenances attached to, structurally sound, maintained in good repair, with proper anchorage, and capable of supporting imposed loads? 11. SKYLIGHT Are all skylights kept in sound condition, good repair, and weather tight? Attachment No. 1 12. CHIMNEY Are al! chimneys structurally sound, safe, sound, and maintained in good repair? Are all exposed metal or wood surfaces protected against decay or rust by paint or other surface treatment? 70 BUILDING EXTERIOR (continued Attachment No. 1 71 Description PASS OR FAIL N/A Repairs Required 13. li HANDRAILS & GUARDRAILS Are handrails and guardrails firmly fastened, capable of supporting normal loads, and maintained in good repair? Do all stairways having more than four (4) risers have a handrail on one side? Do all open portion of a landing, balcony, porch, deck, ramp, or other walking surface more than 30" above grade have guardrails? If handrails are present, are they at less 30" and not more than 42" high? If guardrails are present, are they at less 30' or more above the floor of the landing, balcony, porch, deck, ramp, or other walking surface? 14. DOORS Are all doors, frames, and hardware kept in sound condition, good repair, and weather tight? Do all locks tightly secure the doors to provide security for the occupants and property within? Does each door have a dead bolt with a throw of not less than 1"? Can the deadbolt be operated from the inside without a key? If storm doors or screen doors are present, are they kept in sound condition, good repair, weather tight, and have a self -closing device in good condition? 15. I WINDOWS Are all windows and frames kept in sound condition, good repair, and weather tight? Is all glazing present and maintained free from cracks and holes? II Are all windows that provide ventilation to habitable rooms equipped with insect screens and kept in sound condition and good repair? If basement windows are present, are rodent shields or storm windows in sound condition, good repair, and weather tight? aN, u;`YSENIE,N UAS`,`°Wy.YeirPRewENT) Are basement hatchways maintained to prevent the entrance of rodents, rain, and surface drainage water? Are basement hatchways equipped with devices that secure the dwelling from unauthorized entry? 17. FENCES/GATES (RENTAL ONLY) Are all fences and gates maintained in sound condition and good repair? 18. SANITARY DRAINAGE SYSTEM Are all plumbing stacks, vents, waste and sewer line function properly, maintained in a safe, sanitary condition, and kept free from obstructions, leaks, and defects? Attachment No. 1 19. WATER SUPPLY Is the water supply system maintained in a safe, sanitary condition, kept free from obstructions, leaks, and defects? If hose bibs or faucets are installed, are the bibs and faucets protected by an approved atmospheric -type (freeze proof) vacuum breaker? 20. ELECTRICAL SERVICE Does a three -wire, 120/240 volt, single-phase electrical service with a rating of not less than 60 amperes, serve the dwelling? Is all equipment, wiring, and appliances properly installed and maintained in a safe condition? 72 LIVING ROOM Attachment No. 1 73 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? 2. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 3. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing). Is there at least one (1) operable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above kround level, equipped with a working window sash - locking device? 4. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Do all doors fit reasonably well within its frame and are capable of gyp;r g opened ?r!d closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Is weatherstripping present and in good condition on all exterior doors? 5. ROOM WIDTH AND HEIGHT Is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? 6. ELECTRICAL RECEPTACLES/SWITCHES Attachment No. 1 Are there at least two working separate and remote receptacle outlets? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? J 74 DEN OR FAMILY ROOM Attachment No. 1 75 Description PASS OR FAIL ' N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structure fly sound, and sanitary? r 2. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 3. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) Is there at least one (1) openable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? 4. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and serf u.rwiy attached to ambs headers or tracks As intended by the manufacturer of the attachment hardware? Is weather stripping present and in good condition on all exterior doors? 5. ROOM WIDTH AND HEIGHT Is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? 6. ELECTRICAL RECEPTACLES/SWITCHES Attachment No. 1 Are there at least two working separate and remote receptacle outlets? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 76 DINING ROOM Attachment No. 1 77 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? 2. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 3. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) Is there at least one (1) openable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? �s. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Is weather stripping present and in good condition on all exterior doors? 5. ROOM WIDTH AND HEIGHT Is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? 6. ELECTRICAL RECEPTACLES/SWITCHES Attachment No. 1 Are there at least two working separate and remote receptacle outlets? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 78 KITCHEN Attachment No. 1 79 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? 2. INTERIOR SURFACE Does any interior surfaces, including windows, doors, cabinets, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? Are all countertops used for food preparation sanitary, maintained in proper condition, and good repair? 3. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) Is there at least one (1) openable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? 4. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Is weather stripping present and in good condition on all exterior doors? . I ROOM WIDTH AND HEIGHT 1 Is there a clear passageway of not less than 3' between countertops and appliances or countertops and walls? Is the ceiling height less than 7'? Attachment No. 1 6. ELECTRICAL RECEPTACLES/SWITCHES/ FIXTURES: Are there at least two working separate and remote receptacle outlets? Is there at least one permanently attached working light fixture? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? so KITCHEN (Continued) Attachment No. 1 81 Description PASS OR FAIL NSA Repairs Required 7. PLUMBING SYSTEM & FIXTURES Does the kitchen have a sink, which is properly connected to a public utility service? Is the sink supplied with hot and cold running water? Are all plumbing fixtures, including drains and water lines, properly installed, maintained in working order, kept free from obstructions, leaks, and defects, safe, sanitary, and capable of performing the design function? 8. COOKTOP, OVEN OR RANGE SERVICE Is there a working connection for either gas or electrical service for installation of a cooktop, oven or a range? Are all service connections properly installed, of adequate size (electrical), maintained in a safe condition, good repair, free of leaks (gas), safe, and capable of performing the design function? Is the service free from electrical hazards? 9. STOVE OR RANGE WITH OVEN (RENTAL ONLY) Is there a working oven, and a stove (or range) with top burners that work? 10. REFRIGERATOR (RENTAL ONLY) Is there a refrigerator that works and maintains a temperature low enough so that food does not spoil over a reasonable period of time? MAIN BATHROOM Attachment No. 1 82 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? Z. BATHROOM ACCESS Do all occupants have access to at least one water closet and lavatory without passing through another bedroom? 3. INTERIOR SURFACE Does any interior surfaces, including windows, doors, cabinets, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are ail waiis and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? Are all vanity countertops sanitary, maintained in proper condition, and good repair? 4. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation? (Example: 30 sq. ft room must have 2.4 sq. ft of window glazing). Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? LKception: In hell 1(i bieancli velit;:ii Lkiil, co iiiiCiitr mechanical ventilation complying with building code is permitted. Is air exhausted by mechanical ventilation discharged to the outdoors and not recirculated? 5. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Does the door have an interior locking device? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Attachment No. 1 S. ROOM WIDTH AND HEIGHT Is the ceiling height less than 7'? NOTE: There are no width requirements for bathrooms. 7. ELECTRICAL RECEPTACLES/SWITCHES/ FIXTURES: Is there an at least one working receptacle outlet? is there at least one permanently attached working light fixture? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 83 Attachment No. 1 84 8. PLUMBING SYSTEM & FIXTURES Does the bathroom have a bathtub or shower, lavatory and water closet, which are properly connected to a public utility service? Are the tub or shower and lavatory supplied with hot and cold running water? Is the water closet supplied with cold running water? Are ail plumbing fixtures, including drains and water lines, properly installed, maintained in working order, kept free from obstructions, leaks, and defects, safe, sanitary, and capable of performing the design function? MASTER BATHROOM Attachment No. 1 85 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? 2. BATHROOM ACCESS Do all occupants have access to at least one water closet and lavatory without passing through another bedroom? 3. INTERIOR SURFACE Does any interior surfaces, including windows, doors, cabinets, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? Are all vanity countertops sanitary, maintained in proper condition, and good repair? 4. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total fioor area for ventilation? (Example: 30 sq. ft room must have 2.4 sq. ft of window glazing). Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - Locking device? Exception: in Eieu e natural ventlation, artiftdzE mechanical ventilation complying with building code is permitted. is air exhausted by mechanical ventilation discharged to the outdoors and not recirculated? 5. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Does the door have an interior locking device? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Attachment No. 1 6. ROOM WIDTH AND HEIGHT Is the ceiling height less than 7'? NOTE: There are no width requirements for bathrooms. 7. ELECTRICAL RECEPTACLES/SWITCHES/ FIXTURES: Is there an at least one working receptacle outlet? is there at least one permanently attached working light fixture? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 86 Attachment No. 1 87 S. PLUMBING SYSTEM & FIXTURES Does the bathroom have a bathtub or shower, lavatory and water closet, which are properly connected to a public utility service? Note: Tub or shower is not required if main bathroom has these items. If tub and shower are present, are the tub or shower and lavatory supplied with hot and cold running water? Is the water closet supplied with cold running water? Are all plumbing fixtures, including drains and water lines, properly installed, maintained in working order, kept free from obstructions, leaks, and defects, safe, sanitary, and capable of performing the design function? BEDROOM #1 H`L.""'C""NV. . Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION I Is the room maintained in good repair, structurally sound, and sanitary? 2. OCCUPANCY LIMITATIONS Does bedroom have at least 70 sq. ft if occupied by one (1) person and at least 50 sq. ft. for each occupant, if occupied by more than one (1) person? 3. BEDROOM ACCESS Does bedroom have its own entrance without passing through another bedroom or bathroom? 4. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 5. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) is there at least one (1) operable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 5' or less above ground level, equipped with a working window sash- locking device? I I i I 6. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Does the door have an interior locking device? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment 88 hardware? Attachment No. 1 5. ROOM WIDTH AND HEIGHT Is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? EXCEPTION: In bedrooms with sloped ceilings, the ceiling height must be 7' over not less than 1/3"1 of minimum floor area. 7. ELECTRICALRECEPTCLE5/SWITCHES Are there at least two working separate and remote receptacle outlets? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? 89 BEDROOM #2 Attachment No. 1 90 Description PASS OR FAIL N/A Repairs Required 1. 1. 3. