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HomeMy WebLinkAbout2019 CON Springboard CDFI - First Time Homebuyer Program FY18-19AGREEMENT BY AND BETWEEN THE CITY OF NATIONAL CITY AND SPRINGBOARD CDFI FOR FIRST-TIME HOMEBUYER PROGRAM This a reement for FIRST-TIME HOMEBUYER PROGRAM ("Agreement"), is entered into this 20ay of May, 2019, by and between the City of National City, a municipal corporation (the "City"), and Springboard CDFI, a 501(c)3 non-profit public benefit corporation (the "Subrecipient"). RECITALS WHEREAS, the City receives an annual allocation of HOME Investment Partnerships ("HOME") program funds from the U.S. Department of Housing and Urban Development ("HUD") and has made an allocation of funds to continue the previously established first-time homebuyer down payment and closing cost assistance program ("Program"); and WHEREAS, the City has appropriated $397,279.48 in Fiscal Year 2018-2019 to assist low-income first-time homebuyers at or below 80% of area median income by providing assistance in the form of a silent second mortgage loan of up to $70,000; and WHEREAS, the Subrecipient responded to the City's HOME notice of funding availability (NOFA) to continue to deliver the City's first-time homebuyer down payment and closing cost assistance program; and WHEREAS, the Subrecipient has extensive knowledge and experience in managing the delivery of HOME -funded down payment assistance programs; and WHEREAS, the City has determined that the Subrecipient has the experience, adequate staff capacity, and ability to deliver the services desired by the City in a professional and timely manner, and the Subrecipient is willing to perform such services. NOW, THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS: 1. ENGAGEMENT OF SUBRECIPIENT. The City hereby agrees to engage the Subrecipient and the Subrecipient hereby agrees to perform the services hereinafter set forth in accordance with all terms and conditions contained herein. The Subrecipient represents that all services required hereunder will be performed directly by the Subrecipient or under direct supervision of the Subrecipient. 2. SCOPE OF SERVICES. The express purpose of this contract is for the City to provide the Subrecipient with THREE HUNDRED NINETY-SEVEN THOUSAND, TWO HUNDRED SEVENTY-NINE HUNDRED DOLLARS AND 48/100 CENTS ($397,279.48) of HOME Program funds. Which funds shall be used by Subrecipient solely as set forth in Section 4, below, and to assist low-income homebuyers purchase a home through the provision of a second mortgage loan. The Subrecipient will perform the services set forth in the attached Exhibit "A" entitled Scope of Work. The Subreceipient shall also comply with the National City First -Time Homebuyer Program Manual, attached hereto as Exhibit "B", which provides a detailed description of the use of HOME funds under this Agreement including a description of the project, roles and responsibilities, performance standards, affordability, project requirements, and property standards. The Subrecipient shall be responsible for all research and reviews related to the work and shall not rely on personnel of the City for such services, except as authorized in advance by the City. The Subrecipient shall appear at Program related meetings and provide reports as cited in Exhibit "A" to keep staff and City Council advised of the progress on the Program. The City may unilaterally, or upon request from the Subrecipient, from time to time reduce or increase the Scope of Services to be performed by the Subrecipient under this Agreement. 3. PROJECT COORDINATION AND SUPERVISION. Angelita Palma, Community Development Specialist II, is hereby designated as the Program Coordinator for the City and will monitor the progress and execution of this Agreement. The Subrecipient shall assign a single Program Coordinator to provide supervision and have overall responsibility for the progress and execution of this Agreement for the Subrecipient. Yasmin Felix, DPA and Servicing Administrator for Springboard CDFI is hereby designated as the Program Director for the Subrecipient. 4. COMPENSATION AND PAYMENT. The compensation to the Subrecipient shall be based on closed loans. Billings shall include labor classifications, respective rates, hours worked and materials, if any. The total cost for all work described in Exhibit "A" shall not exceed the schedule given in Exhibit "A" without prior written authorization from the City's Housing & Economic Development staff. Invoices will be processed for payment and remitted within thirty (30) days from receipt of invoice, provided that work is accomplished consistent with Exhibit "A" as determined by the City. The Subrecipient shall maintain all books, documents, papers, employee time sheets, accounting records, and other evidence pertaining to costs incurred and shall make such materials available at its office at all reasonable times during the term of this Agreement and for five (5) years from the date of final payment under this Agreement, for inspection by the City and will furnish copies to the City, if requested. 5. ACCEPTABILITY OF WORK. The City shall decide any and all questions which may arise as to the quality or acceptability of the services performed and the manner of performance, the acceptable completion of this Agreement and the amount of compensation due. In the event the Subrecipient and the City cannot agree to the quality or acceptability of the work, the manner of performance and/or the compensation payable to the Subrecipient in this Agreement, the City or the Subrecipient give the other party hereto written notice of the same. Within ten (10) business days, the Subrecipient and the City shall each prepare a report which supports their position and file the same with the other party. The City shall, with reasonable diligence, determine the quality or acceptability of the work, the manner of performance and/or the compensation payable to the Subrecipient. 6. LENGTH OF AGREEMENT. This contract begins on the date that it is executed. All funds shall be committed within twenty-two (22) months of the execution date of HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 2 of 15 this Agreement (i.e., by day of May, 2021). All loans shall be funded within twenty-four (24) months of the execution date of this Agreement (i.e., by WS- day of July, 2022). 7. DISPOSITION AND OWNERSHIP OF DOCUMENTS. All reports, studies, information, data, statistics, forms, designs, plans, and procedures, systems and any other materials or properties produced under this Agreement shall be the sole and exclusive property of the City. No such materials or properties produced in whole or in part under this Agreement shall be subject to private use, copyrights, or patent rights by the Subrecipient in the United States or in any other country without the express consent of the City. The City shall have unrestricted authority to publish, disclose (except as may be limited by the provisions of the Public Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any such reports, studies, data, statistics, forms or other materials or properties produced under this Agreement. 8. INDEPENDENT CONTRACTOR. Both parties hereto in the performance of this Agreement will be acting in an independent capacity and not as agents, employees, partners or joint ventures with one another. Neither the Subrecipient nor the Subrecipient's employees are employees of the City and are not entitled to any of the rights, benefits, or privileges of the City's employees, including but not limited to retirement, medical, unemployment, or workers' compensation insurance. This Agreement contemplates the personal services of the Subrecipient and the Subrecipient's employees, and it is recognized by the parties that a substantial inducement to the City for entering into this Agreement was, and is, the professional reputation and competence of the Subrecipient and its employees. Neither this Agreement nor any interest herein may be assigned by the Subrecipient without the prior written consent of the City. Nothing herein contained is intended to prevent the Subrecipient from employing or hiring as many employees, or subcontractors, as the Subrecipient may deem necessary for the proper and efficient performance of this Agreement. All agreements by Subrecipient with its subcontractor(s) shall require the subcontractor to adhere to the applicable terms of this Agreement. 9. CONTROL. Neither the City nor its officers, agents or employees shall have any control over the conduct of the Subrecipient or any of the Subrecipient's employees except as herein set forth. The Subrecipient expressly agrees not to represent that the Subrecipient or the Subrecipient's agents, servants, or employees are in any manner agents, servants or employees of the City. Tthe Subrecipient, its agents, servants, and employees are, as to the City, wholly independent contractors. The Subrecipient's obligations to the City are solely as prescribed by this Agreement. 10. COMPLIANCE WITH APPLICABLE LAW. The Subrecipient, in the performance of the services to be provided herein, shall comply with all applicable State and Federal statutes and regulations, and all applicable ordinances, rules and regulations of the City of National City, whether now in force or subsequently enacted. The Subrecipient, and each of its subcontractors, shall obtain and maintain a current City of National City business license prior to and during performance of any work pursuant to this Agreement. 11. LICENSES, PERMITS, ETC. The Subrecipient represents and covenants to the City that it has all licenses, permits, qualifications, and approvals of whatever nature whcih are legally required to practice its profession and to perform the services described in this Agreement. The Subrecipient represents and covenants to the City that the Subrecipient shall, at its sole cost and expense, keep in effect at all times during the term of this Agreement, all licenses, HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 3 of 15 permits, and approvals which are legally required for the Subrecipient to practice its profession or to perform the services described in this Agreement. 12. STANDARD OF CARE. A. The Subrecipient, in performing any services under this Agreement, shall perform in a manner consistent with the level of care and skill ordinarily exercised by members of the Subrecipient's trade or profession currently practicing under similar conditions and in similar locations. The Subrecipient shall take all special precautions necessary to protect the Subrecipient's employees and members of the public from risk of harm arising out of the nature of the work and/or the conditions of the work site. B. Unless disclosed in writing prior to the date of this Agreement, the Subrecipient warrants to the City that it is not now, nor has it for the five (5) years preceding, been debarred by a governmental agency or involved in debarment, arbitration or litigation proceedings concerning the Subrecipient's professional performance or the furnishing of materials or services relating thereto. C. The Subrecipient is responsible for identifying any unique products, treatments, processes or materials whose availability is critical to the success of the project the Subrecipient has been retained to perform, within the time requirements of the City, or, when no time is specified, then within a commercially reasonable time. Accordingly, unless the Subrecipient has notified the City otherwise, the Subrecipient warrants that all products, materials, processes or treatments identified in the project documents prepared for the City are reasonably commercially available. Any failure by the Subrecipient to use due diligence under this sub- paragraph will render the Subrecipient liable to the City for any increased costs that result from the City's later inability to obtain the specified items or any reasonable substitute within a price range that allows for project completion in the time frame specified or, when not specified, then within a commercially reasonable time. 13. NON-DISCRIMINATION PROVISIONS. The Subrecipient shall not discriminate against any employee or applicant for employment because of age, race, color, ancestry, religion, sex, sexual orientation, marital status, national origin, physical handicap, or medical condition. The Subrecipient will take positive action to insure that applicants are employed without regard to their age, race, color, ancestry, religion, sex, sexual orientation, marital status, national origin, physical handicap, or medical condition. Such action shall include but not be limited to the following: employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. The Subrecipient agrees to post in conspicuous places available to employees and applicants for employment any notices provided by the City setting forth the provisions of this non-discrimination clause. 14. CONFIDENTIAL INFORMATION. The City may from time to time communicate to the Subrecipient certain confidential information to enable the Subrecipient to effectively perform the services to be provided herein. The Subrecipient shall treat all such information as confidential and shall not disclose any part thereof without the prior written consent of the City. The Subrecipient shall limit the use and circulation of such information, even within its own organization, to the extent necessary to perform the services to be provided herein. The foregoing obligation of this Section 14, however, shall not apply to any part of the information that (i) has been disclosed in publicly available sources of information; (ii) is, through no fault of the Subrecipient, hereafter disclosed in publicly available sources of information; (iii) is already in the possession of the Subrecipient without any obligation of confidentiality; or (iv) has been or is hereafter rightfully disclosed to the Subrecipient by a third party, but only to the extent that the use or disclosure thereof has been or is rightfully authorized by that third party. HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 4 of 15 The Subrecipient shall not disclose any reports, recommendations, conclusions or other results of the services or the existence of the subject matter of this Agreement without the prior written consent of the City. In its performance hereunder, the Subrecipient shall comply with all legal obligations it may now or hereafter have respecting the information or other property of any other person, firm or corporation. Subrecipient shall be liable to City for any damages caused by breach of this Section 14. 15. INDEMNIFICATION AND HOLD HARMLESS. The Subrecipient agrees to defend, indemnify, and hold harmless the City of National City, its officers, officials, agents, employees, and volunteers against and from any and all liability, loss, damages to property, injuries to, or death of any person or persons, and all claims, demands, suits, actions, proceedings, reasonable attorneys' fees, and defense costs, of any kind or nature, including workers' compensation claims, of or by anyone whomsoever, resulting from or arising out of the Subrecipient's negligent performance of this Agreement. City will cooperate reasonably in the defense of any action, and Subrecipient shall employ competent counsel, reasonably acceptable to the City Attorney. The indemnity, defense and hold harmless obligations contained herein shall survive the termination of this Agreement with respect to any alleged or actual omission, act, or negligence under this Agreement which occurred during the term of this Agreement. 16. WORKERS' COMPENSATION. The Subrecipient shall comply with all of the provisions of the Workers' Compensation Insurance and Safety Acts of the State of California, the applicable provisions of Division 4 and 5 of the California Government Code and all amendments thereto; and all similar state or Federal acts or laws applicable; and shall indemnify, and hold harmless the City and its officers, and employees from and against all claims, demands, payments, suits, actions, proceedings and judgments of every nature and description, including reasonable attorney's fees and defense costs presented, brought or recovered against the City or its officers, employees, or volunteers, for or on account of any liability under any of said acts which may be incurred by reason of any work to be performed by the Subrecipient under this Agreement. 17. INSURANCE. The Subrecipient, at its sole cost and expense, shall purchase and maintain, and shall require its subrecipient(s), when applicable, to purchase and maintain throughout the term of this Agreement, the following checked insurance policies: A. ® If checked, Professional Liability Insurance (errors and omissions) with minimum limits of $1,000,000 per occurrence. B. Automobile Insurance covering all bodily injury and property damage incurred during the performance of this Agreement, with a minimum coverage of $1,000,000 combined single limit per accident. Such automobile insurance shall include any auto vehicles. The policy shall name the City and its officers, agents and employees as additional insureds, and a separate additional insured endorsement shall be provided. C. Commercial General Liability Insurance, with minimum limits of either $1,000,000 per occurrence and $2,000,000 aggregate, or $1,000,000 per occurrence and $2,000,000 aggregate with a $1,000,000 umbrella policy, covering all bodily injury and property damage arising out of its operations, work, or performance under this Agreement. The policy shall name the City and its officers, agents, employees, and volunteers as additional insureds, and a HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 5 of 15 separate additional insured endorsement shall be provided. The general aggregate limit must apply solely to this "project" or "location". The "project" or "location" should be noted with specificity on an endorsement that shall be incorporated into the policy. D. Workers' Compensation Insurance in an amount sufficient to meet statutory requirements covering all of Subrecipient's employees and employers' liability insurance with limits of at least $1,000,000 per accident. In addition, the policy shall be endorsed with a waiver of subrogation in favor of the City. Said endorsement shall be provided prior to commencement of work under this Agreement. If Subrecipient has no employees subject to the California Workers' Compensation and Labor laws, Subrecipient shall execute a Declaration to that effect. Said Declaration shall be provided to Subrecipient by City. E. The aforesaid policies shall constitute primary insurance as to the City, its officers, employees, and volunteers, so that any other policies held by the City shall not contribute to any loss under said insurance. Said policies shall provide for thirty (30) days prior written notice to the City of cancellation or material change. F. If required insurance coverage is provided on a "claims made" rather than "occurrence" form, the Subrecipient shall maintain such insurance coverage for three (3) years after expiration of the term (and any extensions) of this Agreement. In addition, the "retro" date must be on or before the date of this Agreement. G. The Certificate Holder for all policies of insurance required by this Section shall be: City of National City c/o Risk Manager 1243 National City Boulevard National City, CA 91950-4397 H. Insurance shall be written with only California admitted companies that hold a current policy holder's alphabetic and financial size category rating of not less than A VIII according to the current Best's Key Rating Guide, or a company equal financial stability that is approved by the City's Risk Manager. In the event coverage is provided by non -admitted "surplus lines" carriers, they must be included on the most recent California List of Eligible Surplus Lines Insurers (LESLI list) and otherwise meet rating requirements. This Agreement shall not take effect until certificate(s) or other sufficient proof that these insurance provisions have been complied with, are filed with and approved by the City's Risk Manager. If the Subrecipient does not keep all of such insurance policies in full force and effect at all times during the terms of this Agreement, the City may elect to treat the failure to maintain the requisite insurance as a breach of this Agreement and terminate the Agreement as provided herein. J. All deductibles and self -insured retentions in excess of $10,000 must be disclosed to and approved by the City. K. If the Subrecipient maintains broader coverage or higher limits (or both) than the minimum limits shown above, the City requires and shall be entitled to the broader coverage or higher limits (or both) maintained by the Subrecipient. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. 18. LEGAL FEES. If any party brings a suit or action against the other party arising from any breach of any of the covenants or agreements or any inaccuracies in any of the representations and warranties on the part of the other party arising out of this Agreement, then in such event, the prevailing party in such action or dispute, whether by final judgment or out -of - HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 6 of 15 court settlement, shall be entitled to have and recover of and from the other party all costs and expenses of suit, including attorneys' fees. For purposes of determining who is the prevailing party, it is stipulated that attorney's fees incurred in the prosecution or defense of the action or suit shall not be considered in determining the amount of the judgment or award. Attorney's fees to the prevailing party if other than the City shall, in addition, be limited to the amount of attorney's fees incurred by the City in its prosecution or defense of the action, irrespective of the actual amount of attorney's fees incurred by the prevailing party. 19. MEDIATION/ARBITRATION. If a dispute arises out of or relates to this Agreement, or the breach thereof, the parties agree first to try, in good faith, to settle the dispute by mediation in San Diego, California, in accordance with the Commercial Mediation Rules of the American Arbitration Association (the "AAA") before resorting to arbitration. The costs of mediation shall be borne equally by the parties. Any controversy or claim arising out of, or relating to, this Agreement, or breach thereof, which is not resolved by mediation shall be settled by arbitration in San Diego, California, in accordance with the Commercial Arbitration Rules of the AAA then existing. Any award rendered shall be final and conclusive upon the parties, and a judgment thereon may be entered in any court having jurisdiction over the subject matter of the controversy. The expenses of the arbitration shall be borne equally by the parties to the arbitration, provided that each party shall pay for and bear the costs of its own experts, evidence and attorneys' fees, except that the arbitrator may assess such expenses or any part thereof against a specified party as part of the arbitration award. 20. TERMINATION. A. This Agreement may be terminated with or without cause by the City or Subrecpient. Termination without cause shall be effective only upon 60-day's written notice to the Subrecipient or City. During said 60-day period the Subrecipient shall perform all services in accordance with this Agreement. B. This Agreement may also be terminated immediately by the City for cause in the event of a material breach of this Agreement, misrepresentation by the Subrecipient in connection with the formation of this Agreement or the performance of services, or the failure to perform services as directed by the City. C. Termination with or without cause shall be effected by delivery of written Notice of Termination to the Subrecipient or City as provided for herein. D. In the event of termination, all finished or unfinished Memoranda Reports, Maps, Drawings, Plans, Specifications and other documents prepared by the Subrecipient, whether paper or electronic, shall immediately become the property of and be delivered to the City, and the Subrecipient shall be entitled to receive just and equitable compensation for any work satisfactorily completed on such documents and other materials up to the effective date of the Notice of Termination, not to exceed the amounts payable hereunder, and less any damages caused the City by the Subrecipient's breach, if any. Thereafter, ownership of said written material shall vest in the City all rights set forth in Section 6. E. The City further reserves the right to immediately terminate this Agreement upon: (1) the filing of a petition in bankruptcy affecting the Subrecipient; (2) a reorganization of the Subrecipient for the benefit of creditors; or (3) a business reorganization, change in business name or change in business status of the Subrecipient. 21. NOTICES. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered; or sent by overnight mail (Federal Express or the like); or sent by registered or certified mail, postage prepaid, return receipt requested; or sent by ordinary mail, postage prepaid; or delivered or sent by facsimile or fax; and HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 7 of 15 shall be deemed received upon the earlier of (i) if personally delivered, the date of delivery to the address of the person to receive such notice, (ii) if sent by overnight mail, the business day following its deposit in such overnight mail facility, (iii) if mailed by registered, certified or ordinary mail, five (5) days (ten (10) days if the address is outside the State of California) after the date of deposit in a post office, mailbox, mail chute, or other like facility regularly maintained by the United States Postal Service, (iv) if given by facsimile or fax, when sent. Any notice, request, demand, direction or other communication delivered or sent as specified above shall be directed to the following persons: To the City: Angelita Palma Community Development Specialist Housing & Economic Development City of National City 1243 National City Boulevard National City, CA 91950-4301 To the Subrecipient: Al Nemerofsky Compliance/Risk Management VP Springboard CDFI Nationwide Mortgage Collaborative 4351 Latham Street, Suite 100 Riverside, CA 92501 Yasmin Felix DPA and Servicing Administrator Springboard CDFI Yasmin.Felix@springboard.org 4351 Latham Street, Suite 100, Riverside, CA 92501 springboard.org Notice of change of address shall be given by written notice in the manner specified in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to constitute receipt of the notice, demand, request or communication sent. Any notice, request, demand, direction or other communication sent by cable, telex, telecopy, facsimile or fax must be confirmed within forty-eight (48) hours by letter mailed or delivered as specified in this Section. 22. CONFLICT OF INTEREST AND POLITICAL REFORM ACT OBLIGATIONS. During the term of this Agreement, the Subrecipient shall not perform services of any kind for any person or entity whose interests conflict in any way with those of the City of National City. The Subrecipient also agrees not to specify any product, treatment, process or material for the project in which the Subrecipient has a material financial interest, either direct or indirect, without first notifying the City of that fact. The Subrecipient shall at all times comply with the terms of the Political Reform Act and the National City Conflict of Interest Code. The Subrecipient shall immediately disqualify itself and shall not use its official position to influence in any way any matter coming before the City in which the Subrecipient has a financial interest as defined in Government Code Section 87103. The Subrecipient represents that it has no knowledge of any financial interests that would require it to disqualify itself from any matter on which it might perform services for the City. ® If checked, the Subrecipient shall comply with all of the reporting require- ments of the Political Reform Act and the National City Conflict of Interest Code. Specifically, the Subrecipient shall file a Statement of Economic Interests with the City Clerk of the City of National City in a timely manner on forms which the Subrecipient shall obtain from the City Clerk. HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 8 of 15 The Subrecipient shall be strictly liable to the City for all damages, costs or expenses the City may suffer by virtue of any violation of this Paragraph 22 by the Subrecipient. 23. HOME PROGRAM SUBRECIPIENT PROVISIONS. A. Use of HOME Funds. The HOME funds will be used to deliver a loan assistance program that will assist approximately five (5) First-time Homebuyers, which loans will be funded in accordance with HUD's Homebuyer Guidelines under CFR § 92.254 Exhibit "A" and the National City First -Time Homebuyer Program Guidelines, attached hereto as Exhibit "B", provide detailed descriptions of the use of HOME funds under this Agreement. B. Affordability Period and Recapture. The entire amount of direct HOME subsidy will be recaptured from the homebuyer during the 30-year affordability period (which exceeds the period required by the HOME Regulations, see 24 CFR § 92.254(a)(4)), if the property is transferred or sold during the applicable affordability period. Provided, however if the loan is repaid in full (all principal and interest) prior to expiration of the otherwise applicable 30- year affordability period, the affordability period shall be deemed satisfied. C. Affirmative Marketing Procedures. The Subrecipient shall adopt affirmative marketing procedures and requirements for all HOME assisted housing in compliance with 24 CFR § 92.351, as well as City's affirmative marketing responsibilities. Affirmative marketing steps consists, at a minimum, of actions to provide information and otherwise attract eligible persons from all racial, ethnic, and gender groups in the housing market area to the available housing assistance program The procedures and requirements must include methods for informing the public and owners about fair housing laws and policies so as to ensure that all individuals, without regard to race, color, national origin, religion, or sex are given an equal opportunity to participate in the program. The Subrecipient shall be solely responsible for the effective marketing responsibilities necessary to achieve Subrecipient's production goals set forth in Paragraph 2. D. Environmental Review. The City has assessed the activities carried out under this Agreement in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) and the related authorities listed in HUD's implementing regulations at 24 CFR parts 50 and 58. The City has determined that the activities described in the Scope of Work are exempt from environmental review as described at 24 CFR part 58.35(b)5. E. Displacement, Relocation, and Acquisition. The City will not provide financial assistance to any housing unit that is tenant occupied. To insure compliance with 24 CFR § 92.353, the Subrecipient and seller, and buyer will certify that any real property selected for HOME assistance is either owner -occupied or has been vacant for three months before the offer to purchase was accepted by the seller. F. Procurement. Unless specified otherwise within this Agreement, the Subrecipient shall procure all materials, property, or services in accordance with the requirements of 24 CFR 84.40-48. The Subrecipient will follow its written policy for procurement. G. HOME Program Conflict of Interest. No member, officer or employee of the City or its designees or agents; no member of the governing body of the locality in which the Program is situated; and no other public official of such locality or localities, who exercises any functions or responsibilities with respect to the program funded hereunder during their tenure or for one year thereafter, shall have any interest, direct or indirect, in any contract or subcontract, or the proceeds thereof, for work to be performed hereunder. Subrecipient agrees to incorporate, HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 9 of 15 or cause to be incorporated, like language prohibiting such interest in all contracts and subcontracts hereunder. No officer, employee, member or program participant of Subrecipient its contractors or its subcontractors shall have a financial interest, direct or indirect, in this Agreement or the monies transferred hereunder or be financially interested, directly or indirectly, in the sale to Subrecipient of any land, materials, supplies, or services purchased with any funds transferred hereunder, except on behalf of Subrecipient, as an officer, employee, member, or program participant. Any willful violation of this paragraph with the knowledge, expressed or implied, of Subrecipient or its subcontractors shall render this Agreement voidable by City. H. Lead -Based Paint Hazards. The Subrecipient agrees that any residential structures with assistance provided under this Agreement shall be subject to HUD Lead -Based Paint Regulations at 24 CFR Part 92.355. Such regulations pertain to all HOME -assisted housing and require that all owners, prospective owners, and tenants of properties constructed prior to 1978 be properly notified that such properties may include lead -based paint. Such notification shall point out the hazards of lead -based paint and explain the symptoms, treatment and precautions that should be taken when dealing with lead -based paint poisoning and the advisability and availability of blood lead level screening for children under seven. The notice should also point out that if lead -based paint is found on the property, abatement measures may be undertaken. The regulations further require that a visual assessment, risk assessment and potentially paint stabilization be conducted as required by 24 CFR Part 35 Subpart J. Flood Disaster Protection. In accordance with the requirements of the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001), the Subrecipient shall assure that for activities located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, flood insurance under the National Flood Insurance Program is obtained and maintained as a condition of financial assistance for acquisition or construction purposes (including rehabilitation). J. Use and Reversion of Assets. If any assets purchased with HOME funds are sold, the proceeds will be considered as program income and will be used for eligible activities. K. Program Income. Any program income or recaptured funds under this Agreement obtained by the Subrecipient shall be returned within five (5) business days to the City by the Subrecipient. L. Program Monitoring. The City may monitor client eligibility for each assisted project. Each review shall also include, but not be limited to on -site inspections to determine compliance with all applicable property codes and standards. Subrecipient shall fully cooperate with the City in monitoring the effectiveness and work performed by the Subrecipient in compliance with the terms of the Agreement. City shall have access at a reasonable hour to all offices and records (dealing with the use of funds that are the basis of this Agreement) of Subrecipient, its officers, directors, agents, employees, and subcontractors for the purposes of such monitoring. City shall give Subrecipient reasonable notice for accessing offices and records. M. Uniform Administrative Requirements. Subrecipient agrees to comply with the HOME requirements 24 CFR § 92.505 and the requirements and standards of OMB Circular A-122, "Cost Principles for Non -Profit Organizations" and with the following Attachments to OMB Circular No. A-110 and any changes to either Circulars. It is understood that all items below may not be applicable to Subrecipient's operations: HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 10 of 15 1. Attachment A, "Cash Depositories," except for Paragraph 4 concerning deposit insurance; 2. Attachment B, "Bonding and Insurance"; 3. Attachment C, "Retention and Custodial Requirements for Records"; 4. Attachment F, "Standards for Financial Management Systems"; 5. Attachment H, "Monitoring and Reporting Program Performance," paragraph 2; 6. Attachment N, "Property Management Standards," except for paragraph 3 concerning the standards; 7. Attachment 0, "Procurement Standards"; and 8. Attachment P, "Audit Requirements." Audits must be conducted in accordance with 24 CFR Part 44 and OMB Circular A-133. N. Retention of Records. Subrecipient agrees to keep or cause to be kept an accurate record of all actions taken and all funds expended, with source documents, in the pursuit of the objectives of the performance of this Agreement. Such records shall be kept for a minimum of five (5) years beyond the close of