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? OCCUPANCY LIMITATIONS Does bedroom have at least 70 sq. ft if occupied by one (1) person and at least 50 sq. ft. for each occupant, if occupied by more than one (1) person? BEDROOM ACCESS Does bedroom have its own entrance without passing through another bedroom or bathroom? 4. 5. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, property anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Is there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) Is there at least one (1) openable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground ievci, equipped with a working window sash - locking device? 6. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Does the door have an interior locking device? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Attachment No. 1 7. ROOM WIDTH AND HEIGHT is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? EXCEPTION: In bedrooms with sloped ceilings, the ceiling height must be 7' over not less than 1/3`I of minimum floor area. 8. ELECTRICAL RECEPTACLES/SWITCHES Are there at least two working separate and remote receptacle outlets? Are ail receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 91 BEDROOM #3 Attachment No. 1 92 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? 2. OCCUPANCY LIMITATIONS Does bedroom have at least 70 sq. ft if occupied by one (1) person and at least 50 sq. ft. for each occupant, if occupied by more than one (1) person? 3. 4. BEDROOM ACCESS Does bedroom have its own entrance without passing through another bedroom or bathroom? INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling. flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 5. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? !s there at !east one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) Is there at least one (1) openable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? 6. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Does the door have an interior locking device? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as I intended by the manufacturer of the attachment hardware? Attachment No. 1 7. ROOM WIDTH AND HEIGHT Is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? EXCEPTION: In bedrooms with sloped ceilings, the ceiling height must be 7' over not less than 1/3rd of minimum floor area. 8. ELECTRiCA„L RECEPTACLES/SWITCHES Are there at least two working separate and remote receptacle outlets? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 93 BEDROOM #4 Attachment No. 1 94 Description PASS OR FAIL NA Repairs Required 1. GENERAL CONDITION Is the room maintained in good repair, structurally sound, and sanitary? 2. OCCUPANCY LIMITATIONS Does bedroom have at least 70 sq, ft if occupied by one (1.) person and at least 50 sq. ft. for each occupant, if occupied by more than one (1) person? 3. BEDROOM ACCESS Does bedroom have its own entrance without passing through another bedroom or bathroom? 4. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 5. WINDOWS Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? !s there at least one (1) window facing directly outside, that has a minimum glazed area of 8% of the total floor area for ventilation and lighting? (Example: 100 sq. ft room must have 8 sq. ft of window glazing) Is there at least one (1) openable window that has a minimum opening of at least 45% of the minimum glazed area as required above? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located b' or less above ground Level, equipped with a working window sash - locking device? b. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Does the door have an interior locking device? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? Attachment No. 1 7. ROOM WIDTH AND HEIGHT Is the width of the room in any plan dimension less than 7'? Is the ceiling height less than 7'? EXCEPTION: In bedrooms with sloped ceilings, the ceiling height must be 7' over not less than 1/3'd of minimum floor area. :;. ELECTRICAL RECEPTACLES/SWITCHES Are there at least two working separate and remote receptacle outlets? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? 95 UTILITY ROOM Attachment No. 1 96 Description PASS OR FAIL N/A Repairs Required I. GENERAL CONDITION is the room maintained in good repair, structurally sound, and sanitary? 2. INTERIOR SURFACE Does any interior surfaces, including windows, doors, cabinets, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all walls and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? Are all vanity countertops sanitary, maintained in proper condition, and good repair? 3. WINDOWS Note: Utility rooms do not require windows. If windows are present, are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? 4. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? ROOM WIDTH AND HEIGHT is the ceding height Lacs than 7'? NOTE: Where are no width requirements :Nr this room. 6. ELECTRICAL RECEPTACLES/SWITCHES/ FIXTURES: Is there at least one working receptacle outlet? is there at least one permanently attached working light fixture? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the room free from electrical hazards? Are all receptacles properly installed, of adequate size, and capable of performing the design function? Is the room free from electrical hazards? Attachment No. 1 7. PLUMBING SYSTEM & FIXTURES If the washer hook-up is installed in this room, are all plumbing fixtures, including drains and water lines, properly installed and connected to a public utility service, maintained in working order, kept free from obstructions, leaks, and defects, safe, sanitary, and capable of performing the design function? If washer hook-up is present, is the washer hook-up supplied with hot and cold running water? 97 HALLS & STAIRWAYS Attachment No. 1 98 Description PASS OR FAIL N/A Repairs Required 1. GENERAL CONDITION Are the halls and stairways maintained in good repair, structurally sound, and sanitary? 2. INTERIOR SURFACE Does any interior surfaces, including windows, doors, and trim have any paint peeling, flaking, chipped, cracking, chalking or showing any other signs of paint deterioration? Are all wails and ceiling surfaces free of cracks or loose plaster, decayed wood, or other defective surface conditions? Is all trim maintained in good repair, properly anchored, and in a safe condition? Are all floors sound and maintained in good repair? Are floor coverings sanitary, maintained in good repair, and free from hazardous (trip) conditions? 3. WINDOWS (IF PRESENT) Are all window frames and trim kept in sound condition, good repair, and weather tight? Is weather stripping present and in good condition on all windows? Are all operable windows easily opened and capable of being held in position by window hardware? Are all operable windows, located 6' or less above ground level, equipped with a working window sash - locking device? 4. DOORS Are all doors, frames, and hardware kept in sound condition and good repair? Do all doors fit reasonably well within its frame and are capable of being opened and closed by being properly and securely attached to jambs, headers or tracks as intended by the manufacturer of the attachment hardware? S. HALL WIDTH & HEIGHT Is the width at least 36"? Is the ceiling height less than 7'? 6. ELECTRICAL RECEPTACLES/SWITCHES is there at least one permanently attached working light fixture for the hail? Is there at least one permanently attached working light fixture for the stairway? Are all receptacles, switches, fixtures, and cover plates maintained in a safe condition and good repair? Is the hall and stairway free from electrical hazards? 7. HANDRAILS & GUARDRAILS Are handrails and guardrails firmly fastened, capable of supporting normal loads, and maintained in good repair? Attachment No. 1 Do all stairways having more than four (4) risers have a handrail on one side? Do all open portion of a landing, balcony, or other walking surface more than 30" above floor level have guardrails? If hardrai!s are present, are they at less 30" and not more than 42" high? !f guardrails are present, are they at less 30" or more above the floor of the landing, balcony, or other walking surface? 99 MISCELLANEOUS Attachment No. 1 100 Description PASS OR FAIL N/A Repairs required . MEANS OF EGRESS Are there at a minimum two (2) egress doors to the exterior? Do the egress doors open without the need for keys, special knowledge, or effort? If bars, grilles, grates, or other similar devices are installed on windows and doors, can the devices be released or removed from the inside without the use of a key, tool, or torte greater than that which is required for normal operation? 2. SMOKE ALARMS Are smoke alarms installed on the ceiling or walls outside the immediate vicinity of bedrooms, in each bedroom, and in each story within a dwelling? Do smoke alarms receive primary power from the building electrical system? Exception. Smoke alarms are permitted to be solely battery operated in units which are not undergoing alterations, repairs, or construction of any kind. Are smoke alarms interconnected so that activation of one alarm will activate all the alarms? Exception: Smoke alarms are permitted to be solely battery operated in units which are not undergoing alterations, repairs, or construction of any kind. 3. WATER HEATING FACILITIES Are water heating facilities properly installed, maintained, and capable of providing adequate amount of water to be drawn at every required sink, lavatory, bathtub, shower, and laundry facility at a temperature of not less than 110 degrees? If a gas -burning water heater is installed, is it located in a non -authorized area such as a bathroom, toilet room, bedroom, or other occupied room normally kept closed? Does the water heater have an approved combination temperature and pressure -relief valve installed? Does the water heater have a relief discharge pipe properly installed and maintained? If a gas -burning water heater is installed, is a supply of air for complete combustion of fuel and for ventilation (flue vent) to exterior of the space provided? If electrical water heater is installed, is the electrical system properly installed, of adequate size, and capable of performing the design function? 4. HEATING FACILITIES Is there a heating system? Are cooking appliances being used to provide space heating? Is the heater capable of maintaining a room temperature of 68 degrees in all habitable rooms and bathrooms? If a gas -burning heater is installed, is it located in a non - authorized area such as a bathroom, toilet room, bedroom, or other occupied room normally kept closed? Attachment No. 1 If a gas -burning heater is installed, is a supply of air for complete combustion of fuel and for ventilation (flue vent) to exterior of the space provided? If an electrical heater is installed, is the electrical system properly installed, of adequate size, and capable of performing the design function? If the heating system is located in the attic, is there at least one permanently attached working light fixture near the system? is the thermostat installed properly, maintained in a safe working condition, and capable of performing the intended? 101 MISCELLANEOUS (Continued) Attachment No. 1 102 Description PASS OR FAIL N/A Repairs Required 5. DUCT SYSTEMS Are the duct systems maintained free of obstructions and capable of performing the required function? 6. WASHER & DRYERS If the washer hook up is installed, are all plumbing fixtures, including drains and water lines, properly installed and connected to a public utility service, maintained in working order, kept free from obstructions, leaks, and defects, safe, sanitary, and capable of performing the design function? If washer hook-up is present, is the washer hook-up supplied with hot and cold running water? If washer hook-ups are installed, is there at least one (1) grounded -type receptacle or a receptacle with a ground fault interrupter? If the dryer hook-ups are installed, is the electrical system properly installed, of adequate size, and capable of performing the design function? If a clothes dryer is installed, is the exhaust independent of all other systems? Is the clothes dryer exhausted to the outside in accordance with manufacturer's instructions? 7. MECHANICAL EQUIPMENT Are all mechanical appliances, air conditioning systems, fireplaces, solid fuel -burning appliances, cooking appliances, water heating appliances properly installed, maintained in a safe working condition, and capable of performing the intended use? Are all required clearances to combustible material maintained? Are all safety controls for fuel -burning equipment maintained properly? 8. MINIMUM SPACE REQUIREMENTS (RENTAL ONLY) Living Room: 1-2 Occupant — No requirements. 3-.5 Occupants — Does the living room have at least 120 sq. ft. of space? 6 or more Occupants - Does the living room have at least 150 sq. ft. of space? Dining Area: 1-2 Occupant — No requirements. 3..5 Occupants — Does the dining area have at least 80 sq. ft. of space? 