this Agreement. Subrecipient also agrees to obtain and keep on file and available for inspection by City the following information on each household assisted under this Agreement: 1. annual income and size of the household; 2. ethnic group of the client; 3. whether the head of household is male or female; 4. additional statistical information as may be required by HUD regulations and any amendments thereto; 5. proof the subject property meets the applicable property standards; 6. the total per unit amount of HOME dollars invested; 7. the compliance with the affirmative marketing requirements and existence of acceptable procedures; 8. compliance with relocation requirements; 9. minority and female -owned business data, and affirmative fair housing actions; 10. compliance with lead based paint regulations and guidelines; 11. compliance with conflict of interest rules; and HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 11 of 15 12. evidence the income targeting requirements are met. O. Enforcement of the Agreement. If assisted housing does not meet the applicable requirements under 24 CFR § 92.254 the funds provided to the assisted project must be repaid to the Subrecipient within thirty (30) days of failure to comply. Specific property recapture provisions to maintain the principal residency period must be stated in the HOME agreement between the homebuyer and the Subrecipient and filed of public record at the close of escrow. P. Hatch Act. The Subrecipient agrees that no funds provided, nor personnel employed under this Agreement, shall be in any way or to any extent engaged in the conduct of political activities in violation of Chapter 15 of Title V of the U.S.C. Q. Conflict of Interest. The Subrecipient agrees to abide by the provisions of 24 CFR 84.42 and 570.611, which include (but are not limited to) the following: a. The Subrecipient shall maintain a written code or standards of conduct that shall govern the performance of its officers, employees, or agents engaged in the award and administration of contracts supported by Federal funds. b. No employee, officer, or agent of the Subrecipient shall participate in the selection, or in the award, or administration of, a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved. c. No covered persons who exercise or have exercised any functions or responsibilities with respect to HOME -assisted activities, or who are in a position to participate in a decision -making process or gain inside information with regard to such activities, may obtain a financial interest in any contract, or have a financial interest in any contract, subcontract, or agreement with respect to the HOME -assisted activity, or with respect to the proceeds from the HOME -assisted activity, either for themselves or those with whom they have business or immediate family ties, during their tenure or for a period of one (1) year thereafter. For purposes of this paragraph, a "covered person" includes any person who is an employee, agent, consultant, officer, or elected or appointed official of the City, the Subrecipient, or any designated public agency. R. Lobbying. The Subrecipient hereby certifies that: a. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 12 of 15 b. If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying," in accordance with its instructions; and c. It will require that the language of paragraph (d) of this certification be included in the award documents for all sub awards at all tiers (including subcontracts, sub grants, and contracts under grants, loans, and cooperative agreements) and that all Subrecipients shall certify and disclose accordingly: d. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by 31 U.S.C. § 1352 Any person who fails to file the required certification shall be subject to a civil penalty of not Tess than $10,000 and not more than $100,000 for each such failure. S. Conditions for Religious Organizations. If applicable, the Subrecipient must meet the conditions in 24 CFR Part 92.257 regarding the use of HOME funds involving a primarily religious entity. T. Closeout. HOME funds will be closed out in accordance with procedures established by HUD. 24. MISCELLANEOUS PROVISIONS. A. Computation of Time Periods. If any date or time period provided for in this Agreement is or ends on a Saturday, Sunday, or federal, state, or legal holiday, then such date shall automatically be extended until 5:00 p.m. Pacific Time of the next day which is not a Saturday, Sunday, or federal, state, or legal holiday. B. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. C. Captions. Any captions to, or headings of, the sections or subsections of this Agreement, are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. D. No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, or obligate any of the parties hereto, to any person or entity other than the parties hereto. E. Exhibits and Schedules. The Exhibits and Schedules attached are incorporated herein by this reference for all purposes. To the extent any exhibits, schedules, or provisions thereof conflict or are inconsistent with the terms and conditions contained in this Agreement, the terms and conditions of this Agreement shall control. This Agreement is controlling except where preempted by applicable federal law. F. Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 13 of 15 G. Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. H. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Entire Agreement. This Agreement, along with the Exhibits and Attachments hereto, supersede any prior agreements, negotiations, and communications, oral or written, and contains the entire agreement between the parties as to the subject matter hereof. No subsequent agreement, representation, or promise made by either party, or by or to an employee, officer, agent, or representative of any party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. J. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties. K. Construction. The parties acknowledge and agree that (i) each party is of equal bargaining strength; (ii) each party has actively participated in the drafting, preparation, and negotiation of this Agreement; (iii) each such party has consulted with or has had the opportunity to consult with its own, independent counsel and such other professional advisors as such party has deemed appropriate, relative to any and all matters contemplated under this Agreement; (iv) each party and such party's counsel and advisors have reviewed this Agreement; (v) each party has agreed to enter into this Agreement following such review and the rendering of such advice; and (vi) any rule or construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 14 of 15 25. ATTACHMENTS TO THE SUBRECIPIENT AGREEMENT Exhibit A: Scope of Work Exhibit B: National City First -Time Homebuyer Program Manual Exhibit C: Notice: CPD-18-09 Requirements for HOME Homebuyer Program Policies and Procedures Subrecipient Insurance IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written. CITY OF NATIONAL CITY By: St(phen Mangar ello Acting City Manager APPROVED AS TO FORM: By./��" i�.�� • ai '�':-Jo - - —i �: ne Cor• ero SPRINGBOARD, CDFI By: —/ Todd Eme son Chairman ttorney :•ard App.inted Interim President HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 15 of 15 Exhibit "A" SCOPE OF WORK First -Time Homebuyer Program I. Program Design and Scope Exhibit "A" Springboard CDFI will provide full -cycle -lending to assist approximately five (5) first-time homebuyers (FTHB) through the entire process. The first-time home buyer program will ensure that new buyers are educated, prepared, and qualified to purchase a new home. Notwithstanding Paragraph 8, of the Agreement, Springboard CDFI may assign outreach, education and counseling services to a third party nonprofit housing counseling agency(s). The First -Time Homebuyer Program service delivery model is outlined below: Outreach: Springboard CDFI will provide continuous outreach about the FTHB program in both English and Spanish via flyers, brochures, and a webpage for the City's FTHB Program. Springboard CDFI may also participate in community events as a form of outreach. The outreach performed will be reported on a quarterly basis to the City. Education: Springboard CDFI will ensure that any loan applicants are offered 8 hours or more of HUD Certified Home Buyer Education (HBE) and are subsequently provided with a loan pre -qualification. Quarterly reports to the City will include the number of clients that received HBE and pre -qualification. Counseling: Springboard CDFI will ensure that clients receiving FTHB Program funds receive pre -purchase and post -purchase counseling to at no charge. Counseling sessions will be reported quarterly to the City. Administration of FTHB loan funds: Springboard CDFI will provide one-on-one in -person client intake and applications for the FTHB Program, underwrite, ensure an inspection is completed, and oversee loan document preparation and loan closing. Springboard CDFI will underwrite applications, taking all approved transactions through closing. Springboard CDFI shall not fund a first mortgage and the City's assistance loan for the same client under the FTHB Program within the same homebuyer transaction. Environmental Review: At time of final loan reservation, Springboard CDFI will provide City with Airport Area Influence map location and FEMA details regarding flood zone for subject property and a draft HOME Homebuyer set-up form for the environmental review. All clients that submit an application and go through the home buying process with Springboard should be tracked on the quarterly reporting spreadsheet. Loans funded should be tracked on the expense reimbursement spreadsheet. HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 1 of 3 Exhibit "A" SCOPE OF WORK The Process Exhibit "A" • Homebuyer/agent contacts Sprinboard CDFI. Springboard CDFI takes FTHB loan application • / •Springboard CDFI ensures client takes a HUD certified Home Buyer Education course and Financial Fitness training classes ♦ •Springboard CDFI ensures client completes a group or individual pre -qualification and pre- purchase counseling sessions with Springboard CDFI or a certified lendering partner. J • Loan application and pre -approval: Applicants are offered choices for 1st mortgage lenders and the loan application process begins. ♦ •Property Search and selection / 4 •At time of reservation, Springboard CDFI will provide City with Airport Area Influence map ♦ location and FEMA details regarding flood zone for subject property, and a draft HOME Homebuyer set-up form for the environmental review along with the lead based paint requirement appendix J • •Springboard CDFI will underwrite applications, taking all approved transactions through closing. Springboard CDFI shall not fund a first mortgage and the City's assistance loan for the same client under the FTHB Program within the same homebuyertransaction. 1 •Loan closing and home ownership: Underwriting, closing and FTHB loan funding provided 4' by Springboard CDFI. Springboard will ensure that clients receive post -purchase foreclosure prevention counseling resources. / 1 40 •Springboard CDFI submits reports and invoice to the City for reimbursement of loan funding and loan fee. HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 2 of 3 Exhibit "A" SCOPE OF WORK II. Program Budget, Compensation, and Payment Exhibit "A" A. Per the Agreement, the City will provide the Springboard CDFI with THREE HUNDRED NINETY-SEVEN THOUSAND, TWO HUNDRED SEVENTY-NINE HUNDRED DOLLARS AND 48/100 CENTS ($397,279.48) of HOME Program funds. Funds shall be used by Springboard CDFI to assist approximately five (5) low-income homebuyers purchase a home through the provision of a second mortgage loan. The maximum amount of each loan shall be $70,000. The loans shall only be made to families at or below 80% of the area median income. The loans shall only be used to assist such families with the purchase of homes through utilizing affordable financing options (down payment/closing costs) and first mortgages. B. Springboard CDFI shall be responsible for all research and reviews related to the work and shall not rely on personnel of the City for such services, except as authorized in advance by the City. The Springboard CDFI shall appear at Program related meetings and provide reports as cited in this Exhibit "A". C. The City may unilaterally, or upon request from the Springboard CDFI, from time to time, reduce or increase the Scope of Services (Exhibit "A") to be performed by the Springboard CDFI under the Agreement, notwithstanding the fee per closed loan. D. A maximum fee of $4,900.00 per closed loan may be charged by Springboard CDFI. Invoices will be processed for payment and remitted within thirty (30) days from receipt of invoice, provided that work is accomplished consistent with this Exhibit "A" as determined by the City. III. Reporting A. A detailed description of the quarterly activity reports requested is listed in Part I of Exhibit "A". Quarterly reports should include: Education, Outreach, Counseling, and the Administration of the FTHB Program Funds. B. Invoices will be submitted for payment upon closing a loan and within thirty (30) days with the following back-up documentation. Additional back-up documents maybe requested by the City for reimbursement. a) Cover letter for HOME FTHB Reimbursement b) Expense Reimbursement Claim Form c) HUD-1 Settlement Statement d) Promissory Note Appendix 1: Cover letter for HOME FTHB Reimbursement Appendix 2: Expense Reimbursement Claim Form Appendix 3: Homebuyer Set Up and Completion Form Appendix 4: Homebuyer Set Up and Completion Form Appendix A HOME Program Agreement FY 2018-2019 First -Time Homebuyer Program Page 3 of 3 Agency Letterhead Date Angelita Palma Community Development Specialist City of National City 140 E. 12th Street, Suite B National City, CA 91950 Re: FY 20XX-20XX HOME FTHB Program Invoice # Dear Ms. Palma, XortebdiYA? Please find the reimbursement request for the above referenced agreement in the amount of $ The supporting documentation for this expenditure request is attached for your review. Please remit full amount due to: Insert Address If you have any questions, please contact me at ( ) Sincerely, Name and Title of the Authorized Signer for Reimbursements Attachments: Expense Reimbursement Claim Form HUD-1 Settlement Statement Promissory Note febilliYa42 Expenditure Reimbursement Claim Form First -Time Homebuyer Program Springboard CDFI 1 C'ty of National City - HOME Investment Partnership Program HOME Contract Fiscal Year: FY 2018-2019 ( HOME Claims this period: HOME Contract Award Amount: $ 397,279.48 Year-to-date Expenditures: $ - Available Funds Year-to-date: $ 397,279.48 HVL - Homeownership Value Limit Total Funds Year-to-date HOME Claims Buyer Name(s) Last, First: Address: Parcel No: Loan Amount: $ - $ - Springboard CDFI Loan No.: SB Loan Serv.: $ - $ - HVL Effective Date: HVL Max Purchase Price: Escrow Closing Date: Purchase price: Buyer Name(s) Last, First: Address: Parcel No: Loan Amount: $ - $ - Springboard CDFI Loan No.: SB Loan Serv.: $ - $ - HVL Effective Date: HVL Max Purchase Price: $ - Escrow Closing Date: Purchase price: $ - Buyer Name(s) Last, First: Address: Parcel No: Loan Amount: $ - $ - Springboard CDFI Loan No.: SB Loan Serv.: $ - $ - HVL Effective Date: HVL Max Purchase Price: $ - Escrow Closing Date: Purchase price: $ - Buyer Name(s) Last, First: Address: Parcel No: Loan Amount: $ - $ - Springboard CDFI Loan No.: SB Loan Serv.: $ - $ - HVL Effective Date: HVL Max Purchase Price: $ - Escrow Closing Date: Purchase price: $ - Buyer Name(s) Last, First: Address: Parcel No: Loan Amount: $ - $ - Springboard CDFI Loan No.: SB Loan Serv.: $ - $ - HVL Effective Date: HVL Max Purchase Price: $ - Escrow Closing Date: Purchase price: $ - Buyer Name(s) Last, First: Address: Parcel No: Loan Amount: $ - $ - Springboard CDFI Loan No.: SB Loan Serv.: $ - $ - HVL Effective Date: HVL Max Purchase Price: $ - Escrow Closing Date: Purchase price: $ - Year-to-date Expenditures: $ - $ - CERTIFICATION: I certify that the above reported expenses were incurred in accordance with all terms and conditions as set forth in the HOME Agreement and that all expenses were necessary to accomplish the objective of the Agreement. Authorized Signature : Date: Title: I For National City Use Only: 1 Program Administrator Signature Date: U.S. Department of Housing and Urban Development Office of Community Planning and Development Homebuyer Set Up and Completion Form HOME Program (For single and multi -address activities) l�SBbtlIiYA3 Check the appropriate box: ❑ Original Submission ❑ Change Owner's Address ❑ Ownership Transfer ❑ Revision Name and Phone Number of Person Completing Form: Set Up Activity: A. General Information. 1. Name of Participant: 2. IDIS Activity ID Number: 3. Activity Name: B. CHDO Questions. (Only if applicable 1. Is funding limited to CHDO Operating (CO) or CHDO Capacity Building (CC) (Y/N)?: (If Yes, STOP. DO NOT FILL OUT THIS FORM.) 2. Will activity be funded with CR (Y/N) If yes, CHCO Acting as (enter code) (1) Owner (2) Sponsor (3) Developer 3. Will initial funding be a CHDO Site Control and/or Seed Money Loan (Y/N)? (Y/N) 4. Is the activity going forward? (Y/N): (If "Y", fill out the rest of the form. If "N", only the cost information is needed.) (If "Y", answer Item 4.) C. Objective and Outcome. 1. Objective (enter code): (1) Create suitable living environment (2) Provide decent affordable housing (3) Create economic opportunities 2. Outcome (enter code): (1) Availability/accessibility (2) Affordability (3) Sustainability D. Special Characteristics. 1. Activity Location Type "Y" next to any that apply (1) CDBG Strategy Area (2) Local target area (3) Presidentially declared major disaster area (4) Historic preservation area E. Activity Information. (5) Brownfield redevelopment area (6) _ Conversion of nonresidential to residential use (7) _Colonia (For AZ, CA, NM, TX) 2. Will this activity be carried out by a faith -based organization (Y/N)? 1. Activity Type (enter code): (2) New Construction Only (4) Acquisition & Rehab (3) Acquisition Only (5) Acquisition & New Construction 2. Homebuyer's Name (optional): 3. Street: 4. City: 5. State: 6. Zip Code: 7. County code: Activity Estimates: 8. HOME Units: 9. HOME Cost: 10. Multi -Address (Y/N)? 11. Loan Guarantee (Y/N)? F. Developer. (For multi -address activities onl 1. Developer Type (Enter code): (1) Individual (4) Not -for -Profit (2) Partnership (5) Publicly Owned (3) Corporation (6) Other 2. Developer's Name: 3. Developer's Street Address: 4. City: 5. State: 6. Zip Code: Page 1 of 6 Revised (8/06) f�ebdliY� Complete Homebuyer Activity: G. Activity Information. If this is a multi -address activity, make copies of this form so that cost and beneficiary information is reported for each address - Sections I, J, and K. 1. Activity Type (enter code): 2. Property Type (enter code): 3. FHA Insured (Y/N)? (2) New Construction Only (1) 1-4 Single Family (For single address activities.) (3) Acquisition Only (2) Condominium (4) Acquisition & Rehab (3) Cooperative (5) Acquisition & New Construction (4) Manufactured Home 4. Lease Purchase? If yes, date of agreement (5) Completed Units: (For single address activities.) Total number: HOME -assisted : H. Units. 1. Of the Completed Units, the number: Total HOME -assisted Meeting Energy Star standards: 504-accessible: 2. Period of Affordability: If you are imposing a period of affordability that is longer than the regulatory minimum, enter the total years (HOME minimum + additional) of affordability. PJ-imposed period of affordability: years. I. Property Address. (For multi -address activities.) 1. Homebuyer's Name (optional): 2. Homebuyer's Street Address: 3. City: 4. State: 5. Zip Code: 6. County: J. Costs. Purchase Price: Value After Rehab (for Acquisition/Rehab activities only): 1. HOME Funds (Including Program Income) a. Prooertv Costs Totals (1) Amortized Loan $ (2) Grant $ (3) Deferred Payment Loan (DPL) $ (4) Other $ $ b. Downpayment Assistance (1) Amortized Loan $ (2) Grant $ (3) Deferred Payment Loan (DPL) $ (4) Other $ $ c. CHDO Loan $ HOME Total this address [a + b + c] $ Page 2 of 6 Revised (8/06) OebdiYA 2. Public Funds (1) Other Federal Funds $ (2) State/Local Funds $ (3) Tax Exempt Bond Proceeds $ Total Public Funds [(1) + (2) + (3)] $ 3. Private Funds (1) Private Loans $ (2) Owner Cash Contribution $ (3) Private Grants $ Total Private Funds [(1) + (2) + (3)] $ 4. Activity Total (or Total this address) $ K. Household Characteristics. (Refer to code below where applicable) Household Unit # # of Bdrms Occup ant % Med Hispanic? Y/N Race Size Type Assistance Type Total Monthly Rent 2 N/A 1. Homebuyer Counseling Homebuyer received (enter code): 2. FHA Insured Y/N? (For multi address activities.) 3. First-time homebuyer Y/N? (1) No Counseling (3) Post -counseling (2) Pre -counseling (4) Both 4. Coming from subsidized housing Y/N? 5. Lease Purchase Y/N? If yes, date of agreement: (For multi address activities.) g of Bdrme 0 — SRO/Efficiency 1 —1 bedroom 2 — 2 bedrooms 3 — 3 bedrooms 4 — 4 bedrooms 5 — 5 or more bedrooms Assistance Tvoe 1 — Section 8 2 — HOME TBRA 3 — Other federal, state or local assistance 4 — No assistance Occupant 1 — Tenant 2 — Owner 9 — Vacant Unit Household Size 1 — 1 person 2 — 2 persons 3 — 3 persons 4 — 4 persons 5 — 5 persons 6 — 6 persons 7 — 7 persons 8 — 8 or more persons Household % of Med 1-0to30% 2-30+to50% 3 — 50+ to 60% 4 — 60+ to 80% Household Type 1 — Single, non -elderly 2 — Elderly 3 — Single parent 4 — Two parents 5 — Other Household Race 11—White 12 — Black or African American 13 — Asian 14 — American Indian or Alaska Native 15 — Native Hawaiian or Other Pacific Islander 16 — American Indian or Alaska Native & White 17 — Asian & White 18 — Black or African American & White 19 — American Indian or Alaska Native & Black or African American 20 — Other Multi Racial Page 3 of 6 Revised (8/06) Instructions for Completing the Homebuyer Set-up and Completion Report HOME Program Read the instructions for each item carefully before completing the form. The purpose of this report is to assist with the collection of information to be entered into IDIS. Applicability. This report is to be completed for each homebuyer activity assisted with HOME funds. Timing. This report form is used to setup an activity in IDIS so that funds may be drawn down and to complete the activity so that the HOME Program reporting requirements are met. Set Up Activity A. General Information. (Only applicable if the activity is being carried out by a CHDO.) 1. Name of Participant. Enter the name of the participating jurisdiction or the agency administering the homebuyer activity. 2. IDIS Activity ID Number. Enter the activity number assigned by IDIS. 3. Activity Name. Enter the name that the grantee or sub -grantee has designated to the activity. B. CHDO Questions. (Only applicable if the activity is being carried out by a CHDO.) 1. Is funding limited to CHDO Operating (CO) or CHDO capacity Building (CC)? This report does not apply to CO or CC activities. In IDIS, fund and draw after selecting CO/CC on the HOME menu. 2. Will the activity be funded with CR (Y/N)? If yes, CHDO Acting as: (Enter code) (1) Owner (2) Sponsor (3) Developer 3. Will initial funding be a CHDO Site Control and/or Seed Money Loan (Y/N)? (If Y, answer 4) 4. Is the activity going forward? After funding and drawing CL, answer "Y" to proceed to set up a Homebuyer activity or "N" to report costs and complete the activity. C. Objective and Outcome Objective. Enter the code of the objective that best describes the purpose of the activity. If a code is not entered in IDIS, the system will default the answer to "2" — Decent affordable housing. 1. Suitable living environments. Applies to activities that benefit communities, families, or individuals by addressing issues in their living environment. 2. Decent affordable housing. Applies to housing activities that meet individual family or community needs. This objective should not be used for activities where housing is an element of a larger effort. 3. Creating economic opportunities. Applies to activities related to economic development, commercial revitalization, and job creation. Outcome. Enter code of the outcome that best describes the benefits resulting from the activity. If a code is not entered in IDIS, the system will default the answer to "2" — Affordability. 1. Availability/accessibility. Applies to activities that make services, infrastructure, housing, and shelter available and accessible. Note that accessibility does not refer only to physical barriers. 2. Affordability. Applies to activities that provide affordability in a variety of ways. It can include the creation or maintenance of affordable housing, basic infrastructure hookups, or services such as transportation or day care. 3. Sustainability. Applies to activities that promote livable or viable communities and neighborhoods by providing services or by removing slums or blighted areas. D. Special Characteristics 1. Activity Location. Type "Y" next to any that apply. IDIS will default the answer to "N" if an answer is not typed in the field. (1) CDBG strategy area is defined as HUD -approved neighborhood or Community Revitalization strategy Area (NRSA or CRSA), identified in the grantee's Consolidated/Annual Action Plan under Section 91.215(e) or Section 91.315(e)(2). Local target area is defined as a locally designated non- CDBG strategy area targeted for assistance. Presidentially declared major strategy area is defined as an area declared a major disaster under subchapter IV of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. Historic Preservation Area is defined as an area designated for historic preservation by local, state, or federal officials. Brownfield redevelopment area is defined as an abandoned, idle, or underused property where expansion or redevelopment is complicated by real or potential environmental contamination. (6) Conversion from non-residential or residential use is self explanatory. An example is converting an old warehouse into rental units or condominiums. Colonia is defined as a rural community or neighborhood located within 150 miles of the U.S.-Mexican border that lacks adequate infrastructure and frequently also lacks other basic services. This field only applies to activities located in the states of Arizona, California, New Mexico, and Texas. 2. Faith -Based Organization. Will this activity be canied out by a faith -based organization (Y/N)? Enter "Y" if it is known or if the organization declares itself to be a faith -based organization. If not, enter "N". Note: IDIS will enter the default answer of "N" if an answer is not typed in the field. icEpOithilliY (2) (3) (4) (5) (7) E. Activity Information 1. Activity Type. (Enter code): to indicate the type of activity. (1) New Construction Only. Any activity that involved: (a) the addition of units outside the existing walls of the structure and (b) the construction of a new residential unit(s). (2) Acquisition Only. Acquisition of a structure that received certificate of occupancy at least 13 months before acquisition, which did not require rehabilitation and which is being used to provide affordable housing. Acquisition & Rehab. A HOME -assisted rehabilitation activity, which included the acquisition of real property. (4) Acquisition & New Construction. A HOME -assisted new construction activity, which included the acquisition of real property. This includes acquisition of a structure that has received an initial certificate of occupancy within a one-year period prior to acquisition. 2. Homebuyer's Name (optional). Enter the name of homeowner. For multi address activities the name of the development can be entered. 3. Street. Self explanatory. For multi address activities enter a general description of the project location. 4. City. Self explanatory. 5. State. Self explanatory. 6. Zip code. Self explanatory. 7. County code. Enter the county name or code. 8. Activity Estimates. HOME Units. Enter the estimated total number of units (upon completion) that will receive HOME assistance. 9. Activity Estimated HOME Cost. Enter the total amount of HOME funds requested for the activity. 10. Multi -Address (Y/N)? If the activity consists of more than one home, enter "Y" so that costs and beneficiary information can be reported for each address at completion. 11. Loan Guarantee? Y/N. Enter Yes or No to indicate whether this activity is supported by a loan guarantee. F. Developer Information. (For multi -address activities only.) 1. Developer Type. (Enter code.) (1) Individual (2) Partnership (3) Page 4 of 6 Revised (8/06) (3) Corporation (4) Not -for -Profit (5) Publicly Owned (6) Other 2. Developer's Name. Enter the name of the developer. 3. - 6. Developer's Street Address, City, State, and Zip Code. Self-explanatory. Complete Homebuyer Activity G. Activity Information 1. Activity Type. Only if the activity type has changed from set up in E. 1, enter the revised completion activity type in the box. 2. Property Type. Enter code to indicate the type of property assisted: (1) 1-4 Single Family (2) Condominium (3) Cooperative (4) Manufactured Home 3. FHA Insured (Y/N ) ? (For single address activities.) Enter "Y" for yes or "N" for no to indicate whether the property's mortgage is insured by FHA. 4. Lease Purchase? (For single address activities.) If there is a lease purchase agreement, enter the date of the agreement. 5. Completed Units: Total Number: HOME Assisted: Enter the total number of completed units and the total number of HOME Assisted units. H. Units 1 Of the units completed, the number: Total and Home - Assisted Meeting Energy Star Standards. Enter the total number of completed units that meet Energy Star standards and the number of completed HOME -Assisted units that meet Energy Star standards. Energy Star applies to substantial rehabilitation. It is a system for achieving and verifying a level of building performance with respect to energy efficiency. The performance level is certified by third party contractors. See www.enerqystar.qov for more information. Total and HOME Assisted 504 accessible. Enter the total number of completed units and completed HOME assisted units that are 504 accessible. Note: IDIS will default the answers to zero if units are not entered in these fields. 2. Period of Affordability. If you are imposing a period of affordability that is longer than the regulatory minimum, enter the total years (HOME minimum + additional) of affordability. PJ- imposed period of affordability: years. The period of affordability for Homebuyer activities is based on the amount of HOME funds invested in the housing: Per Unit HOME Amount Minimum Period of Affordability Under $15,000 $15,000 to $40,000 Over $40,000 5 years 10 years 15 years To indicate that the housing is to be affordable in perpetuity, enter "99" in the PJ-Imposed Period of Affordability field. I. Property Address (For multi -address activities.) 1. Homebuyer's Name. (Optional.) 2. - 6. Hombuyer's Street Address, City, State, Zip Code, and County Code. Self-explanatory. J. Costs Purchase Price. Enter the price paid by the homebuyer for the property as evidenced on the deed. Value After Rehab. Enter the dollar value of the property. The dollar value is the appraised value of the property before rehabilitation plus the total rehabilitation cost (i.e. all materials, supplies and labor costs directly related to the rehabilitation of the property). Costs. Include all HOME funds used for the activity and all other funds (public and private). Do not double count. If private funds are used for construction financing and those funds are later replaced by 1. HOME Funds. (Including Program Income.) Enter funds provided for a. Property Costs and for b. Downpayment Assistance. Note: For this activity to be reported as an ADDI activity, an amount must be entered in the Downpayment Assistance Section b. for each property address that is to be counted as assisted with ADDI funds. a. Property Costs - b. Downpayment Assistance (1) Amortized Loan. Enter the amount of HOME funds provided for this activity in the form of an amortized loan. If there are multiple loans, enter the interest rate and term of the largest loan. (2) Grant. Enter the amount of HOME funds provided without any repayment requirements. (Note: A grant may be used to reduce the principal amount borrowed, a principal reduction payment, or the effective interest rate, an interest subsidy payment, on a privately originated loan.) Deferred Payment Loan (DPL). Enter the amount of HOME funds provided through loans where payment of principal and interest is deferred until a future time and enter the interest rate and amortization period, if any. A DPL is sometimes called a conditional grant (e.g., repayment is required when the property is sold, or is forgiven if the owner does not sell the property for a specified number of years or repayment of principal and interest starts after the bank loan is repaid.) (4) Other. Enter the total amount of HOME funds provided for subsidy funding that is other than the type of loan/grant assistance identified in the above items listed in (1) through (3). c. CHDO Loan. Enter the amount of HOME funds provided as a CHDO loan for the activity. Total HOME Funds or total this address. Enter the total of items a through c as the amount of HOME funds expended. 2. Public Funds. (1) Other Federal Funds. Exclude any HOME funds expended. State/Local Funds. Tax Exempt Bond Proceeds. Report funds used for development costs only. Total Public Funds. Enter the total of items (1) through (3) as the amount of Public Funds expended. 3. Private Funds. (1) Private Loans. Enter the amount of all of the costs that have been paid with funds obtained from private financial institutions, such as banks, savings and loans, and credit unions, and enter the interest rate and amortization period of the loan. If there are multiple loans, enter the interest rate and term of the largest loan. (Do not double count.) Owner Cash Contribution. Enter the amount of all cash contributions provided by the homebuyer. Private Grants. Enter the amount of cash contributions provided by private organizations, foundations, donors, etc. Total Private Funds. Enter the total of items (1) through (3) as the amount of Private Funds expended. 4. Activity Total or Total Address. Enter the sum of totals for HOME funds, Public funds and Private funds. / BbitlikA'3 permanent financing, do not report both. Report all HOME funds expended on the activity. (Note: Federal regulations specifically prohibit paying back HOME funds with HOME funds.) For funds other than HOME, to the extent a choice must be made to avoid double counting, report permanent financing rather than construction financing. The total amount of HOME funds reported in the block titled "Total HOME funds (Total Item (1) for all addresses must equal the total amount disbursed through IDIS for this activity. (3) (2) (3) (2) (3) K. Household Characteristics. Complete one line for the head of household of each residential unit that is receiving homebuyer assistance from the HOME Program. Unit Number. Enter the unit number of each unit that will receive HOME assistance. Number of Bedrooms. Enter 0 for a single room occupancy (SRO) unit or for an efficiency unit, 1 for 1 bedroom, 2 for 2 bedrooms, 3 for 3 bedrooms, 4 for 4 bedrooms, and 5 for 5 or more bedrooms. Page 5 of 6 Revised (8/06) Occupant. For homebuyer activities, one unit must be owner occupied. If there are tenant occupied units, enter 1 for tenant or 9 for vacant. Percent of Area Median Income. For each occupied residential unit, enter one code only based on the following definitions: 1. 0-30 Percent of Area Median Income refers to a household whose annual income is at or below 30 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families. 2. 30+-50 Percent of Area Median Income refers to a household whose annual income exceeds 30 percent and does not exceed 50 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families. 3. 50+-60 Percent of Area Median Income refers to a household whose annual income exceeds 50 percent and does not exceed 60 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families. 4. 