6 or more Occupants - Does the living room have at least 100 sq. ft. of space? Combination Living & Dining: 1-2 Occupant — No requirements. 3-5 Occupants — Does the living room have at least 200 sq. ft. of space? 6 or more Occupants - Does the living room have at I least 250 sq. ft. of space? Attachment No. 1 103 9. INFESTATION Is there any evidence of insect and/or rodent infestation? 10. GARAGE Are all doors, frames, and hardware kept in sound condition, good repair, and weather tight? Do all locks tightly secure the doors to provide security for the occupants and property within? 11. PLAIDS/PERMITS/INSPECTIONS All additions and/or conversions were built with required state and local permits and final inspections. Inspected by: on this day of 2015. Attachment No. 1 104 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE 27383 Recording Requested By And When Recorded Mail to: City of National City Housing, Grants, and Asset Management 1243 National City Boulevard National City, CA 91950 SPACE ABOVE THIS LINE FOR RECORDER'S USE [RECORD AFTER THE 1ST DEED OF TRUST] DECLARATION OF COVENANTS CONDITIONS AND RESTRICTIONS (HUD HOME Program 3% Deferred) City Loan No. THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS ("Declaration") is made as of this day of , 20 , by (hereafter collectively and/or individually "Borrower"), in connection with that certain parcel of real property ("Property") located in the City of National City, County of San Diego, California, described in Exhibit "A" attached hereto and incorporated herein by reference. RECITALS e . Concurrently with the recordation of this Declaration, the City of National City ("Lender") is funding a loan to Borrower ("HUD HOME Loan") evidenced by a promissory note ("HOME Note"). The HUD HOME Loan is secured by a deed of trust ("Deed of Trust") made by Borrower, as trustor, in favor of the Lender as beneficiary. The Lender is making the HUD HOME Loan to aid Borrower, who is a first-time homebuyer, in acquiring the Property. B. The Deed of Trust and HIM HOME Loan and were conditioned in part upon the recordation of this Declaration against the Property. NOW, THEREFORE, Borrower hereby declares that the Property shall be subject to the covenants, conditions and restrictions set forth below: 1. Representations and Warranties of Borrower. Borrower declares, represents and warrants to the Lender and agrees as follows: Attachment No. 1 105 (a) Income Eligibility Requirements -Annual Gross Income 092.203). Borrower's annual gross income, including the income of any co -purchasers or co -tenants, at the time of the execution of this Declaration does not exceed eighty percent (80%) of the Area Median Income for the San Diego -Carlsbad -San Marcos Metropolitan Statistical Area, as adjusted for family size, as determined by HUD. (b) Principal Place of Residence. For so long as the Deed of Trust is recorded against the Property, Borrower will reside in the Property as Borrower's principal place of residence. The Borrower shall be considered as occupying the Property as a principal place of residence if the Borrower is living in the Property for at least ten (10) months out of each calendar year. Borrower agrees not to neglect, sublet, lease or rent out all or any portion of the Property during such period. (c) Ownership Interest. The Borrower has fee simple title on the Property (24 CFR Part 92.254). (d) Liquid Assets. At the time of the execution of this Declaration, Borrower, including any co -purchasers or co -tenants and all other household members, does not hold, directly or indirectly, "liquid assets", as defined below, whose aggregate value exceeds $25,000. As used herein, the term "liquid assets" refers to cash and assets which are readily convertible to cash within a reasonable period, including but not limited to savings and checking accounts, certificates of deposit of any term, marketable securities, money market and similar accounts, mutual fund shares, and insurance policy cash values. The term "liquid assets" shall not include retirement funds which are not readily accessible or which cannot be accessed by the buyer without the buyer incurring a penalty. (e) Not a Full -Time Student. Borrower is not, and none of the co -purchasers or co- tenants of Borrower are, a full-time student, or a household comprised exclusively of persons who are full-time students, unless such persons are married and eligible to file a joint federal income tax return. The term "full-time student" shall be defined as any person who will be or has been a full-time student during five calendar months of the calendar year in question at an educational institution (other than a correspondence school) with regular faculty and students. (f) Not a Student Dependent. Borrower is not, and none of the co -purchasers or co- tenants of Borrower are, a student dependent as defined in the U.S. Internal Revenue Code, unless the taxpayer (upon whom the student in question is dependent) resides in the Property. (g) Not an Owner of Real Property. Borrower does not, and none of the co -purchasers of Borrower, own any real property at the time of escrow closing for the subject Property. (h) First -Time Home Buyer, Displaced Homemaker or Single Parent. Borrower satisfies at least one of the following criteria: (1) Borrower is a first-time home buyer; that is, he or she has not owned a home within the three-year period immediately preceding the date of this Declaration; provided, however, an individual shall not be disqualified as a first-time homebuyer on the basis that the individual owns or owned, as a Attachment No. 1 106 principal residence during the three-year period, a dwelling unit whose structure is not permanently affixed to a permanent foundation in accordance with local or other applicable regulations or is not in compliance with State, local, or model building codes, or other applicable codes, and cannot be brought into compliance with the codes for less than the cost of constructing a permanent structure; (2) Borrower is a displaced homemaker as defined in 24 C.F.R. §92.2; or (3) Borrower is a single parent as defined in 24 C.F.R. §92.2. (i) Homebuyer Counseling. Borrower has attended a HUD -approved Homebuyer Counseling session. 2. Due on Sale, Default, or 30-Years. (a) Borrower shall pay principal and all accrued interest (either simple interest or default interest, as the case may be) on the HOME Note, in one lump sum, to Lender upon the earliest of: (1) a Sale (as defined in Section 2(b), below); (2) a default after completion of the applicable acceleration procedures set forth in Section 3, below; or (3) thirty (30) years from the date first written above. Borrower shall make any payments at the City of National City Finance Department's office located at 1243 National City Boulevard, National City, California 91950, or such other place as designated by Lender. Notwithstanding the foregoing, in the event of a Sale, where the net proceeds available from the sale are less than the amount that would otherwise be due hereunder, then the Lender shall be entitled to recapture the net proceeds available from the Sale. Net proceeds are defined as the sales price minus repayment of all senior loans and any closing costs. "Senior loans" means loans that are superior to the Deed of Trust. In the event of any Sale which is not a foreclosure or an arm's-length transaction. The "sales price" shall be determined by an appraiser holding a M_Al designation from the Appraisal Institute that has at least five (5) years of experience in the g ogtaohhic area in which the Property is located, selected by the Lender in its sole discretion. (b) Sale Defined. The following shall all be considered transfers or sales of the Property and shall be referred to herein generally as a "Sale": (i) all or any part of the Property or any interest in 'the Property is sold, conveyed or transferred; (ii) if Borrower is not a natural person and a beneficial interest in Borrower is sold, conveyed or transferred; (iii) all or any part of the Property is refinanced or further encumbered, except as otherwise allowed by law; (iv) Borrower does not occupy the Property as his, her, or their, primary residence; (v) the leasing or renting of all or any part of the Property; (vi) any material breach of this Declaration, the HOME Note or Deed of Trust; or (vii) the filing of bankruptcy by the Borrower. Notwithstanding the foregoing, a refinancing of the Property shall not be considered a default, provided the Lender provides written consent to Borrower prior to the refinancing, which consent may be granted or withheld in the sole and absolute discretion of the Lender. Attachment No. 1 107 (c) No Assumption of Note. The HOME Note may not be assumed by any person, except as otherwise allowed by law. 3. Acceleration (Default). (a) Acceleration, Remedies. Upon Borrower's default of this Declaration, the HOME Note, the Deed of Trust, or any other document secured by this Declaration, the Deed of Trust and/or the Property, Lender shall give notice to Borrower prior to acceleration, such notice shall include: (1) a description of the breach; (2) the action required to cure such breach (if any); (3) a date, not less than ten (10) days from the date the notice is mailed to Borrower, by which such breach must be cured; and (4) a statement that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by the Deed of Trust and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Borrower to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Lender, at Lender's option, may declare all of the sums secured by the Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by applicable law, including, but not limited to, as provided in and pursuant to the procedure set forth in the Deed of Trust. Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this Section 3, including, but not `'~" ted to, reasonable attorneys' fees. (b) Borrower's Right to Reinstate. (1) Curable Breach. Notwithstanding Lender's acceleration of the sums secured by the Deed of Trust due to Borrower's breach, Borrower shall have the right to have any proceedings begun by Loner to enforce the Decd of Trust discontinued at any time prior to five (5) days before the sale of the Property pursuant to the power of sale contained in the Deed of Trust or at any time prior to entry of a judgment enforcing the Deed of Trust if: (A) Borrower pays Lender all sums which would be then due under the HOME Note and the Deed of Trust had no acceleration occurred; (B) Borrower cures all breaches of any other covenants or agreements of Borrower contained in the Deed of Trust; Attachment No. 1 108 (C) Borrower pays all reasonable expenses incurred by Lender and the trustee in enforcing the covenants and agreements of Borrower contained in the Deed of Trust, including, but not limited to, reasonable attorneys' fees; and (D) Borrower takes such action as Lender may reasonably require to assure that the lien of the Deed of Trust, Lender's interest in the Property and Borrower's obligation to pay the stuns secured by the Deed of Trust shall continue unimpaired. Upon such payment and cure by Borrower as set forth in this Section 3(b) (1), the Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. (2) Non -Curable Breach. (A) Failure to Occupy/Renting Out the Property is a Violation of Law. Borrower hereby acknowledges that the HUD HOME Loan evidenced by the HOME Note and secured by the Deed of Trust and this Declaration was funded by Lender using U.S. Department of Housing and Urban Development ("HUD") Home Investments Partnership Act ("HOME") funds. Section 215 of the HOME Investment Partnerships Act (42 U.S.C. §12745) and the HOME program regulations (24 C.F.R. §92.254) require Borrower to occupy the Property as Borrower's principal residence. Leasing or renting out the Property in whole or in part and/or Borrower's failure to occupy the Property as Borrower's principal residence is a violation of State of California and Federal law (in addition to being a violation of this Declaration). Lender is obligated by Federal law to enforce the provisions of the HOME program, Lender's failure to do so would jeopardize Lender's ability to obtain additional HOME funds from HUD and help other low- income families to obtain affordable housing. (B) Failure to Occupy/Renting Out the Property Materially Impairs Lender's Security. Borrower hereby acknowledges and agrees that renting out the Property (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence, materially impairs Lender's security for the HUD HOME Loan and Lender's ability to obtain: additional WIMEfunds uc n HUD and help other low-income families to obtain affordable housing. Borrower further acknowledges that if the Property is rented out (in whole or in part) and/or Borrower fails to occupy the Property as Borrower's principal residence, then during any such period the Property will not qualify as "affordable housing" and Lender may be in breach of its obligations to HUD and therefore