60+-80 Percent of Area Median Income refers to a household whose annual income exceeds 60 percent and does not exceed 80 percent of the median family income for the area, as determined by HUD with adjustments for smaller and larger families. Hispanic? Y/N. For each occupied residential unit, enter the ethnicity for the head of household as either "Y" for Hispanic or Latino or "N" if the head of household is not Hispanic nor Latino. Hispanic or Latino race is defined as a person of Cuban, Mexican, Puerto Rican, South or Central American, other Spanish culture or origin, regardless of race. The term, "Spanish origin," can be used in addition to "Hispanic or Latino." Race of Head of Household. For each occupied residential unit, enter one code only based on the following definitions: 11. White. A person having origins in any of the original peoples of Europe, North Africa or the Middle East. 12. Black/African American. A person having origins in any of the black racial groups of Africa. Terms such as "Haitian" or "Negro" can be used in addition to "Black or African American." 13. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand and Vietnam. 14. American Indian/Alaska Native. A person having origins in any of the original peoples of North and South America (including Central America), and who maintains affiliation or community attachment. 15. Native Hawaiian/Other Pacific Islander. A person having origins in any of the original people of Hawaii, Guam, Samoa or other Pacific Islands. 16. American Indian/Alaska Native & White. A person having these multiple race heritages as defined above. 17. Asian & White. A person having these multiple race heritages as defined above. 18. Black/African American & White. A person having these multiple race heritages as defined above. 19. American Indian/Alaska Native & Black/African American. A person having these multiple race heritages as defined above. 20. Other Multi Racial. For reporting individual responses that are not included in any of the other categories listed above. Household Size. Enter the appropriate number of persons in the household: 1, 2, 3, 4, 5, 6, 7, or 8 or more persons (for households of more than 8, enter 8). Household Type. For each residential unit, enter one code only based on the following definitions: 1. Single, Non -elderly. One -person household in which the person is not elderly. 2. Elderly. One or two person household with a person at least 62 years of age. 3. Single Parent. A single parent household with a dependent child or children (18 years old or younger). 4. Two Parents. A two -parent household with a dependent child or children (18 years old or younger). AFpfiebiliYQ3 5. Other. Any household not included in the above 4 definitions, including two or more unrelated individuals. Assistance Type. For rented units, enter one code only to indicate the type of assistance, if any, being provided to the tenant. 1. Section 8. Tenants receiving Section 8 assistance through the Section 8 Certificate Program under 24 CFR part 882 or the Section 8 Housing Voucher Program under 24 CFR part 887. 2. HOME TBRA. Tenants receiving HOME tenant -based rental assistance. 3. Other federal, state or local assistance. Tenants receiving rental assistance through other federal, state or local rental assistance programs. 4. No assistance. Self-explanatory. Total Rent. For renters, enter the total monthly rent (tenant contribution plus subsidy amount). 1. Homebuyer Counseling. Enter the code to indicate the type of counseling received by the homebuyer, if any: (1) No counseling (2) Pre -counseling (3) Post -counseling (4) Both 2. FHA -Insured (Y/N)? Enter Yes, "Y", or No, "N", to indicate whether the property's mortgage is insured by FHA. 3. First-time Homebuyer (Y/N)? Enter "Y", if a first-time homebuyer. If not, enter "N". 4. Coming from subsidized housing Y/N? Enter "Y" if the homebuyer was living in public housing or receiving rental assistance from a federal, state or local program immediately prior to HOME assistance or "N" if not. 5. Lease Purchase (Y/N)?: (For single address activities.) If there is a lease purchase agreement, enter the date of the agreement. Page 6 of 6 Revised (8/06) F eb1ikAQ Homebuyer Set Up and Completion Form — Appendix A HOME Program (For single and multi -address activities) Lead Paint Requirement Buyer Name(s) Last, First: Address: Springboard CDFI Loan No. Check one of the following 3 options: 1. Housing constructed before 1978 2. Exempt: housing constructed 1978 or later info: A residential property for which construction was completed on or after January 1, 1978, or, in the case of jurisdictions which banned the sale of residential use of lead -containing paint prior to 1978, an earlier date as HUD may designate. 3. Otherwise exempt: 1. 0 bedroom; 2. Elderly/disabled with no children under 6; 3. lead -based paint free, and/or; 4. used no more than 100 days in a year EXHIBIT B Exhibit "B" NA-TIA)NALa--nr cAtri#30)flAcrsr• City of National City's First -Time Homebuyer Manual Effective May 2019 (Subject to period updates) Funded by the U.S. Department of Housing & Urban Development HOME Investment Partnerships Program Program Administrator: SPRINGBOARD CDFI EQUAL HOUSING OPPORTUNITY Exhibit "BT Table of Contents PURPOSE OF THE PROGRAM MANUAL 2 GENERAL DEFINITIONS 2 SECTION I: BORROWER ELIGIBILITY REQUIREMENTS 5 A. ELIGIBLE BORROWERS 5 B. INCOME CRITERIA 7 C. HOUSEHOLD ELIGIBILITY REQUIREMENTS 9 D. CREDIT WORTHINESS 10 E. ELIGIBLE PROPERTIES 10 F. MAXIMUM PURCHASE PRICE 10 G. LOAN PROCEDURES AND TERMS 11 SECTION II: PROGRAM ADMINISTRATION AND PROCEDURES 13 A. LENDER ELIGIBILITY 13 B. LOAN ORIGINATION AND PROGRAM APPLICATION 14 C. FTHB APPLICATION PACKET 15 D. PROCESSING 16 E. PROPERTY SELECTION 17 F. PROPERTY INSPECTION 18 G. LOAN CLOSING 20 H. CANCELLATION AND COMMITMENT EXPIRATIONS 21 SECTION III: CHANGES PRIOR TO CLOSING 22 APPENDIX Al APPENDIX A2 APPENDIX A3 APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G APPENDIXES - APPLICATION FOR NATIONAL CITY HOME FIRST-TIME HOMEBUYER PROGRAM - FIRST TIME HOMEBUYER PROGRAM AFFIDAVIT - AUTHORIZATION FOR RELEASE OF INFORMATION - CPD INCOME ELIGIBILITY CALCULATOR DETAILS - FROM THE HUD EXCHANGE - SUBSIDY LAYERING ANALYSIS - SEQUENCE OF LOAN PROCESS - CITY LOAN QUALITY COMMITMENT POLICY - CODE AND PROPERTY STANDARDS (PS) - NOTICE OF VOLUNTARY ACQUISITION AND OCCUPANCY CERTIFICATION HOME First -Time Homebuyer Program Manual Page 11 Exhibit "E2 APPENDIX H APPENDIX I APPENDIX J APPENDIX K APPENDIX L APPENDIX M APPENDIX N APPENDIX 0 APPENDIX P - SAMPLE "HOME FIRST-TIME HOMEBUYER REGULATORY AGREEMENT" APPENDIXES CONTINUED - SAMPLE "DEED OF TRUST" - SAMPLE "PROMISSORY NOTE" - CITY LOAN DISCLOSURE - ERROR AND OMISSIONS/COMPLIANCE AGREEMENT - SELLER AFFIDAVIT -VOLUNTARY ACQUISITION - LENDER'S CERTIFICATION OF OCCUPANCY - TRUTH AND LENDING - LOAN RESERVATION FORM 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 & Economic Development Department. The City is currently funding the First -Time Homebuyer Program using the U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnership (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 (Springboard CDFI) will reject those applications where the information submitted indicates that the applicant does not qualify for the program. GENERAL DEFINITIONS AFFIDAVIT: A written statement 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 thirty (30) 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. The loan term for repayment is 30-years. Once the City's loan is repaid (Principal and Interest) the restrictions are released. APPLICANT: Any person within the household whom applies for City loan assistance. Home First -Time Homebuyer Program Manual P a g e 1 2 Exhibit"H3 ARMS LENGTH TRANSACTION: A transaction in which the buyers and sellers 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. CITY: The City of National City. COMMITMENT: A reservation of funds by the Program Administrator once a purchase contract has been accepted and the FTHB Loan Reservation Request has been approved by Program Administrator. Each Commitment shall be valid for 45 days. See FTHB Loan Reservation Request form Appendix P. ELIGIBLE DWELLING: Real property located within the City of National City which is designed as a residence for one household and meets the property standards and criteria as set forth in this manual with no outstanding civil penalties against the property. HOME PROGRAM (Home): The City's First -Time Homebuyer Program subject to the 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. INCOME: The gross amount of all income that is anticipated to be received during the coming twelve (12) months, as further defined in 24 CFR Section 5.609, for all adult Household members. 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. 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, as defined in Section 1, A, below, to finance the purchase of an Eligible Dwelling. Home First -Time Homebuyer Program Manual P a g e 1 3 Exhibit "B4 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. LIQUID ASSETS: 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. 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. PRINCIPAL RESIDENCE: One of the following types of residences: 1) single-family house; 2) condominium unit; 3) town home unit which is occupied by the Borrower as its sole dwelling meaning that no portion of the Property shall be rented out to any other persons and the Borrower shall live in the Property full-time. PROHIBITED MORTGAGE: Any liens superior to the City First -Time Homebuyer loan(s), other than the first Trust Deed. PROGRAM ADMINISTRATOR: Springboard CDFI administers the City's First -Time Homebuyer Program on behalf of the City of National City's Housing & Economic Development Department, 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: See Appendix F for detailed Property Standards (PS). PROPERTY VALUE: The 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 in an arm's length transaction, 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 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 acquisition. RELATED PERSON: A person allied by nature, origin, kinship, marriage, etc. Home First -Time Homebuyer Program Manual Page 14 Exhibit "B5 RESIDENTIAL 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. VOLUNTARY ACQUISITION: An acquisition of Property which is done acting of one's own free will. SECTION I: BORROWER ELIGIBILITY REQUIREMENTS Federal law sets borrower eligibility requirements. Income guidelines shall be modified based on Federal directives when issued. The Program Administrator 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. The Application must also be signed by each adult household member. These must be included in the Application Package submitted to the Program Administrator, reference AppendixA-1 and A-2. 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 Program Administrator 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 the short form, 1040A or 1040EZ for the last three (3) years, completes and signs the required affidavits, but is unable to Home First -Time Homebuyer Program Manual Page 1 5 Exhibit "133 produce copies of the signed returns, the Program Administrator 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: 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 Program Administrator 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 Program Administrator 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 any 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 of 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. Home First -Time Homebuyer Program Manual Page 16 Exhibit "EJ 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 National City employees (except for certain employees of the Housing & Economic Development Department) are eligible to participate and may require HUD approval. a) Transactions involving City employees from Lending, Realty, and other departments will not constitute a conflict of interest, except as otherwise provided in 24 CFR Section 92.356 or as prohibited by State law. b) Applicant must disclose if applicant is a City employee, consultant, or City Council person. Any Applicant(s) which are a family member of a City employee, consultant, or City Councilmember, must identify each person with whom such Applicant has family or business ties in order to determine whether a conflict of interest exists pursuant to 24 CFR Section 92.356 or under State law. B. INCOME CRITERIA 1. Income must be above 60% and below 80% of the currently published San Diego County median income, adjusted for household size. Income limits are established by the U.S. Department of Housing and Urban Development (HUD) and published by HUD, and are adjusted annually. Applicants may not obtain "stated income" loans. The Applicant's actual income is a qualifying factor in loan approval. Household Size 60% AMI 80% AMI 1 person $40,920 $54,500 2 people $46,740 $62,300 3 people $52,560 $70,100 4 people $58,380 $77,850 5 people $63,060 $84,100 6 people $67,740 $90,350 7 people $72,420 $96,550 8 people $77,100 $102,800 Effective: June 1, 2018 These income limits are updated annually. Please check the following link to view the most recent income limits.: https://www.hudexchanpe.info/programs/home/home- income-limits/ 2. Income shall be either Income, as defined above, or the Applicant's adjusted gross income as defined for purposes of reporting under Internal Revenue Service Form 1040 series for individual Federal annual income tax purposes. Income includes the combined Income (whether as defined above or adjusted gross income) of all adult members of the Household. Home First -Time Homebuyer Program Manual Page 17 Exhibit "E8 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. 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. The City program requires that every source of taxable and non-taxable income be included in the CPD Income Eligibility Calculation (See Appendix B). The household income is calculated using HUD's Technical Guide for Determine Income and Allowance under the HOME Program: http://portal.hud.gov/hudportal/HUD?src=/program offices/com m planning/affordablehousing/library/modelguides/2005/1780 ii. Self -Employed: Year-to-date profit and loss statement and three prior year's tax returns are required. iii. 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. iv. 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. v. Income Verification: The Program Administrator bears the burden of proving that the Buyer's income is within the program guidelines. The computation Home First -Time Homebuyer Program Manual P a g e 1 8 Exhibit "Eg should be clear, complete, and documented by third party verifications, to the greatest extent possible. vi. 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. vii. Part or Full Time Students: Adult members (18 and older) enrolled in a vocational, community college or university must provide evidence of current enrollment status and a copy of their Financial Aid Award letter. viii. Dependents: 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 3% of the total purchase price of the property will be required from the borrower's personal seasoned (not less than 3 months) funds or by a gift, which must be used for down payment, closing costs, or cash reserves. If the Borrower completes a Financial Fitness class, they may reduce this amount to 2.5%. Households will be required to provide a down payment. Cash cannot be used to meet the borrower's minimum contribution requirement. 4. Borrower(s) must have reserves after dose of escrow in amount equal to one month of proposed housing costs (PITI, based on 1003/1008) or $1000, whichever is greater. Gift funds cannot be used to meet the minimum reserves. 5. Cash gift funds up to $50,000 may be given towards the purchase of the subject property. The Applicant's projected Maximum Liquid Assets after the residence will close 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 worksheet of all Assets shall be included in the application package submitted to the Program Administrator, reference Appendix G. All Asset sources must be disclosed at the time of application. Home First -Time Homebuyer Program Manual Page 1 9 Exhibit "BD 6. The combined income of all members of the Household who are currently living together and will 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 at the time of application. D. CREDIT WORTHINESS 1. Households must have a minimum credit score of 640 2. Applicants with a foreclosure history must provide a letter of explanation and possibly 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. 6. Child Support payments must be current and with no arrears. E. ELIGIBLE PROPERTIES 1. Properties must be located within the City of National City. 2. Each property must be a single dwelling unit property which is a single-family home, condominium or townhouse. Manufactured/mobile homes, duplexes, triplexes or four- plexes do not qualify as eligible properties. 3. Properties must be vacant, seller -occupied or occupied by borrower 120 days prior to contract acceptance. 4. All types of sales are eligible under the program with up to $70,000 available in City gap financing. 5. Properties cannot have any outstanding civil penalties with the City of National City, i.e. substandard liens, code enforcement violations, other judgements, etc. Unpermitted structures are not allowed. Any discrepancies in the property square footage as reported on the appraisal report, the MLS and the County tax records will be questioned. F. MAXIMUM PURCHASE PRICE The maximum purchase price cannot exceed 95 percent of the median purchase price for the area, as determined by HUD. The HUD Approved 95% Purchase price for existing single family homes (single unit) is $437,000, effective April 1, 2018. The 95% purchase price for new construction is $438,000. Home First -Time Homebuyer Program Manual Page 110 Exhibit "ET https://www.hudexchange.info/resource/2312/home-maximum-purchase-price-after-rehab- value/ G. LOAN PROCEDURES AND TERMS 1. The FTHB Loans shall be 3% interest deferred payment loans with a term of 30 years. No monthly payments of principal or interest are required. When the buyer sells the property, or wants to pay the loan in full, the buyer must pay all accrued interest in addition to the principal balance. 2. The promissory note shall contain 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 • Renting of the property • 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. The total gap subsidies (inclusive of other sources) shall not exceed 25% 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 1st 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. Principal, interest, taxes and insurance (PITI) cannot exceed 38% of Applicant(s) gross monthly income or be less than 30%. Exceptions may be considered on a case by case basis, not to exceed 39%. An exception will not be considered when the ratio includes income calculated from a mortgage credit certificate. 7. Total debt -to -income ratio may not exceed 45%. 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. No exceptions can be Home First -Time Homebuyer Program Manual Page 111 Exhibit "ffi made to this ratio. In case of a Mortgage Credit Certificate, the loan application shall include the calculations used to lower the applicant's ratios, if needed to qualify for the City's FTHB assistance. 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 City loan. 11. Any fees and/or commissions shall be customary and reasonable. 12. The terms of the City's HOME Program 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. 13. 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. 14. Subsequent mortgages to the new First Trust Deed and City HOME Program Loan are permitted. The City Home Loan must remain in second position. 15. The City Home Loan is not assumable. 16. A Promissory Note, Deed of Trust, and Regulatory Agreement will secure the City Home Loan. 17. 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. 18. The Program Administrator shall underwrite the City's loan. The City of National City's Housing & Economic Development Department does not underwrite the loans, but shall 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. 19. 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. Applicants who provide false and misleading information shall not be allowed to re -apply. Home First -Time Homebuyer Program Manual Pagel 12 Exhibit "i SECTION II: PROGRAM ADMINISTRATION AND PROCEDURES 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. Please note, however, that all elements of the processing sequence must be completed at some point. A. LENDER ELIGIBILITY Lender is defined above. 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 Program Administrator. 2. Agree to adhere to Quality Commitment Policy. Please refer to Appendix E. 3. Loan officer that attends the certification course will be designated the contact person for the program. 4. All lending personnel submitting a City program loan application on behalf of the homebuyer must attend training sessions and study and apply procedures listed in the Lender Training Handbook. 5. Provide the First -Time Homebuyer Program Manual and Lender Training Handbook to all loan processors. 6. Cooperate with Program Administrator in providing the best possible service to the Applicants. 7. Program Administrator shall not fund a first mortgage and the City's assistance loan for the same client under the FTHB Program within the same homebuyer transaction. Home First -Time Homebuyer Program Manual 113 Exhibit "B 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 Program Administrator 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 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. 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 Program Administrator and contains the required certifications below: a. That the residence will be used as the Principal Residence and that the Applicant must notify the Program Administrator 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 a new 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. City's loan application matches vesting on 1st Mortgage. City will not allow vesting as married but sole and separate property. However, if borrower provides a letter from the 1st 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 Home First -Time Homebuyer Program Manual Page 1 14 Exhibit "Ef; 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. FTHB APPLICATION PACKET Applicant/Lender transmits an application packet to the Program Administrator that includes the following forms and additional documentation as required. See FTHB — Submission Checklist for a complete list of items required. 1. City First -Time Homebuyer Application*, see Appendix A-1 2. Authorization for Release of Information Form*, see AppendixA-3 3. Complete copy of Lender's First Mortgage Loan Application 4. Income computation from CPD Income Eligibility Calculator and all supporting documentation*, see Appendix B 5. Subsidy Layering Analysis, see Appendix C 6. Three 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 8. Certificate of Completion for First -Time Homebuyer Education Training Course. The applicant must attend an approved eight hour home ownership education class that is approved by the City. At this time, only Springboard CDFI, Credit.org, and Frameworks are approved by the City. 9. Completed Applicable Exhibits 10. Purchase Contract and all Addendums signed by all parties. Purchase Contract must disclose that purchase is contingent on borrower(s) obtaining financing from National City FTHB program. Seller to sign Voluntary Acquisition/Occupancy Certification with purchase contract (Appendix N). 11. Lead -Based Paint Disclosure* 12. Appraisal and Housing Quality Standards inspection (HQS HUD 52580 form). See Section F. 13. Copy of Title Report Home First -Time Homebuyer Program Manual P a g e l 15 Exhibit "Eft 14. 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) 15. Signed and executed copy of the Power of Attorney if applicable * 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 live/wet signed. 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 AppendixA-3. E-Mail (via secured email) the APPLICATION PACKAGE to the Program Administrator: Springboard CDFI, nationalcitydpa@springboard.org 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. PROCESSING 1. Program Administrator accepts and reviews the application package and makes a determination as to completeness and accuracy. Final determinations for eligibility and all interpretations of the regulations shall be at the discretion of the Program Administer. a. Commitment period - Once funds are reserved, the Program Administrator will issue a commitment (reservation) of funds for a 45 day period. After the commitment period, funds will be released back into the FTHB Program. One extension may be granted of up to 15 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 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 Program Administer. Home First -Time Homebuyer Program Manual Page 116 Exhibit "W 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 Program Administer 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 (reservation) of funds will be issued by the Program Administrator for a 45 day period at receipt of the purchase contract and FTHB Loan Reservation Request. If the purchase contract falls through, the Program Administer will have sole discretion to release the funds back into the FTHB Program or issue an extension of the commitment. 5. Lender will complete the remainder of the standard mortgage application process. 6. Program Administrator Turn -Around: The Program Administrator shall date -stamp packages and review in order of receipt. Turn -around time for initial review and for providing a list of conditions, a loan commitment or a denial letter is 5 business days from the receipt of a complete* package. 7. RUSH: Packages marked "RUSH" or "SUPER RUSH" etc. will not be processed ahead of other pending packages. 8. Incomplete Packages: Incomplete packages may delay the approval and subsequent issuance of the Commitment Approval Letter. * Complete packages must include those items listed on the FTHB — Submission Checklist. 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. Purchase contract must disclose that purchase is contingent on borrower(s) obtaining financing from FTHB program. 2. An appraisal to establish the property value as determined by a certified state licensed appraiser must be completed and provided to the Program Administer. 3. A Housing Quality Standards (HQS HUD 52580 form) inspection and all lead certification requirements must be completed as specified in Section F. 4. Pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended, (URA) Final Rule effective February 3, 2005, prior to the presentation of the final FTHB Loan Approval, adjusted based on the licensed appraisal, Home First -Time Homebuyer Program Manual Page 117 Exhibit "ffi Program Administrator will mail a voluntary acquisition notice to the owner of record. The Seller and owner of record must execute the initial "Notice of Voluntary Acquisition and Occupancy Certification" (Appendix N) with the purchase contract. The Notice will include the following: a. Since the purchase is voluntary and the Buyer does not have the power of Eminent Domain, the seller is not eligible for relocation payments, or other relocation assistance; 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; and c. Seller certifies that the property has not been occupied by a tenant within 120 days (with the exception of the potential buyer). 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 or store personal property there. 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 after this information is provided. Only after a participant has an 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. A Housing Quality Standards (HQS HUD 52580 forms) inspection must be completed. Program Administrator will have a HQS inspector contact the selling agent and/or loan officer for access to the property. Inspection must be conducted by an approved HQS inspector. Health and safety issues must be corrected. HQS inspector must issue PASS inspection report prior to City loan approval. The HQS HUD 52580 form is for programmatic purposes only and is not intended to replace the third party independent property inspection. It is STRONGLY recommended that the borrower obtain a third party independent property inspection. 2. Termite report and clearance is REQUIRED prior to funding and cannot be waived, regardless of purchase agreement terms. Not applicable for new construction. 3. Housing assisted with HOME funds is subject to the Lead -Based Paint Poisoning Prevention Act (42 U.S.C. 4821-4846), the Residential Lead -Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4851-4856), and implementing regulations at part 35, subparts A, B, J, K, M and R of this title. Residential units built prior to January 1, 1978 are subject to a lead -based paint visual assessment by an HQS inspector that has completed the U.S. Department of HUD training found at: https://apps.hud.gov/offices/lead/training/visualassessment/h00101.htm to determine if a Lead Risk Assessment will need to be conducted on the property. Lead - Home First -Time Homebuyer Program Manual 1 18 Exhibit "El Based Paint Notifications will be given to the homebuyer(s). The City will not be responsible for lead -based paint removal and/or coverage; nor will the City provide any down payment and or any financial assistance, unless appropriate level of lead abatement is performed given HUD's standards as illustrated in the chart below. If required, paint stabilization must be completed by an individual or company trained and certified in Lead Safe work practices. No assistance will be provided a unit successfully passes a clearance test performed by a certified lead risk assessor. 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. Approach to Lead Hazard Evaluation and Reduction < $5,000 Do no harm $5,000- $25,000 Identify and control lead hazards Notification Yes Yes Lead Hazard Evaluation • Paint testing of surfaces to be disturbed by • rehabilitation • Paint Testing of surfaces to be disturbed by rehabilitation • Risk Assessment Lead Hazard Reduction • Repair surfaces disturbed during rehabilitation • Safe work practices • Clearance of work site • Interim controls • Safe work practices • Clearance of unit Ongoing Maintenance For HOME rental Programs Funded Properties only By Other EBL No No Options • 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 Hazards are present on the subject property, the City shall notify Buyer, Lender and Escrow within 15 days of such determination and provide those parties with a copy of any and all Risk Assessment Report(s). The Lender will be notified 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. 4. 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 19 Exhibit "al 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. 5. The City loan may be funded upon the completion of the repairs and clearance from the HQS Inspector and the City Program Administrator. Properties must meet minimum health and safety standards upon occupancy, as inspected by an approved HQS Inspector. 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). G. LOAN CLOSING 1. Program Administrator will issue a loan Approval Notice once ALL conditions are satisfied, including HQS clearance and termite report clearance. (Prior to issuance of Approval Notice, only a list of conditions will be provided as often as necessary, not a "conditional approval".) 2. Lender and Program Administer 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 45-day commitment (reservation) 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 Recorder's Office), original Promissory Note, Truth in Lending Statement (Appendix 0), Escrow Instructions and all amendments and copy of estimated Settlement 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, see Appendix L. d. All outstanding loan conditions listed on the Approval Notice and/or Instructions to Escrow. e. City reviews Closing Package and checks the file to ensure all necessary documents have been submitted. 4. The Program Administrator will issue an expiration date on loan documents between 30-60 days from issuance. Home First -Time Homebuyer Program Manual Page 120 Exhibit "81' 5. Program Administrator will transfer funds by wire as instructed on the escrow/title company wire instructions. 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 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 (reservation). 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 application package; b. Submit written notice of loan cancellation; or c. Request a 30 day extension in writing with explanation of extenuating circumstances. Upon expiration of the Commitment, the Lender must do one of the following: a) If the loan has not closed, the Lender must submit a request for extension and provide estimate of closing date to the Program Administrator. b) If 45 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. Home First -Time Homebuyer Program Manual Page 121 Exhibit "ffi SECTION III: CHANGES PRIOR TO CLOSING Program Administrator issues a loan Commitment (reservation) and an Approval Notice based on the Applicant'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 and the Approval Notice are 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 Approval Notice based on the household income as of the date the Commitment is issued. The income verified for the Approval Notice is valid as long as the loan closes within 45 days after the financial information was originally (and completely) submitted and there have been no changes which effect previously reported income. If the loan does not close within 45 days, all applicable City documentation must be submitted and income must be re - verified. 2. Marital Status: If the Applicant gets married after issuance of the Commitment or the Approval Notice and prior to closing, the spouse must satisfy the prior homeownership requirements contained in the First -Time Homebuyer Application and 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 or Approval Notice. 3. Acquisition Cost: If a change in acquisition cost occurs after the Commitment or Approval of City loan and prior to closing, 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. Voluntary Acquisition Form d. All other documentation that may be applicable as listed previously in this Manual 4. Loan Amount: Any changes to the loan amount which occur after the Commitment or the Approval Notice has been issued and prior to closing must be reported to the Program Administer immediately by phone, followed up with a written confirmation along with all applicable documentation listed in this Program Manual. Upon receipt of revised/updated documentation, a revised Commitment or Approval Notice may be issued. Home First -Time Homebuyer Program Manual Page 122 APPLICATION FOR NATIONAL CITY FIRST-TIME HOMEBUYER PROGRAM Dear Applicant: Exhibit'8! ,�.