the Lender's security for the HUD HOME Loan will be materially impaired. (C) Failure to Occupy/Renting Out the Property is a Non -Curable Breach. Borrower hereby acknowledges and agrees that renting out the Property (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence, will be a non -curable breach and Lender shall have the right to accelerate the HUD HOME Loan and foreclose on the Property as provided herein. Notwithstanding anything to the contrary set forth in this Declaration, Borrower agrees that in the event Borrower rents out the Property (in whole or in part) and/or fails to occupy the Property as Borrower's principal residence, Borrower shall not have the right to cure the breach and reinstate the HUD HOME Loan, the Deed of Trust or the obligations secured thereby. Attachment No. 1 109 (D) Borrower's Waiver. Borrower hereby knowingly waives and relinquishes any and all legal and/or contractual rights Borrower may have to cure or otherwise reinstate the Deed of Trust and the obligations secured thereby, in the event that Property is rented out (in whole or in put) and/or Borrower fails to occupy the Property as Borrower's principal residence. (E) Representation of Comprehension. Borrower acknowledges and agrees that Lender has advised Borrower (and each of them if there is more than one Borrower) to retain an attorney to represent Borrower with respect to this Declaration. By executing this Declaration, Borrower (and each of them if there is more than one Borrower) represents that: (i) Borrower fully understands and accepts the terms of this Declaration, the HOINTE Note and Deed of Trust; (ii) Borrower has relied upon the legal advice of Borrower's attorneys or that Borrower has freely and independently chosen not to seek the advice of an attorney; (iii) that neither the Lender nor its attorneys represents Borrower; (iv) that Borrower has had a full and ample opportunity to consult with any other professionals of Borrower's choice in connection with the rights and liabilities created by this Declaration, the HOME Note and Deed of Trust; (v) that Borrower does not have any questions with regard to the legal import of any term, word, phrase, or portion of this Declaration, the HOME Note and Deed of Trust, or any of the foregoing documents in their entireties; and (vi) Borrower accepts the terms of this Declaration, the HOME Note and Deed of Trust as written. 4. Term. This Declaration shall expire upon the earlier of the foreclosure of any deed of trust or mortgage on the Property made in favor of or held by an institutional lender or investor that is senior in recording priority to this Declaration or payment in full of the HOME Note. 5. Covenant Against Discrimination. Borrower covenants on behalf of itself and its successors and assigns, and each successor in interest to the Property, not to discriminate against any prospective purchaser of the Property on the basis of race, religion, sex or national origin. 6. Enforcement. Borrower expressly agrees and declares that Lender or any successor public agency is a proper party and shall have standing to initiate and pursue any and all actions or proceedings, at law or in equity to enforce the provisions hereof and/or to recover damages for any default hereunder and/or to enforce the terms of this Declaration. Further, Lender or any successor public agency shall be the proper party to waive, relinquish, release or modify the rights, cove ants, obligations or restrictions contained in or arising under this Declaration. 7. Attorneys' Fees. Upon the breach of the terms of this Declaration, the HOME Note or Deed of Trust, Borrower agrees to pay Lender any and all attorneys' fees, court costs, trustee fees, and any and all other fees and costs incurred by Lender as a result of said breach and/or default. 8. Severability. In the event that any provision or covenant of this Declaration is deemed to be invalid or unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest of this Declaration and the remaining provisions shall continue in fall force and effect. Attachment No. 1 110 9. Covenants Run With The Land. The covenants contained herein shall constitute "covenants running with the land" pursuant to Civil Code Sections 1460, 1462, 1463, 1464, 1465, 1467 and 1468, to the extent applicable, and shall bind the Property and every person having an interest therein during the term of this Declaration, including Borrower and its successors, heirs and assigns. Borrower agrees for itself and its successors that, in the event that, for any reason whatsoever, a court of competent jurisdiction determines that the foregoing covenants do not run with the land, such covenants shall be enforced as equitable servitudes against the Property. 10. Recordation. This Declaration shall be recorded in the Office of County Recorder of San Diego, California. 11. Remedies Cumulative. Lender shall have the right, in the event of any breach of any such agreement or covenant, to exercise all the rights and remedies, and to maintain any actions at law or suit in equity or other proper proceedings to redress the breach of agreement or covenant. 12. Headings. The headings used in this Declaration are for convenience only and are not to be used to interpret the meaning of any of the provisions of this Declaration. 13. Liberal Construction. The provisions of this Declaration shall be liberally construed to effectuate its purpose. Failure to enforce any provision of this Declaration shall not constitute a waiver of the right to enforce the provision later. 14. Number; Gender. The singular shall include the plural and the plural the singular, unless the context requires the contrary; and the masculine, feminine and neuter shall include the masculine, feminine or neuter, as the context requires. 15. Exhibits. Any exhibits referenced herein and attached to this Declaration are hereby incorporated by reference. 16. Notices to Mortgagees of Record. On any loss to the Property, if such loss exceeds One Thousand Dollars ($1,000.00), notice in writing of such loss shall be given to each mortgagee of record. 17. Fire and Extended Coverage Insurance. Borrower shall obtain and maintain a policy of fire insurance for the full insurable value of all the improvements within the Property. The form, content and term of the policy, its endorsements and the issuing company must be satisfactory to all mortgagees. If more than one mortgagee has a loan of record against the Property, or any part thereof, the policy and endorsement shall meet themaximum S standards of thc various _ ,� .'. .s�t��e�i"aaw.6s3 rmortgagees represented in the Property. The policy shall contain an agreed amount endorsement or its equivalent, an increased cost of construction endorsement, vandalism and malicious mischief coverage, a special form endorsement and a determinable cash adjustment clause or a similar clause to permit cash settlements covering the fall value of the improvements in case of partial destruction and a decision not to rebuild. The policy shall name as insureds the owners, Borrower and the mortgagees, as long as their respective interests may appear. "Mortgagees", as used herein, includes beneficiaries under a deed of trust. 18. Binding Effect. This Declaration shall inure to the benefit of and be binding upon the Attachment No. 1 111 successors and assigns of Borrower and the heirs, personal representatives, grantees, tenants, successors -in -interest or assigns of the owners. 19. Certifications by Borrower. Not less frequently than once a year Borrower shall certify to Lender that Borrower: (a) Complies with all the terms and conditions of this Declaration and the Deed of Trust; and (b) Has obtained and does maintain fire and casualty insurance on the Property satisfactory to Lender, including a certificate of insurance, of which Lender shall be a holder, from the insurance company providing coverage satisfactory to Lender which may not be cancelled by the insurance company without thirty (30) days advance notice of cancellation. 20. Declaration Subordinate. This Declaration is subordinate to any deed of trust or mortgage on the Property, which deed of trust is senior in recording priority to this Declaration. Any party, and its successors and assigns, receiving title to the Property through a trustee's sale, judicial foreclosure sale, or deed in lieu of foreclosure of such senior deed of trust or mortgage, and any conveyance or transfer thereafter, shall receive title free and clear of the provisions of this Declaration. 21. Refinancing. Neither the Property, nor any portion thereof, shall be refinanced without the written consent the Lender, except as otherwise allowed by law. The Lender may withhold any such consent in its sole and absolute discretion, nothing contained herein shall obligate Lender to agree to Borrower's request to refinance the Property or any portion thereof. 22. Waiver by Lender. Any provision hereof, including without limitation, the requirement that Borrower occupy the Property, may be waived only with the advance written approval of the Lender and HUD for good cause shown. 23. HOME Period. The HUD HOME Loan was funded by Lender using U.S. Department of Housing and Urban Development ("HUD") Home Investments Partnership Act ("HOME") funds. The HOME program regulations (24 C.F.R. Part 92), apply for a period of years, from the date of recordation of the Deed of Trust. Beginning years after the date of recordation of the Deed of Trust, and for the remainder of the term of this Declaration, the Property will continue to be subject to the restrictions set forth in this Declaration, but shall no longer be subject to the HOME program regulations. 24. Declaration Independent of HOME Note. The obligations of Borrower under this Declaration shall be independent of, and in addition to, Borrower's obligations under the HOME Note, and repayment of the HOME Note shall not terminate or otherwise affect this Declaration. Date: Borrower: Attachment No. 1 112 Date: Borrower: Attachment No. 1 113 EXHIBIT "A" Legal Description of the Property Property Address: , National City, California Attachment No. 1 114 A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document, to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. ACKNOWLEDGIl NT: STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On before me, , a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the persons acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature of Notary (SEAL) Attachment No. 1 115 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 Recording Requested By And When Recorded Mail To: City of National City Housing, Grants, and Asset Management 1243 National City Boulevard National City, CA 91950 [RECORD AFTER THE CC&R'S] DEED OF TRUST (HUD HOME Program 3% Deferred) City Loan No. THIS DEED OF TRUST ("Deed of Trust") is made this day of , 20 , among the Trustor, ("Borrower"), the trustee, ("Trustee"), and the Beneficiary, San City of National City ("Lender"), whose address is 1243 National City Boulevard, National City, California 91950. BORROWER HEREBY irrevocably grants, transfers, and assigns to Trustee, in trust, with power of sale, all, that property in the City of National City, County of San Diego, State of California, described as: (See Legal Description - Exhibit "A") which has the address of , San Diego, California (herein "Property Address"); TOGETHER with all the improvements now and hereafter erected on the Property, and all easements, rights, appurtenances and rents (subject, however, to the rights and authorities given herein to Lender to collect and apply such rents), all of which shall be deemed to be and remain part of the property covered by this Deed of Trust; and all of the foregoing,together with said property, are hereinafter referred to as the "Property"; TO SECURE to Lender: (A) Repayment of the indebtedness evidenced by the Promissory Note (HUD HOME Program three percent (3%) Deferred) of even date herewith, and extensions and renewals thereof, in CITY OF NATIONAL CITY PAGE 1 OF 12 HOME -DEED OF TRUST Attachment No. 1 116 the principal sum of U.S. Dollars ($ ) ("HOME Note") made by Borrower in favor of the Lender; (B) The performance of each agreement and covenant of Borrower under that certain Declaration of Covenants, Conditions and Restrictions (HUD HOME Program 3% Deferred) ("Declaration") of even date herewith and recorded concurrently herewith affecting the Property; (C) The payment of all other sums, with interest thereon, advanced to protect the security of this Deed of Trust; and 03) The performance of the covenants and agreements of Borrower contained herein. BORROWER covenants that Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Property, and that Borrower is unencumbered except for encumbrances of record. Borrower covenants that Borrower warrants, and will defend generally, the title to the Property against all claims and demands, subject to encumbrances of record. UNIFORM COVENANTS Borrower and Lender covenant