\ \ 1 `ew CALIFORM, N TIONAL CJ V L- Z CORYon AT�=D 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 HOUSEHOLD MEMBER #1 (HEAD OF HOUSEHOLD) (add additional pages for more than 3 adults in the household) I I First Name Middle Last Name Social Security Number D.O.B Address: Home Phone: ( ) Cell Phone: ( ) - Occupation: Work Phone: ( ) Employer Name and Address: (1 a) 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 (1b) 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: Appendix A-1 Exhibit "&S (2) ADULT HOUSEHOLD MEMBER #2 Relationship to Primary Applicant First Name Address: Home Phone: Occupation: Work Phone: Employer Name and Address: Middle Last Name / / Social Security Number D.O.B Cell Phone: (2a) 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 (2b) Race (check one) White Black/African American Asian American Indian/Alaskan Native Native Hawaiian/Other Pacific Islander Hispanic Ethnicity (check one) Yes No (3) ADULT HOUSEHOLD MEMBER #3 American Indian/Alaskan Native & White Asian & White Black/African American & White American Indian/Alaskan Native & Black/African American Other: Relationship to Primary Applicant First Name Address: Home Phone: Occupation: Work Phone: Employer Name and Address: Middle Last Name Social Security Number D.O.B Cell Phone: (2a) 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 (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: Appendix A-1 Exhibit "ET (3) HOUSEHOLD INFORMATION: 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 Total yearly HOUSEHOLD Income $ D.O.B. M/F 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. M/F Relationship to Head of Household D.O.B. M/F D.O.B. M/F Relationship to Head of Household Relationship to Head of Household (4) EMPLOYMENT: Must provide pay stubs If an adult is not working please list N/A. 1 Last Name, First for the past 60 List each person days for each job in your household reported below for each who works or expects to Date Employment Starts adult household member. be working: Occupation Name Self- Employed? ❑ Yes No I,Weekly Hours Worked Hourly Pay Rate $ Weekly Tips/Bonus $ How often paid? Employer's Name y Employer's Address (Street, City, State, ZipI — Employer's Phone # ( ) Employer's Fax # ( ) 1 Last Name, First Name Self- Employed? Date Employment Starts Occupation ❑ Yes ❑ No 1Weekly Hours Worked Hourly Pay Rate Weekly Tips/Bonus How often paid? Employer's Name $ $ 1 Employer's Address (Street, City, State, Zip) Employer's Phone # Employer's Fax # ( ) ( ) Last Name, First Name Self- Date Employment Starts Occupation 1Weekly Hours Worked Hourly Pay Rate $ Weekly Tips/Bonus How often paid? Employer's Name $ 1Employaer's Address (Street, City, State, Zia_ Employer's Phone # ( ) Employer's Fax #� ( ) Appendix A-1 Exhibit ' (5) INFORMATION ON OTHER INCOME: Must provide current proof (most Income. If YES, complete all information EACH QUESTION MUST BE ANSWERED (NO recent 2 statements) of any income reported below. EXCEPTIONS) Check YES or NO next to Type of by or for any household member, including for income received or expected to receive children. If necessary, report any other additional sources on a separate sheet of paper. Type of Income Yes No Who Receives Funds Monthly Amount Name and Address of Provider Social Security Benefits - SSA or/and SSI $ CALWORKS $ $ Food Stamps $ State Disability $ Worker's Compensation $ $ Unemployment BenefitsVeteran's __ $ Benefits $ -------__--- Military Pay/Allotment $ $ Pensions or RetirementChild $ $ Support Spousal Support $ $ Contributions — ----- $ -- -- Gifts or Loans $ Rental Property Income $ School Financial Aid $ $ _ Other Income Any other additional sources of income reported on a separate sheet of paper attached? ❑Yes ❑No Appendix A-1 Exhibit 'W (6) ASSET INFORMATION: 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 or held by or for any household member, including children. If necessary, report any other additional accounts or sources on a separate sheet of paper. Type of Asset Yes Cash Name(s) on Account Balance/Value Account/Policy # Name and Address of Institution Checking Account Savings Account Other Accounts (i.e. 401k, IRAs, stocks, bonds, etc.) Any other additional sources of asset reported on a separate sheet of paper attached? Yes ❑No REASONABLE ACCOMMODATION DO YOU REQUIRE A SPECIFIC ACCOMMODATION TO FULLY UTILIZE OUR AGENCY'S SERVICES? ❑Yes ❑No If YES, please specify how we may accommodate your disability: Appendix A-1 Exhibit "ES CERTIFICATION OF THE APPLICANT and ADULT HOUSEHOLD MEMBER(S) I acknowledge and understand that this Application as completed above, will be relied on for determining eligibility of applicant(s) and eligibility of household 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 Application or in any other connection with this 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. Household Member #1 DATE Household Member #3 DATE CERTIFICATION OF THE LENDER Household Member #2 DATE Household Member #4 DATE 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 the completed information above as accurate and true to the best of the Lender's knowledge. Based on the FTHB Guidelines for calculating income, the Applicant's anticipated annual household income is $ , and is therefore eligible for a loan of up to $70,000 through the FTHB. Furthermore, the lender has determined that the Borrower(s) (borrower name(s)) has/have 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. ORIGINAL SIGNATURE OF OFFICER APPROVING THE LOAN DATE PRINT NAME PHONE EMAIL Appendix A-1 Exhibit "79 FIRST-TIME HOMEBUYER PROGRAM AFFIDAVIT By signing below applicant(s) makes the following certifications: I, the undersigned, as part of my application for a deferred payment loan ("City Loan") through the City of National City First -Time Homebuyer Program (the "Program"), and in connection with a purchase of a residence (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 Homebuyer 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 the 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 from a date beginning within 30 days of the date of Mortgage Loan closing and ending on the earlier of the date I sell, rent out or transfer the Residence or years from the date of Mortgage Loan closing. (initial) 6. That the Residence will not be used as an investment property, vacation home or recreation home, i.e., I will not rent out all or any portion of the Residence. (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 Residence for conformance with loan requirements. (initial) 10. That the Mortgage Loan is not a replacement mortgage. (initial) 11. That my income does not exceed the program income limits as explained to me by the lender on my Mortgage Loan. (initial) 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 being made specifically to me and may not be transferred by me to anyone else. 14. That the City Loan I am applying for is a deferred payment loan in which simple interest accrues at the rate of 3% on an annual basis. (initial) Appendix A-2 Exhibit "SO 15. That the City loan is due and payable upon sale, rental or transfer of the Residence. (initial) 16. I will be required to sign a Promissory Note, Deed of Trust, and Regulatory Agreement that details my obligations to repay the City Loan and any accrued interest. (initial) 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 City's Lender Participation Agreement and Program Guidelines. (initial) 18. As a requirement of the City Loan, I must attend a homebuyer education class that is approved by the City. At this time, only Springboard CDFI, Credit.org, and Frameworks are approved by the City. (initial) 19. All transactions must be arm's length. I understand that an arm's length transaction is one in which the buyer/tenant, Realtor(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 Residence 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. (initial) 20. Is the applicant a City employee or family members of: a City employee or consultant, or a City Council person? (initial YES or NO as applicable) YES* NO If No, skip to the end. If Yes, transactions involving City employees from Lending, Realty, and other departments will not constitute a conflict of interest, except as otherwise provided in 24 CFR Section 92.356, unless prohibited by State law. (initial) If YES, please identify the City employee, consultant, or City Council person with whom each individual has family or business ties. The purpose of this question is to determine if the applicant would be in conflict of interest. 24 CFR 92.356 Name of Member Indicate: City Employee or Consultant; or City Council Person Indicate Type of Tie (Family or Business) If Family, Indicate Relationship *Please notify the City's Program Administrator if "Yes" is indicated. Appendix A-2 Exhibit "1ST 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 an incorrect answer or misstatement 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 City 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 Program is punishable by fine. PRINT APPLICANT NAME APPLICANT SIGNATURE DATE PRINT APPLICANT NAME APPLICANT SIGNATURE DATE Appendix A-2 AUTHORIZATION FOR RELEASE OF INFORMATION Each household member 18 years or older must read and sign this Authorization Form for Release of Information. Exhibit "ffi NAT s , ' xTir ie8:. , arconrd.lato 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 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 Zip Date of Birth Social Security No. Telephone Number Signature Date Signed Appendix A-3 Exhibit "ffi APPENDIX B CPD Income Eligibility Calculator From the HUD Exchange CPD's Income Eligibility Calculator, an interactive tool that makes determining the income eligibility and assistance amounts for beneficiaries. Please allow at least 15 minutes to complete each applicant's calculation summary. https://www.hudexchange.info/incomecalculator HOME Homeownership Value Limits https://www. hudexchange. info/resource/2312/home-maxim um -purchase -price -after -rehab -value/ Exhibit "> 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). The HOME program requires the participating jurisdiction to evaluate the project (subsidy layering analysis), before committing funds to a project, in accordance with HUD guidelines and prohibits the investment of 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 dollar amount of the qualifying first mortgage and maximum threshold of qualifying FTHB funding shall establish an estimated "maximum purchase price". 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 from the City FTHB Program. The Lender must provide an analysis calculating cash available for all housing expenses" by taking the housing (minimum 30%) or debt -to -income ratio. The housing cash available will then be used to determine the amount of the primary loan and, ultimately, the FTHB 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 fora Mortgage of $122,000 Ratios: 32.746/44.970 Down Payment Assistance Available ($56,000) "Estimated Buying Power " Calculation Qualifying Mortgage $122,000 FTHB Threshold S 56,000 "Maximum" Purchase Price $178,000 "Gap" 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 * 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) Appendix C ..- CAL !O N A -- NATI. , , ; , €ITV •ncompoItATtD BALANCED COMMUNITIES FIRST-TIME HOMEBUYER PROGRAM SEQUENCE OF LOAN PROCESS (Appendix D) HOMEBUYER EDUCATION: First -Time Homebuyer(s) take(s) a HUD -Certified 8 hour education class . • Homebuyer chooses a certified Lender. Certified Lender will: Establish 1 t mortgage qualification Identify eligibility for City assistance Identify maximum purchase price Exhibit "ffi Homebuyer begins home search with realtor of choice. o. Realtor assists homebuyer in selecting a home that is FTHB eligible IMPORTANT: • PROPERTY MUST BE VACANT, SELLER OCCUPIED OR BORROWER OCCUPIED 120 DAYS PRIOR TO OFFER ACCEPTANCE. • PURCHASE AGREEMENT IS REQUIRED TO DISCLOSE THAT THE PURCHASE IS CONTINGENT ON BORROWER(S) OBTAINING FINANCING FROM NATIONAL CITY FTHB PROGRAM. ONCE BORROWER HAS AN ACCEPTED OFFER: MILESTONES Any submissions (all via email) to Springboard CDFI after 3pm will be recorded as received on the next business day. TIMELINE 1 Lender submits RESERVATION REQUEST FORM to Springboard CDFI via email at nationalcitvdpa@springboard.or with required attachments. � q At borrower/lender discretion 2 Springboard CDFI will acknowledge receipt and confirm in writing that the reservation is created. Reservation is good for 45 days. Processing time for funding the FTHB loan is approximately 45 days from date of reservation. 48 hours. 3 Springboard CDFI will have an HQS inspector coordinate inspection with selling agent/loan officer. HQS inspector will communicate a list of health and safety items that need to be repaired and reinspected prior to City loan approval. 3 business days from receipt of reservation request 4 Lender submits complete loan application package (See FTHB Submission Checklist) to Springboard CDFI via email at nationalcitvdpa@springboard.org. Please include the program loan number At borrower/lender discretion issued at reservation on your Submission Checklist. 5 Springboard CDFI will acknowledge receipt of loan application package and will confirm in writing the anticipated date for initial conditions list for FTHB loan. 24 hours. 6 Springboard CDFI will mail a VOLUNTARY ACQUISITION form to seller(s) within 3 business day of receipt of appraisal report. Springboard CDFI will require the mail carrier to obtain a signature to confirm delivery. The FTHB loan will not fund without the seller -signed confirmation of delivery. 3 business days from receipt of appraisal report. Page 1 of 2 Appendix D (rev 4/2019) Exhibit 'ice MILESTONES Any submissions (all via email) to Springboard CDFI after 3pm will be recorded as received on the next business day. TIMELINE 7 INITIAL REVIEW: Springboard CDFI will provide the Lender with an initial conditions list within 5 business days of receipt of loan application package. Initial conditions list will be communicated to Lender via email. No conditional approval is provided. Loan approval is issued once ALL conditions are satisfied. 5 business days from receipt. 8 Conditions should be submitted to Springboard CDFI at a minimum of 80% of the conditions list. Please do not "piecemeal" conditions. At borrower/lender discretion 9 Springboard CDFI will acknowledge receipt of submitted conditions and will confirm in writing the anticipated date for response. 24 hours. 10 CONDITIONS REVIEW: Springboard CDFI will provide the Lender with either a list of additional conditions (not a conditional approval) or a loan approval notice. If additional conditions are 3 business days. required, any subsequent condition submittal will require 3 business days to review and/or clear. FTHB loan approval notice will also indicate that final inspection is cleared and that Springboard CDFI has received confirmation from USPS that seller received VOLUNTARY ACQUISITION Form via mail. 11 Once FTHB loan approval is issued, then Springboard CDFI will prepare closing loan documents. Loan documents will be emailed to settlement agent. Settlement Agent can schedule signing with borrower at this time. 2 business days from approval date. 12 Settlement agent returns original signed documents and certified copies of recorded documents to Springboard CDFI. The FTHB loan funds are wired from Springboard CDFI to settlement agent 24-48 hours after loan docs are signed. Transaction closes. Borrower cannot receive Estimated COE date / 45 days from reservation date or less cash back at closing. Any overage/refund will be returned to Springbaord CDFI to be applied to principal reduction of this subordinate loan. Page 2 of 2 Appendix D (rev 4/2019) Exhibit "Fif 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 timely manner. • 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 Exhibit 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 that is to be acquired for homeownership to be decent, safe, sanitary, and in good repair. The housing must meet or exceed all applicable State and City of National City quality standards and code requirements. Furthermore, the housing cannot contain any of the specific deficiencies proscribed by HUD based on the applicable inspectable items and inspected areas in HUD - prescribed physical inspection procedures (Uniform Physical Condition Standards) issued pursuant to 24 CFR Section 5.705, as such standards are interpreted and enforced by City of National City under its normal policies and procedures. The housing to be acquired must be inspected no earlier than 90 days before the commitment of HOME assistance. Compliance with the inspection requirement shall be documented in a written report. If the housing does not meet these standards, the housing cannot be acquired with HOME funds. (See, 24 CFR Section 92.251(c)(3)) 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 requires to be met in order for the property to have long-term utility and contribute to the livability of the unit. Property Standards Appendix F Page 1 Income Calculation Worksheet Please complete separate worksheet for each person who will be: • Liable on the mortgage • Vested on title Exhibit lig • Non -borrowing spouses • Total household income of all adults 18 yrs of age or older Applicant name: When calculating income, unless a verifiable evidence to the contrary, it is assumed that today's circumstances will continue for the next 12 months. A "snapshot" of the household's current circumstances is used to project future income. Income Type Monthly Amount Gross Pay: covering 60 days' $ Date of VOE: Base monthly income, as per current VOE and most current paystubs consecutive period (current at time of initial submission, no more than 30 days old at time of funding) Use one of the appropriate formulas for full time employment (40 hours) or employment with consistent regular hours or income to arrive at the Borrower's base pay: ➢ Monthly income x 12 months = annual income Bi-Weekly income x 26 = annual income / 12 > Weekly income x 52 = annual income / 12 Hourly income x 40 (hrs per wk) x 52 = annual income / 12 Pay Period dates: Other monthly income that may include, but is not limited to: income; part-time pay period. This projected earned income Human order or other not limited to earnings 1. $ 2. $ 3. $ 4. $ 5, $ 1. Overtime and inconsistent income; bonus and commission employment; Calculate the average amount of overtime pay over the 2 month average amount is then to be added to the total amount of over the following 12-month period. 2. Pension; Social Security benefits; Disability; Worker's Compensation; Assistance Services; Veteran Administration benefits; Use the benefits statement 3. Spousal support and child support; Use the monthly amount appearing in the divorce decree, court supporting documentation 4. Self -Employment Income; Signed Year -to -Date Profit & Loss 5. All other regularly occurring additional income, including but Lender Notes: TOTAL MONTHLY INCOME: TOTAL ANNUAL INCOME: Name and Title of Lender Representative Signature of Lender Representative Date Exhibit "MD FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE 27383 Recording Requested By And When Recorded Mail to: City of National City Housing & Economic Development Dept. 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 A. 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 HUD 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: CITY OF NATIONAL CITY PAGE 1 OF 10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit "ET (a) Income Eligibility Requirements -Annual Gross Income (02.203). 