and agree as follows: I. Payment of Principal and Interest. Borrower shall promptly pay when due the principal and interest evidenced by the HOME Note. 2. Funds for Taxes and Insurance. To protect the security of this Deed of Trust, Borrower agrees to pay, at least ten (10) days before delinquency, all taxes and assessments affecting the Property, including assessments on appurtenant water stock, all encumbrances, charges and liens, with interest, on the Property or any part thereof, which appear to be prior or superior hereto, and all costs, fees and expenses of this Trust. Should Borrower fail to make any payment or fail to do any act as herein provided, then Lender or Trustee, without obligation to do so and without notice to or demand upon Borrower and without releasing Borrower from any obligation hereof, may make or do the same in such manner and to such extent as either may deem necessary to protect the secs ri, hereof, Lender or Trustee being authorized to enter upon the Property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Lender or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either Lender or Trustee appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay his reasonable fees. 3. Anpllication_ of Payments. All payments received by Lender under the HOME Note shall be applied by Lender first in payment of amounts due to Lender by Borrower, then to interest payable on the HOME Note, and then to the principal of the HOME Note. 4. Prior Mortgages and Deeds of Trust; Charges, Liens. Borrower shall perform all of Borrower's obligations under any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust, including Borrower's covenants to make payments when due. Borrower shall pay or cause to be paid all taxes, assessments and other charges, fines and CITY OF NATIONAL CITY PAGE 2 OF 12 HOME -DEED OF TRUST Attachment No. 1 117 impositions attributable to the Property which may attain a priority over this Deed of Trust, and leasehold payments, if any. 5. Hazard Insurance. Borrower shall keep the improvement(s) now existing or hereinafter erected on the Property insured against loss by fire, hazards included within the terms "extended coverage," and such other hazards as Lender may require and in such amounts and for such periods as Lender may require. The insurance carrier providing the insurance shall be chosen by Borrower subject to approval by Lender, provided that such approval will not be unreasonably withheld. All insurance policies and renewals thereof shall be in a form acceptable to Lender and shall include a standard mortgagee clause in favor of and in a form acceptable to Lender. Lender has the right to hold the policies and renewals thereof, subject to the terms of any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust. In the event of loss, Borrower shall give prompt notice to the insurance carrier and Lender. Lender may make proof of loss if not made promptly by Borrower.. If Property is abandoned by Borrower, or if Borrower fails to respond to Lender within thirty (30) days from the date notice is mailed by Lender to Borrower that the insurance carrier offers to settle a claim for insurance benefits, Lender is authorized to collect and apply the insurance proceeds at Lender's option either to restoration or repair of the Property or to the sums secured by this Deed of Trust. 6. Preservation and Maintenance of Property. Borrower will keep the Property in good repair and shall not commit waste or permit impairment or deterioration of the Property and shall comply with the provisions of any lease if this Deed of Trust is on a leasehold. If this Deed of Trust is on a unit in a condominium or planned unit development, Borrower shall perform all of Borrower's obligations under the declaration of covenants, conditions and restrictions creating or governing the condominium or planned unit development, the bylaws and regulations of the condominium or planned unit development, and constituent documents. Borrower shall maintain the Property in conformance with all applicable state, federal, and local laws, ordinances, codes and regulations. In the event that Borrower fails to maintain the Property in accordance with these standards and after at least thirty (30) business days prior to the notice to Borrower, the City or the City's Contractor or Agent may, but shall be under no obligation to, enter upon the Property, make such repairs or replacements as are deemed necessary in the City's discretion, and provide for payment thereof. Any amount advanced by the City to make such repairs, together with interest thereon from the date of such advance at the rate of seven (7%) percent (unless payment of such an interest rate would be contrary to applicable law, in which event such suns shall bear interest at the highest rate then allowable by applicable law), shall become an additional obligation to the Borrower to the City and shall be secured by the Deed of Trust, if not previously reconveyed. Protection7. of Lender Security. i�y. If Borrower fails to perform the covenants anti agreements contained in this Deed of Trust, or if any action or proceeding is commenced which materially affects Lender's interest in the Property, then Lender, at Lender's option, upon notice to Borrower, may make such appearances, disburse such sums including reasonable attorneys' fees, and take such action as is necessary to protect Lender's interest. If Lender's required hazard insurance is a condition of making the loan secured by this Deed of Trust, Borrower shall pay the premiums required to maintain such insurance in effect until such time as the requirement for such insurance terminates in accordance with Borrower's and Lender's written agreement or applicable law. Any amounts disbursed by Lender pursuant to this Section, with interest thereon at the rate of ten percent (10%) per annum, will CITY OF NATIONAL CITY PAGE 3 OF 12 HOME -DEED OF TRUST Attachment No. 1 118 become additional indebtedness of Borrower secured by this Deed of Trust. Unless Borrower and Lender agree to other terms of payment, such amounts will be payable upon notice from Lender to Borrower requesting payment thereof. Nothing contained in this Section will require Lender to incur any expense or take any action hereunder. 8. Inspection. Lender may make or cause to be made reasonable entries upon and inspections of the Property, provided that Lender will give Borrower notice prior to any such inspection, specifying reasonable cause therefor related to Lender's interest in the Property. 9. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of the Property, or part thereof, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lender subject to the terms of any mortgage, deed of trust or other security agreement with a lien which has priority over this Deed of Trust. 10. Borrower Not Released; Forbearance by Lender Not a Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Deed of Trust granted by Lender to any successor in interest of Borrower shall not operate to release, in any manner, the liability of the original Borrower and Borrower's successors in interest. Lender shall not be required to commence proceedings against such successor or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Deed of Trust by reason of any demand made by the original Borrower and Borrower's successors in interest. Any forbearance by Lender in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any such right or remedy. 11. Successors and Assigns Bound, Joint and Several Liability. The covenants and agreements contained herein shall bind, and the rights hereunder shall inure to, the respective successors and assigns of Lender and Borrower, subject to the provisions of Section 15 hereof. All covenants and agreements of Borrower shall be joint and several. 12. Notice. Except for any notice required under applicable law to be givorr in another manner: (a) any notice to Borrower provided for in this Deed of Trust shall be given by delivering it or by mailing such notice by certified mail, addressed to Borrower at the Property Address; and (b) any notice to Lender will be given by certified mail, return receipt requested, to Lender's address stated herein or to such other address as Lender may designate by notice to Borrower as provided herein. Any Notice provided for in this Deed of Trust shall be deemed to have been given to Borrower or Lender when given in the manner designated herein. 13. Governing Law, Severability. The state and local laws applicable to this Deed of Trust shall be the laws of the jurisdiction in which the Property is located. The foregoing sentence shall not limit the applicability of federal law to this Deed of Trust. In the event that any provision or clause CITY OF NATIONAL CITY PAGE 4 OF 12 HOME -DEED OF TRUST Attachment No. 1 119 of this Deed of Trust or the HOME Note conflicts with applicable law, such conflict shall not affect other provisions of this Deed of Trust or the HOME Note which can be given effect without the conflicting provision and, to this end, the provisions of this Deed of Trust and the HOME Note are declared to be severable. As used herein, "costs," "expenses" and "attorneys' fees" include all sums to the extent not prohibited by applicable law or limited herein. 14. Borrower's Copy. Borrower shall be furnished a conformed copy of the HOME Note and this Deed of Trust at the time of execution or after recordation hereof 15. Due on Sale, Breach or 30-Years. (a) Payment. Borrower shall pay principal and all accrued interest (either simple interest or default interest, as the case may be) on the HOME Note, in one lump sum, to Lender upon the earliest of: (1) a Sale (as defined in Section 15(b), below); (2) a default after completion of the applicable acceleration procedures set forth in Section 16, below; or (3) thirty (30) years from the date of the HOME Note. Borrower shall make any payments at the City of National City Finance Department's office located at 1243 National City Boulevard, National City, California 91950, or such other place as designated by Lender. Notwithstanding the foregoing, in the event of a Sale, where the net proceeds available from the sale are less than the amount that would otherwise be due hereunder, then the Lender shall be entitled to recapture the net proceeds available from the Sale. Net proceeds are defined as the sales price minus repayment of all senior loans and any closing costs. "Senior loans" means loans that are superior to the Deed of Trust. In the event of any Sale which is not a foreclosure or an arm's-length transaction. The "sales price" shall be determined by an appraiser holding a MAI designation from the Appraisal Institute that has at least five (5) years of experience in the geographic area in which the Property is located, selected by the Lender in its sole discretion. (d) Sale Defined. The following shall all be considered transfers or sales of the Property and shall be referred to herein generally as a "Sale": (i) all or any part of the Property or any interest in the Property is sold, conveyed or transferred; (ii) if Borrower is not a natural person and a beneficial interest in Borrower is sold, conveyed or transferred; (iii) all or any part of the Property is refinanced or further encumbered, except as otherwise allowed by law; (iv) Borrower does not occupy the Property as his, her, or their, primary residence; (v) the leasing or renting of all or any part of the Property; (vi) any material breach of the HOME Note, the Declaration, this Deed of Trust, or any other agreement or obligation secured by the property; or (vii) the filing of bankruptcy by the Borrower. Notwithstanding the foregoing, a refinancing of the Property shall not be considered a default, provided the Lender provides written consent to Borrower prior to the refinancing, which consent may be granted or withheld in the Sole and absolute discretion of the Lender. (c) No Assumption of Note. The HOME Note may not be assumed by any person, except as otherwise allowed by law. NON -UNIFORM COVENANTS Borrower and Lender further covenant and agree as follows: CITY OF NATIONAL CITY PAGE 5 OF 12 HOME -DEED OF TRUST Attachment No. 1 120 16. Acceleration (Default), Remedies. Upon Borrower's default (or breach) of this Deed of Trust, the HOME Note, Declaration, or any other document secured by this Deed of Trust, the Declaration and/or the Property, Lender, prior to acceleration, shall give notice to Borrower as provided in Section 12 hereof specifying: (a) the breach; (b) the action required to cure such breach; (c) a date, not less than ten (10) days from the date the notice is mailed to Borrower, by which such breach must be cured; and (d) that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Borrower to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Lender, at Lender's option, may declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by applicable law. Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this Section 16, including, but not limited to, reasonable attorneys' fees. If Lender invokes power of sale, Lender shall execute or cause Trustee to execute a written notice of the occurrence of an event of default and of Lender's election to cause the Property to be sold and shall cause such notice to be recorded in each county in which the Property or some part thereof is located. Lender or Trustee shall mail copies of such notice in the manner prescribed by applicable law. Trustee shall give public notice of sale to the persons and in the manner prescribed by law. After the lapse of such time as may be required by applicable law, Trustee, without demand on Borrower, shall sell the Property at o blic auction to the highest bidder at the time and place and under the terms designated in the notice of sale in one or more parcels and in such order as Trustee may determine. Trustee may postpone sale of all or any parcel of the Property by public announcement at the time and place of any previously scheduled sale. Lender or Lender's designee may purchase the Property at any sale. Trustee shall deliver to the purchaser Trustee's deed conveying the PEopeity so sold without any covenant or warranty, expressed or implied. The recitals in the "Trustee's deed shall be prima facie evidence of the truth of the statements made therein. Trustee shall apply the proceeds of the sale in the following order: (1) to all reasonable costs and expenses of the sale, including, but not limited to, reasonable Trustee's and attorneys' fees and costs of title evidence; (2) to all sums secured by this Deed of Trust; and CITY OF NATIONAL CITY PAGE 6 OF 12 HOME -DEED OF TRUST Attachment No. 1 121 (3) the excess, if any, to the person or persons legally entitled thereto. 17. Borrower's Right to Reinstate. (a) Curable Breach. Notwithstanding Lender's acceleration of the sums secured by this Deed of Trust due to Borrower's breach (default), Borrower shall have the right to have any proceedings begun by Lender to enforce this Deed of Trust discontinued at any time prior to five (5) days before the sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (1) Borrower pays Lender all sums which would be then due under this Deed of Trust and the HOME Note had no acceleration occurred; (2) Borrower cures all breaches of any other covenants or agreements of Borrower contained in this Deed of Trust; (3) Borrower pays all reasonable expenses incurred by Lender and the Trustee in enforcing the covenants and agreements of Borrower contained in this Deed of Trust, including, but not limited to, reasonable attorneys' fees; and (4) Borrower takes such action as Lender may reasonably require to assure that the lien of this Deed of Trust, Lender's interest in the Property and Borrower's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by Borrower as set forth in this Section 17(a), this Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. (b) Non -Curable Breach. (1) Failure to Occupy/Renting Out the Property is a Violation of Law. Borrower hereby acknowledges that the loan evidenced by the HOME Note and secured by this Deed of Trust was funded by Lender using U.S. Department of Housing and Urban Development ("HUD") Home Investments Partnership Act ("HOME") funds. Section 215 of the HOME Investment Partnerships Act (42 U.S.C. § 12745) and the HOME program regulations (24 C.F.R. §92.254) require Borrower to occupy the Proper, as Borrower's principal residence. Renting out the Prope y (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence is a violation of State of California and Federal law (in addition to being a violation of the HOME Note, Declaration and this Deed of Trust). Lender is obligated by Federal law to enforce the provisions of the HOME program, Lender's failure to do so would jeopardize the Lender's ability to obtain additional HOME funds from HUD and help other low-income families to obtain affordable housing. (2) Failure to Occupy/Renting Out the Property Materially Impairs Lender's Security. Borrower hereby acknowledges and agrees that renting out the Property (in whole or in CITY OF NATIONAL CITY PAGE 7 OF 12 HOME -DEED OF TRUST Attachment No. 1 122 part) and/or Borrower's failure to occupy the Property as Borrower's principal residence, materially impairs the Lender's security for the loan and the Lender's ability to obtain additional HOME funds from HUD and help other low-income families to obtain affordable housing. Borrower further acknowledges that if the Property is rented out (in whole or in part) and/or Borrower fails to occupy the Property as Borrower's principal residence, then during any such period the Property will not qualify as "affordable housing" and the Lender may be in breach of its obligations to HUD and therefore the Lender's security for the loan will be materially impaired. (3) Failure to Occupy/Renting Out the Property is a Non -Curable Breach. Borrower hereby acknowledges and agrees that renting out the Property (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence, will be a non -curable breach and the Lender shall have the right to accelerate the loan and foreclose on the Property as provided herein. Notwithstanding anything to the contrary set forth in this Deed of Trust, Borrower agrees that in the event Borrower rents out the Property and/or fails to occupy the Property as Borrower's principal residence, Borrower shall not have the right to cure the breach and reinstate the loan, this Deed of Trust or the obligations secured hereby. (4) Borrower's Waiver. Borrower hereby knowingly waives and relinquishes any and all legal and/or contractual rights Borrower may have to cure or otherwise reinstate this Deed of Trust and the obligations secured hereby, in the event that Property is rented out (in whole or in part) and/or Borrower fails to occupy the Property as Borrower's principal residence. (5) Representation of Comprehension. Borrower acknowledges and agrees that Lender has advised Borrower (and each of them if there is more than one Borrower) to retain an attorney to represent Borrower with respect to the loan secured by this Deed of Trust. By executing this Deed of Trust, Borrower (and each of them if there is more than one Borrower) represents that: (i) Borrower fully understands and accepts the terms of this Deed of Trust, the HOME Note and Declaration; (ii) Borrower has relied upon the legal advice of Borrower's attorneys or that Borrower has freely and independently chosen not to seek the advice of an attorney; (iii) that neither the Lender nor its attorneys represents Borrower; (iv) that Borrower has had a full and ample opportunity to consult with any other professionals of Borrower's choice in connection with the rights and liabilities created by this Deed of Trust, the HOME Note and Declaration; (v) that Borrower does not have any questions with regard to the legal import of any term, word, phrase, or portion of this Deed of Trust, the HOME Note or Declaration, or any of the foregoing documents in their entireties; and (vi) Borrower accepts the terms of this Deed of Trust, the HOME Note and Declaration as written. 18. Assignment of Rents; Appointment of Receiver; Lender in Possession. As additional security hereunder, upon acceleration of the HOTS Note or abandonment of the Property, Lender, in person, by agent or by judicially appointed receiver shall be entitled to enter upon, take possession of and manage the Property and to collect the rents of the Property inch ding those Nast due. All rents collected by Lender or the receiver shall be applied first to payment of the cost of management of the Property and collection of rents, including, but not limited to, receiver's fees, premiums on receiver's bonds and reasonable attorneys' fees, and then to the sums secured by this Deed of Trust. Lender and the receiver shall be liable to account only for those rents actually received. 19. Reconveyance. Upon satisfaction of both of the following conditions: (i) payment of all sums secured by this Deed of Trust and (ii) termination of the Declaration, Lender shall request Trustee to CITY OF NATIONAL CITY PAGE 8 OF 12 HOME -DEED OF TRUST Attachment No. 1 123 reconvey the Property and will surrender this Deed of Trust and ail notes evidencing indebtedness secured by this Deed of Trust to Trustee. Trustee shall reconvey the Property without warranty to the person or persons legally entitled thereto. Such person or persons shall pay all costs of recordation, if any. 20. Substitute Trustee. Lender, at Lender's option, may from time to time appoint a successor trustee to any Trustee appointed hereunder by an instrument executed and acknowledged by Lender and recorded in the office of the Recorder of the county where the Property is located. The instrument shall contain the name of the original lender, Trustee and Borrower, the book and page where this instrument is recorded, and the name and address of the successor trustee. The successor trustee shall, without conveyance of the Property, succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. This procedure for substitution of trustee shall govern to the exclusion of all other provisions for substitution. 21. Request for Notices. Borrower requests that copies of the notice of sale be sent to Borrower's address which is the Property Address. 22. Statement of Obligation. Lender may charge a fee not to exceed the amount allowed by law for furnishing the statement of obligation as provided by Section 2943 of the Civil Code of California. 23. Covenants, Conditions and Restrictions. The Property is subject to the Declaration which is not attached hereto but is incorporated herein by reference. Borrower acknowledges receipt of the Declaration and agrees, for himself, his heirs, successors and assigns to be bound by the same. The obligations of Borrower under the Declaration shall be independent of, and in addition to, Borrower's obligations under the HOME Note, and repayment of the HOME Note shall not terminate or otherwise affect the Declaration. 24. Representations and Warranties of Borrower. Borrower represents and warrants, and a violation thereof shall constitute a default/breach of this Deed of Trust, to the Lender as follows: (a) Annual Gross Income. Borrower's annual gross income, including the income of any co -purchasers or co -tenants, at the time of the execution of this Deed of Trust does not exceed eighty percent (80%) of the area median income for the San Diego - Carlsbad -San Marcos Metropolitan Statistical Area, as determined by HUD. Principal Place of Residence. For so long as this Deed of Trust is recorded against the Property, Borrower will reside in the Property as Borrower's principal place of residence. The Borrower shall be considered as occupying the Property as a principal place of residence if the Borrower is living on the Property for at least ten (10) months out of each calendar year. Borrower agrees not to neglect, sublet, lease or rent out all or any portion of the Property during such period. (c) Liquid Assets. At the time of the execution of this Deed of Trust, Borrower, including any co -purchasers or co -tenants, and any other household members, does not hold, directly or indirectly, "liquid assets", as defined below, whose aggregate value exceeds $25,000 As used herein, the term "liquid assets" refers to cash and CITY OF NATIONAL, CITY PAGE 9 OF 12 HOME -DEED OF TRUST Attachment No. 1 124 assets which are readily convertible to cash within a reasonable period, including but not limited to savings and checking accounts, certificates of deposit of any term, marketable securities, money market and similar accounts, mutual fund shares, and insurance policy cash values. The term "liquid assets" shall not include retirement funds which are not readily accessible or which cannot be accessed by the buyer without the buyer incurring a penalty. (d) Not a Full -Time Student. Borrower is not, and none of the co -purchasers or co- tenants of Borrower are, a full-time student, or a household comprised exclusively of persons who are full-time students, unless such persons are married and eligible to file a joint federal income tax return. The term "full-time student" shall be defined as any person who will be or has been a full-time student during five calendar months of the calendar year in question at an educational institution (other than a correspondence school) with regular faculty and students. (e) Not a Student Dependent. Borrower is not, and none of the co -purchasers or co- tenants of Borrower are, a student dependent as defined in the U.S. Internal Revenue Code, unless the taxpayer (upon whom the student in question is dependent) resides in the Property. (f} Not an Owner of Real Property. Borrower does not, and none of the co -purchasers of Borrower, own any real property at the time of escrow closing for the subject Property. (g) First -Time Home Buyer, Displaced Homemaker or Single Parent. Borrower satisfies at least one of the following criteria: (1) Borrower is a first-time home buyer; that is, he or she has not owned a home within the three-year period immediately preceding the date of this Deed of Trust; (2) Borrower is a displaced homemaker as defined in 24 C.F.R. §92.2; or (3) Borrower is a single parent as defined in 24 C.F.R. §92.2. 25. Request for Notice of Default. Lender requests that copies of notices of foreclosure from the holder of any lien which has priority over this Deed of Trust be sent to Lender's address, as set forth on page 1 of this Deed of Trust, as provided by Section 2924b of the Civil Code of California. 26. Refinancing. Neither the Property, nor any portion thereof, shall be refinanced without the written consent of the Lender, except as otherwise allowed by law. The Lender may withhold any such consent in its sole and absolute discretion, nothing contained herein shall obligate the Lender to agree to Borrower's request to refinance the Property or any portion thereof. CITY OF NATIONAL CITY PAGE 10 OF 12 HOME -DEED OF TRUST Attachment No. 1 125 27. Severability. If any provision of this Deed of Trust is deemed to be invalid or unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest of this Deed of Trust and the remaining provisions shall continue in full force and effect. 28. Usury Savings Clause. If a court of competent jurisdiction determines, by way of final unappealable order or judgment that the interest rate charged under the HOME Note is usurious, then such rate shall automatically and retroactively be reduced to the maximum rate allowed under applicable law. 29. Waiver by Lender. Any provision hereof, including without limitation, the requirement that Borrower occupy the Property, may be waived only with the advance written approval of the Lender and HUD for good cause shown. 30. Subordination of Deed of Trust. Borrower concurrently has executed a deed of trust or mortgage in favor of ("Senior Deed of Trust"). This Deed of Trust is subordinate to the Senior Deed of Trust on the Property, which the Senior Deed of Trust is senior in recording priority to this Deed of Trust. Any party, and its successors and assigns, receiving title to the Property through a trustee's sale, judicial foreclosure sale, or deed in lieu of foreclosure of such Senior Deed of Trust, or assignment of the Senior Deed of Trust to the Secretary of U.S. Department of Housing and Urban Development, and any conveyance or transfer thereafter, shall receive title free and clear of the provisions of this Deed of Trust. 31. HOME Period. The loan evidenced by the HOME Note and secured by this Deed of Trust was funded by Lender using U.S. Department of Housing and Urban Development ("HUD") Home Investments Partnership Act ("HOME") funds. The HOME program regulations (24 C.F.R. Part 92), apply for a period of years, from the date of recordation of this Deed of Trust. Beginning years after the date of recordation of this Deed of Trust, and for the remainder of the term of the HOME Note, the Property will continue to be subject to this Deed of Trust, but shall no longer be subject to the HOME program regulations. Date: Date: IN WITNESS WHEREOF, Borrower has executed this Deed of Trust. Borrower: Borrower: CITY OF NATIONAL CITY PAGE 11 OF 12 HOME -DEED OF TRUST Attachment No. 1 126 EXHIBIT 1 "A" Legal Description of the Property Property Address: , National City, California CITY OF NATIONAL CITY DEED OF TRUST EXHIBIT "A" Attachment No. 1 127 ACKNOWLEDGMENT State of California County of San Diego On 20, before me, notary public personally appeared who proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity on behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Signature of Notary Public CITY OF NATIONAL CITY DEED OF TRUST ACKNOWLEDGMENT Attachment No. 1 128 State of California ) County of San Diego ACKNOWLEDGMENT T 20 , before me, notary public personally appeared who proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same i_n his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity on behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Signature of Notary Public CITY OF NATIONAL CITY DEED OF TRUST ACKNOWLEDGMENT Attachment No. 1 129 PROMISSORY NOTE (HUD HOME Investment Partnership Act Program 3% Deferred) ("HOME Note") City Loan No. , 20 Date Property Address: , National City, California ("Property") 1. Borrower's Promise to Pay. In return for a loan ("HOME Loan" or "Loan") that the undersigned ("Borrower") has received, Borrower promises to pay U.S. Dollars ($ ) ("Principal") to the order of the lender, City of National City ("Lender"). Borrower acknowledges and agrees that Lender may transfer this HOME Note. Lender or anyone who takes this HOME Note by transfer and who is entitled to receive payments under this HOME Note will be called the "Note Holder." In addition to the protection given to the Note Holder under this HOME Note, this HOME Note shall be secured by a deed of trust ("Deed of Trust") and Declaration of Covenants, Conditions, and Restrictions ("Declaration") made by Borrower in favor of the Lender and recorded as an encumbrance against the Property. 2. Compliance with HOME Requirements. Borrower acknowledges and agrees that the HOME Loan is subject to the terms, conditions, and restrictions of the HOME Investment Partnerships Act (42 U.S.C. § 12745) and the HOME program regulations (24 C.F.R. Part 92), all of which are hereby incorporated by reference, for a period of years, from the date of recordation of the Deed of Trust. Beginning years after the date of recordation of the Deed of Trust, and for the remainder of the term of this HOME Note, the Property will continue to be subject to the restrictions set forth in this HOME Note, but shall no longer be subject to the HOME program regulations. 3. 3% Deferred Interest. This HOME Note shall accrue simple interest at the rate of 3% per annum. Provided, however, in the event Borrower defaults under the terms of this HOME Note, the Deed of Trust, or the Declaration, or any other document secured by the Declaration, Deed of Trust, or the Property, then Borrower shall owe Lender the "Default Interest." "Default Interest" means interest accrued from the date of this HOME Note, in an amount equal to ten percent (10%) simple interest per annum. 4. Payments. Borrower shall pay principal and all accrued interest (either simple interest or default interest, as the case may be), in one lump sum, to Lender upon the earliest of: (1) a Sale (as defined in Section 5, below); (2) a default after completion of the applicable acceleration procedures set forth in Section 6, below; or (iii) thirty (30) years from the date first written above. Borrower shall make any payments at Lender's offices located at the City of National City Finance Department's office located at 1243 National City Boulevard, National City, California 91950, or such other place as designated by Lender. Notwithstanding the foregoing, in the event of a Sale, where the net proceeds available from the sale are less than the amount that would otherwise be due hereunder, then the Lender shall be entitled to recapture the net proceeds available from the CITY OF NATIONAL CITY PAGE 1 OF 8 HOME -PROMISSORY NOTE Attachment No. 1 130 Sale. N ct proceeds are defined as the sales price minus repayment of all senior loans and any closing costs. "Senior loans" means loans that are superior to the Deed of Trust. In the event of any Sale which is not a foreclosure or an arm's-length transaction. The "sales price" shall be determined by an appraiser holding a MAI designation from the Appraisal Institute that has at least five (5) years of experience inthe geographic area in which the Property is located, selected by the Lender in its sole discretion. 5. Sale Defined. The following shall all be considered transfers or sales of the Property and shall be referred to herein generally as a "Sale": (i) all or any part of the Property or any interest in the Property is sold, conveyed or transferred; (ii) if Borrower is not a natural person and a beneficial interest in Borrower is sold, conveyed or transferred; (iii) all or any part of the Property is refmanced or further encumbered, except as otherwise allowed by law; (iv) Borrower does not occupy the Property as his, her, or their, primary residence; (v) the leasing of all or any part of the Property; (vi) any material breach of this HOME Note, the Declaration, Deed of Trust, or any other agreement or obligation secured by the Property; or (vii) the filing of bankruptcy by the Borrower. Notwithstanding the foregoing, a refinancing of the Property shall not be considered a default, provided the Lender provides written consent to Borrower prior to the refinancing, which consent may be granted or withheld in the sole and absolute discretion of the Lender. 6. Acceleration (Default). (a) Acceleration, Remedies. Upon Borrower's default (breach) of this HOME Note, the Deed of Trust, Declaration, or any other document secured by the Deed of Trust, Declaration, and/or the Property, Lender shall give notice to Borrower prior to acceleration, such notice shall include: (1) a description of the breach; (2) the action required to cure such breach (if any); (3) a date, not less than ten (l.0) days from the date the notice is mailed to Borrower, by which such breach must be cured; and (4) a statement that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by the Deed of Trust and sale of the Property. The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of a default or any other defense of Borrower to acceleration and sale. If the breach is not cured on or before the date specified in the notice, Lender, at Lender's option, may declare all of the sums secured by the Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by applicable law, including, but not limited to, as provided in and pursuant to the procedure set forth in the Deed of Trust. Lender shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this Section 6, including, but not limited to, reasonable attorneys' fees. CITY OF NATIONAL CITY PAGE 2 OF 8 HOME -PROMISSORY NOTE Attachment No. 1 131 (b) Borrower's Right to Reinstate. (1) Curable Breach. Notwithstanding Lender's acceleration of the sums secured by the Deed of Trust due to Borrower's breach, Borrower shall have the right to have any proceedings begun by Lender to enforce the Deed of Trust discontinued at any time prior to five (5) days before the sale of the Property pursuant to the power of sale contained in the Deed of Trust or at any time prior to entry of a judgment enforcing the Deed of Trust if: (A) Borrower pays Lender all sums which would be then due under this HOME Note and the Deed of Trust had no acceleration occurred; (B) Borrower cures all breaches of any other covenants or agreements of Borrower contained in the Deed of Trust; (C) Borrower pays all reasonable expenses incurred by Lender and the trustee in enforcing the covenants and agreements of Borrower contained in the Deed of Trust, including, but not limited to, reasonable attorneys' fees; and (D) Borrower takes such action as Lender may reasonably require to assure that the lien of the Deed of Trust, Lender's interest in the Property and Borrower's obligation to pay the sums secured by the Deed of Trust shall continue unimpaired. Upon such payment and cure by Borrower as set forth in this Section 6(b)(1), the Deed of Trust and the obligations secured hereby shall remain in full force and effect as if no acceleration had occurred. (2) Non -Curable Breach. (A) Failure to Occupy/Renting Out the Property is a Violation of Law. Borrower hereby acknowledges that the Loan evidenced by this HOME Note and secured by the Deed of Trust and Declaration was funded by Lender using U.S. Department of Housing and Urban Development ("HUD") Home Investments Partnership Act ("HOME") funds. Section 215 of the HOME Investment Partnerships Act (42 U.S.C. §12745) and the HOME program regulations (24 C.F.R. §92.254) require Borrower to occupy the Property as Borrower's principal residence. Renting out the Property (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence is a violation of State of California and Federal law (in addition to being a violation of this HOME Note). Lender is obligated by Federal law to enforce the provisions of the HOME program, Lender's failure to do so would jeopardize Lender's ability to obtain additional HOME funds from HUD and help other low-income families to obtain affordable housing. (B) Failure to Occupy/Renting Out the Property Materially Impairs Lender's Security. Borrower hereby acknowledges and agrees that renting out the Property (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence, materially impairs Lender's security for the Loan and Lender's ability to obtain CITY OF NATIONAL CITY PAGE 3 OF 8 HOME -PROMISSORY NOTE Attachment No. 1 132 additional HOME funds from HUT) and help other low-income families to obtain affordable housing. Borrower further acknowledges that if the Property is rented out (in whole or in part) and/or Borrower fails to occupy the Property as Borrower's principal residence, then during any such period the Property will not qualify as "affordable housing" and Lender may be in breach of its obligations to HUD and therefore the Lender's security for the Loan will be materially impaired. (C) Failure to Occupv/Renting Out the Property is a Non -Curable Breach. Borrower hereby acknowledges and agrees that renting out the Property (in whole or in part) and/or Borrower's failure to occupy the Property as Borrower's principal residence, will be a non -curable breach and Lender shall have the right to accelerate the Loan and foreclose on the Property as provided herein. Notwithstanding anything to the contrary set forth in this HOME Note, Borrower agrees that in the event Borrower rents out the Property (in whole or in part) and/or fails to occupy the Property as Borrower's principal residence, Borrower shall not have the right to cure the breach and reinstate the Loan, the Deed of Trust or the obligations secured thereby. (D) Borrower's Waiver. Borrower hereby knowingly waives and relinquishes any and all legal and/or contractual rights Borrower may have to cure or otherwise reinstate the Deed of Trust and the obligations secured thereby, in the event that Property is rented out (in whole or in part) and/or Borrower fails to occupy the Property as Borrower's principal residence. (E) Representation of Comprehension. Borrower acknowledges and agrees that Lender has advised Borrower (and each of them if there is more than one Borrower) to retain an attorney to represent Borrower with respect to the Loan evidenced by this HOME Note. By executing this HOME Note, Borrower (and each of them if there is more than one Borrower) represents that: (i) Borrower fully understands and accepts the terms of this HOME Note, the Deed of Trust, and Declaration; (ii) Borrower has relied upon the legal advice of Borrower's attorneys or that Borrower has freely and independently chosen not to seek the advice of an attorney; (iii) that neither the Lender nor its attorneys represents Borrower; (iv) that Borrower has had a full and ample opportunity to consult with any other professionals of Borrower's choice in connection with the rights and liabilities created by this HOME Note, the Deed of Trust, and Declaration; (v) that Borrower does not have any questions with regard to the legal import of any term, word, phrase, or portion of this HOME Note, the Deed of Trust, or Declaration, or any of the foregoing documents in their entireties; and (vi) Borrower accepts the terms of this HOME Note, the Deed of Trust and Declaration as written. 7. No Assumption. This HOME Note is not assumable, except as otherwise allowed by law. 8. Borrower's Payments Before They Are Due. Borrower has the right to make payments of principal at any time before they are due. Borrower may make a full prepayment or a partial. prepayment. All payments received on account of this HOME Note shall be first applied to accrued interest and the remainder shall be applied to the reduction of principal. Borrower may make a full prepayment at any time. The obligations of Borrower under the Declaration shall be independent of, and in addition to, Borrower's obligations under this HOME Note, and repayment of this HOME Note shall not terminate or otherwise affect the Declaration. CITY OF NATIONAL CITY PAGE 4 OF 8 HOME -PROMISSORY NOTE Attachment No. 1 133 9. Representations and Warranties of Borrower. Borrower represents and warrants, and a violation thereof shall constitute a default/breach of this HOME Note, to the Lender as follows: (a) Annual Gross Income. Borrower's annual gross income, including the income of any co -purchasers or co -tenants, at the time of the execution of this HOME Note does not exceed eighty percent (80%) of the Area Median Income for the San Diego -Carlsbad -San Marcos Metropolitan Statistical Area, as determined by HUD. Principal Place of Residence. For so long as the Deed of Trust is recorded against the Property, Borrower will reside in the Property as Borrower's principal place of residence. The Borrower shall be considered as occupying the Property as a principal place of residence if the Borrower is living in the Property for at least ten (I 0) months out of each calendar year. Borrower agrees not to neglect, sublet, lease or rent out all or any portion of the Property during such period. (c) Liquid Assets. At the time of the execution of this HOME Note, Borrower, including any co -purchasers or co -tenants, does not hold, directly or indirectly, "liquid assets", as defined below, whose aggregate value exceeds $25,000. As used herein, the term "liquid assets" refers to cash and assets which are readily convertible to cash within a reasonable period, including but not limited to savings and checking accounts, certificates of deposit of any term, marketable securities, money market and similar accounts, mutual fund shares, and insurance policy cash values. The term "liquid assets" shall not include retirement funds which are not readily accessible or which cannot be accessed by the buyer without the buyer incurring a penalty. CD) (d) Not a Full -Time Student. Borrower is not, and none of the co -purchasers or co- tenants of Borrower are, a full-time student, or a household comprised exclusively of persons who are full-time students, unless such persons are married and eligible to file a joint federal income tax return. The term "full-time student" shall be defined as any person who will be or has been a full-time student during five calendar months of the calendar year in question at an educational institution (other than a correspondence school) with regular faculty and students. (e) Not a Student Dependent. Borrower is not, and none of the co -purchasers or co- tenants of Borrower are, a student dependent as defined in the U.S. Internal Revenue Code, unless the taxpayer (upon whom the student in question is dependent) resides in the Property. Not an Owner of Real Property. Borrower does not, and none of the co -purchasers of Borrower, own any real property at the time of escrow closing for the subject Property. First -Time Home Buyer, Displaced Homemaker or Single Parent. Borrower satisfies at least one of the following criteria: CITY OF NATIONAL CITY PAGE 5 OF 8 HOME -PROMISSORY NOTE Attachment No. T 134 (1) Borrower is a first-time home buyer; that is, he or she has not owned a home within the three-year period immediately preceding the date of this HOME Note; provided, however, an individual shall not be disqualified as a first- time homebuyer on the basis that the individual owns or owned, as a principal residence during the three-year period, a dwelling unit whose structure is not permanently affixed to a permanent foundation in accordance with local or other applicable regulations or is not in compliance with State, local, or model building codes, or other applicable codes, and cannot be brought into compliance with the codes for less than the cost of constructing a permanent structure; (2) Borrower is a displaced homemaker as defined in 24 C.F.R. §92.2; or (3) Borrower is a single parent as defined in 24 C.F.R. §92.2. 10. Borrower's Waiver. Borrower hereby waives the rights to require the Note Holder to do certain things if Borrower does not keep the promises made in this HOME Note, the Deed of Trust or the Declaration. Those things are: and (a) to demand payment of amounts due (known as "presentment"); (b) to give notice that amounts due have not been paid (known as "notice of dishonor"); (c) to obtain any official certification of nonpayment (known as "protest"). 11. Giving of Notices. Any notice that must be given to Borrower under this HOME Note will be given by delivering it or by mailing it by certified mail addressed to Borrower at the Property address. Any notice that must be given to the Note Holder under this HOME Note will be given by mailing it by certified mail to the City of National City Finance Department's office located at 1243 National City Boulevard, National City, California 91950 or such other address as Lender may designate in writing. 12. Responsibility of Persons Under This Note. If more than one person signs this HOME Note, each of them is fully and personally obligated to pay the all amount owed and to keep all promises made in this HOME Note. The Note Holder may enforce its rights under this HOME Note against each person that signs this HOME Note individually or against all of them together. This means that any one of the persons that sign HOME Note may beli f this Vir... required to Day all of the amounts owed under this HOME Note. Any person who takes over the rights of the persons that sign this HOME Note or obligations under this HOME Note will have all of the rights of the persons that sign this HOME Note and must keep all of the promises made in this HOME Note. 13. Attorneys' Fees. Upon the breach of the terms of this HOME Note, the Deed of Trust or Declaration, the Borrower agrees to pay Lender any and all attorneys' fees, court costs, trustee CITY OF NATIONAL CITY PAGE 6 OF 8 HOME -PROMISSORY NOTE Attachment No. 1 135 fees, and any and all other fees and costs incurred by Lender as a result of said breach and/or default. 14. Severability. If any provision of this HOME Note is deemed to be invalid or unenforceable by a court of competent jurisdiction, that provision shall be severed from the rest of this HOME Note and the remaining provisions shall continue in full force and effect. 15. Governing Law. This HOME Note shall be construed in accordance with and be governed by the laws of the State of California. 16. No Waiver by the Lender. No waiver of any breach, default or failure of condition under the terms of this HOME Note, the Deed of Trust, the Declaration, or any obligation secured thereby shall thereby be implied from any failure of the Lender to take, or any delay by the Lender in taking action with respect to such breach, default or failure or from any previous waiver of any similar or unrelated breach, default or failure; and a waiver of any term of this HOME Note, Deed of Trust, Declaration, or any of the obligations secured thereby must be made in writing and shall be limited to the express written terms of such waiver. 17. Usury. If a court of competent jurisdiction determines, by way of final unappealable order or judgment that the interest rate charged under this HOME Note is usurious, then such rate shall automatically and retroactively be reduced to the maximum rate allowed under applicable law. NOTICE TO BORROWER: Do not sign this HOME Note if it contains blank spaces. All spaces should be completed before you sign. Date: Date: Borrower: Borrower: CITY OF NATIONAL CITY PAGE 7 OF 8 HOME -PROMISSORY NOTE Attachment No. 1 136 APPENDIX K HOME FIRST-TIME HOMEBUYER PROGRAM LOAN DISCLOSURE The City of National City First -Time Homebuyer Program provides up to $20,000 in "gap" financing for eligible low-income buyers for 1-unit property. Specific terms and conditions of the assistance are specifically stated in the Promissory Note secured by a Deed of Trust and Regulatory Agreement. A general summary of the program is as follows: 1. Buyers will sign a Promissory Note and Deed of Trust, for a loan in second position (or third position with City approval if City HUD HOME funds are used), in favor of the City of National City. 2. Buyers will sign a Regulatory Agreement 3. The loan term is 30-years 4. After year 30 principal loan and accrued interest will be due and payable. 5. If at any time before 30 years the property is sold or refinanced, the loan will be due and payable consistent with the terms and conditions of the Promissory Note and Deed of Trust. 6. If at any time the buyer defaults on any terms or conditions of the loan and agreement with the City under the FTHB Program, additional accrued interest will be due in addition to the principal of the loan. 7. The loan may be paid by buyer at any time without pre -payment penalty. Please sign and date this form acknowledging that you have read and understand the terms of the loan that you are entering in to as summarized above. Date: Buyer: Buyer: Print Name Signature Print Name Signature Attachment No. 1 137 APPENDIX L CITY OF NATIONAL CITY FIRST-TIME HOMEBUYER PROGRAM ERROR AND OMISSIONS/COMPLIANCE AGREEMENT The City of National City First -Time Homebuyer Program (FTHB) provides "gap" financing for eligible low- and moderate -income buyers. The undersigned Borrower(s) for and in consideration of the City funding the closing of the FTHB loan agrees, if requested by City of Program Administrator, to fully cooperate and adjust for clerical errors, any or all loan closing documentation if deemed necessary or desirable in the reasonable discretion of City. The undersigned Borrower(s) agree(s) to comply with all noted requests by the City and/or Program Administrator within 5 days from date of mailing said requests. Date: Buyer: Print Name Signature Buyer: Print Name Signature Appendix L Attachment No. 1 138 IF