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 CITY OF NATIONAL CITY PAGE 2 OF10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit "ae 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 defmed 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 defmed 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 defmed 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. (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. CITY OF NATIONAL CITY PAGE 3 OF 10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit '85 (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 limited 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 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 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; CITY OF NATIONAL CITY PAGE 4 OF10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit "44 (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 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 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 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. CITY OF NATIONAL CITY PAGE 5 OF 10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit "ES (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 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 HOME 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, covenants, 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 full force and effect. CITY OF NATIONAL CITY PAGE 6 OF10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit 'W3 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 the maximum standards of the various mortgagees 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 full 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 CITY OF NATIONAL CITY PAGE 7 OH O HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit '411 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: CITY OF NATIONAL CITY PAGE 8 OF10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Date: Exhibit "4E6 Borrower: CITY OF NATIONAL CITY PAGE 9 OF10 HOME -DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit "a EXHIBIT "A" Legal Description of the Property Property Address: , National City, California CITY OF NATIONAL CITY EXHIBIT "A" DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS 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. ACKNOWLEDGMENT: STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) Exhibit "f7 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) CITY OF NATIONAL CITY EXHIBIT "B" DECLARATION OF COVENANTS, CONDITIONS & RESTRICTIONS Exhibit "S1 FREE RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 Recording Requested By And When Recorded Mail To: City of National City Housing & Economic Development Dept. 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, CITY OF NATIONAL CITY PAGE 1 OF 12 HOME -DEED OF TRUST in the principal sum of of the Lender; Exhibit "12 U.S. Dollars ($ ) ("HOME Note") made by Borrower in favor (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 (D) 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: 1. 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 security 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. Application 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 Exhibit "83 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 sums 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. 7. Protection of Lender Security. If Borrower fails to perform the covenants and 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 CITY OF NATIONAL CITY PAGE 3 OF 12 HOME -DEED OF TRUST Exhibit "9$ amounts disbursed by Lender pursuant to this Section, with interest thereon at the rate of ten percent (10%) per annum, will 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 given 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 CITY OF NATIONAL CITY PAGE 4 OF 12 HOME -DEED OF TRUST Exhibit "ES limit the applicability of federal law to this Deed of Trust. In the event that any provision or clause 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 CITY OF NATIONAL CITY PAGE 5 OF 12 HOME -DEED OF TRUST Exhibit "fie Borrower and Lender further covenant and agree as follows: 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 public 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 Property 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; CITY OF NATIONAL CITY PAGE 6 OF 12 HOME -DEED OF TRUST Exhibit (2) to all sums secured by this Deed of Trust; and (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 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 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. CITY OF NATIONAL CITY PAGE 7 OF 12 HOME -DEED OF TRUST Exhibit "fig (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 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 ity 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 HOME 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 including those past 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 CITY OF NATIONAL CITY PAGE 8 OF 12 HOME -DEED OF TRUST Exhibit "89 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 reconvey the Property and will surrender this Deed of Trust and all 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. In the event the HOME Note is repaid in full (all principal and interest), the Declaration shall terminate. 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. (b) 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, CITY OF NATIONAL CITY PAGE 9 OF 12 HOME -DEED OF TRUST Exhibit "133 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 defmed 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. (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 defmed 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. CITY OF NATIONAL CITY PAGE 10 OF 12 HOME -DEED OF TRUST Exhibit 'ET 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. 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. CITY OF NATIONAL CITY PAGE 11 OF 12 HOME -DEED OF TRUST Exhibit "fl2 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 12 OF 12 HOME -DEED OF TRUST Exhibit '63 EXHIBIT "A" Legal Description of the Property Property Address: , National City, California CITY OF NATIONAL CITY DEED OF TRUST EXHIBIT "A" Exhibit SI 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 the document. 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 Exhibit ' 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 the document. 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 PROMISSORY NOTE (HUD HOME Investment Partnership Act Program 3% Deferred) ("HOME Note") City Loan No. , 20 Date Property Address: , National City, California ("Property") Exhibit 'Tie 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 CITY OF NATIONAL CITY PAGE 1 OF 8 HOME -PROMISSORY NOTE Exhibit 'V/ all reasonable costs and expenses incurred in pursuing the remedies provided in this Section 6, including, but not limited 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 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 CITY OF NATIONAL CITY PAGE 3 OF 8 HOME -PROMISSORY NOTE Exhibit '+86 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. 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 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 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 (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 CITY OF NATIONAL CITY PAGE 2 OF 8 HOME -PROMISSORY NOTE Exhibit '83 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 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 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 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 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 CITY OF NATIONAL CITY PAGE 4 OF 8 HOME -PROMISSORY NOTE Exhibit 'TO accrued interest and the remainder shall be applied to the reduction of principal. Borrower may make a full prepayment at any time. In the event this HOME Note is repaid in full (all principal and interest), the Declaration shall terminate. 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. (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) 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. (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. CITY OF NATIONAL CITY PAGE 5 OF 8 HOME -PROMISSORY NOTE Exhibit 'BT (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 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: (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"); and (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 full 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 this HOME Note may be required to pay all of the amounts owed under this HOME Note. Any person who takes over the rights of the persons CITY OF NATIONAL CITY PAGE 6 OF 8 HOME -PROMISSORY NOTE Exhibit '72 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 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 fmal 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 Exhibit "H3 APPENDIX K HOME FIRST-TIME HOMEBUYER PROGRAM LOAN DISCLOSURE The City of National City First -Time Homebuyer Program provides up to $70,000 in "gap" financing for eligible low-income buyers for 1-unit property. The First -Time Homebuyer Program has made it possible for low-income families to buy a home that would otherwise be unaffordable. In exchange for giving you the opportunity to buy your otherwise unaffordable home you will be required to sign a Declaration of Covenants, Conditions and Restrictions, Promissory Note and Deed of Trust. Specific terms and conditions of the assistance are specifically stated in the Promissory Note secured by a Deed of Trust and Declaration of Covenants, Conditions and Restrictions. 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, in favor of the City of National City. 2. Buyers will sign a Declaration of Covenants, Conditions and Restrictions 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 or not occupied as the buyer's principal residence, this will result in a breach of your agreement with the City of National City and 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 agreements with the City under the FTHB Program, additional accrued interest will be due in addition to the principal of the loan. In addition in the event of such a default, including the failure to occupy the property as the buyer's principal residence, the City may acquire your property through foreclosure of the Deed of Trust. 7. Once a year you will be asked to supply information in writing confirming (i) that you still live in the home, (ii) that you did not lease or rent all or any portion of your home, (iii) evidence that your first trust deed loan is current and your property taxes have been paid, (iv) evidence that any homeowners association dues are current, (v) that your home is being properly maintained, and (vi) any other information reasonably needed to assure compliance with the terms of the Declaration of Covenants, Conditions and Restrictions. 8. The loan may be paid by buyer at any time without pre -payment penalty. In the event the loan is repaid in full (all principal and interest), the program requirements shall terminate, the Deed of Trust shall be reconveyed and the Declaration of Covenants, Conditions and Restrictions and Promissory Note shall be released. 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 Appendix K Exhibit "BQ 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 Exhibit "ffi NATO. )�- t+£3 8 7 fACORp. A= NOTICE OF VOLUTARY ACQUISITION AND OCCUPANCY CERTIFICATION Informational Notice - Seller to complete with purchase contract Property Address: Purchase Price: Buyer Name(s): I am the Seller of the Property identified in the above address. I understand that the buyer is applying for a loan from the City of National City First Time Homebuyer Program (FTHB). The City of National City uses HOME funds from the U.S. Department of Housing and Urban Development. As a voluntary sale, I understand that I am not entitled to relocation benefits under the Uniform Relocation Assistance and Real Property acquisition Policies act of 1970 (URA) as a result of this transaction. I understand my property is not being purchased under the threat of eminent domain and that I am free to negotiate the sales price with the buyer and if I do not want to sell I don't have to. The buyer has informed me that the market value of the property is . The buyer and I have voluntarily negotiated the above identified purchase price. I understand that this program does not allow the purchase of a property that is currently occupied by anyone other than the buyer or seller. I hereby state that there are no tenants currently renting the property (with the allowed exception of the buyer's household). I also state that no tenants have occupied the property in the last 120 days or have stored their belongings in the property in the last 120 days. I acknowledge that any material misstatement negligently or fraudulently made by me in connection with this First Time Homebuyer loan application is a violation punishable by a fine and revocation of the FTHB HOME, in addition to any criminal penalty imposed by law. I understand that I can phone the Program Administrator at (951) 779-7712, if I have questions regarding this document or transaction. Please acknowledge receipt of this notice and return to the buyer's real estate agent with the purchase contract. Seller Signature Date Printed Name Seller Signature Date Printed Name Seller's Current Address Exhibit "ffi OPPORTUNITY Appendix G Exhibit "SI LENDER'S CERTIFICATION OF OCCUPANCY I certify that the property located at: Presently owned by: Please mark the applicable box with "X": The property was vacant at the time that the offer to purchase was signed. Seller was residing in the property at the time that the offer to purchase was signed. The property was tenant occupied at the time the offer to purchase was signed - Properties occupied by a tenant at the time the purchase offer was made are not eligible for FTHB assistance. Loan packages for properties that are tenant occupied will be rejected by the City of National City. Existing New n Foreclosure Condo Conversion For Foreclosure, Seller/Bank/Lender's Name I certify under penalty of perjury that the foregoing statements are true and correct . Executed on: Date Lender Representative Signature Date Name of Lender (Company) Address Phone No. If New Development: Project's Name Fax No. E-Mail Authorized Agent Phone No. CREDITOR: City of National City Housing, Grants, and Asset Management Department 1243 National City Boulevard National City, CA 91950 Date: TRUTH IN LENDING DISCLOSURE STATEMENT "Deferred Payment 3% Interest Loan" BORROWER: Name: City, State, Zip: Loan Number: Exhibit "B3 1. ANNUAL 2. FINANCE 3. AMOUNT 4. TOTAL OF PERCENTAGE CHARGE FINANCED PAYMENTS RATE The dollar amount the credit will cost you, which is subject to change. $ The amount of credit provided to you or on your behalf. $ The amount you will have paid after you have made all payments based on the current annual percentage rate, which is subject to change. $ The cost of your credit as a yearly rate, which is subject to change. 5. FORGIVENESS OF INTEREST: Provided the borrower is not in default under the terms of the Note and have continually occupied the property as their principal residence, the outstanding principal balance, plus the accrued interest will be due as a balloon payment (30) thirty years from the date of the execution of the Note or upon sale of the property. 6. PAYMENTS: Your payment schedule will be: No. of Amount Payments of Payment Payment Due 1 $ (See Paragraph No. 5 above) 7. INSURANCE: 8. SECURITY: 9. LATE CHARGE: 10. PRE -PAYMENT: 11. ASSUMPTION: Property insurance is required. You may obtain the insurance from anyone that is acceptable to creditor. You are giving a security interest in the real property being purchased. Property Address: No late charge is required. There is no prepayment penalty. All payments made will first be applied to interest, then to principal. The Deferred Payment — 3% Interest loan is not assumable without the prior written consent of the San Diego Housing Commission. No such consent will be given except under limited circumstances as outlined in the Promissory Note. 12. FILING FEES: $ -0- 13. ITEMIZATION OF AMOUNT FINANCED: The Consumer has the right to receive a written itemization of the amount. an itemization is requested. an itemization is not requested. Exhibit 1911 See your other contract documents for any additional information about non-payment, default, security interests, any required repayment in full before the scheduled date, and pre -payment options. All dates and numerical disclosures except the late payment disclosures are estimates. Date: Date: Date: Date: I (WE) HEREBY ACKNOWLEDGE RECEIVING AND READING A COMPLETED COPY OF THIS DISCLOSURE, AND THE NOTES, DEED OF TRUSTS, AND COVENANTS, CONDITIONS AND RESTRICTIONS AND HAVE READ AND UNDERSTOOD THE SAME. BORROWER(S) Exhibit "P7 City of National City Loan Reservation Request Form Today's Date: Lender: Loan Officer Name: Loan Officer Phone #: Loan Officer Email: Seller Name(s): Seller CURRENT mailing address: Loan Officer Fax #: IMPORTANT: Seller(s) must receive a VOLUNTARY ACQUISITION NOTICE via regular mail from Program Administrator. Mail carrier must obtain a signature to confirm delivery. The loan will not fund without the seller -signed confirmation of delivery. Borrower Name(s): Borrower Phone #: Subject Property Address: Purchase Price: Est. Gross Annual HOUSEHOLD First Mortgage Amount: First Mortgage Type: Year Built: Household Size: DTI Ratios: FTHB amount requested: Please entail thi form and the fetiewing inform ticn to nationals tyd n asprin Boer . r ❑ 1 LENDER FTHB ELIGIBILITY CERTIFICATION form, initialed and signed by Loan Officer ❑ 2 Fully -Executed Purchase Agreement, all addendums and counters. ❑ 3 Fully -Executed Notice of Voluntary Acquisition and Occupancy Certification, completed by Seller with Purchase Agreement ❑ 4 Purchase agreement must disclose that purchase is contingent on borrower(s) obtaining financing from National City FTHB program. ❑ 5 Current Bank Statement(s) to evidence borrowers ability to contribute 3% of purchase price. A gift cannot be used to meet the minimum borrower contribution. ❑ 6 Fully -executed C.A.R. Lead -Based Disclosure from Seller (not applicable for homes built after 1978) IMPORTANT: Unpermitted structures and/or improvements not allowed. Program administrator will have a Final inspection completed to ensure the Health and Safety related items are repaired prior to loan closing. FOR PROGRAM ADMINISTRATOR USE ONLY Exhibit "81' Date Received: Date Approved: NC Loan #: 45-day Expiration: rev. 4/2019 Exhibit "C" U.S. Department of Housing and Urban Development Community Planning and Development Special Attention of: CPD Division Directors All HOME Coordinators All HOME Participating Jurisdictions Notice: CPD-18-09 Issued: August 8, 2018 Expires: This NOTICE is effective until it is amended, superseded, or rescinded Cross Reference: 24 CFR Part 92 Subject: Requirements for HOME Homebuyer Program Policies and Procedures Table of Contents I. PURPOSE 2 II. BACKGROUND 2 III. APPLICABILITY 3 IV. HOMEBUYER PROGRAM POLICY REQUIREMENTS 4 A. UNDERWRITING STANDARDS 5 1) Housing and Overall Debt 6 2) Monthly Expenses 7 3) Assets or Cash Reserves 8 4) Appropriateness of the Amount of Assistance 10 B. RESPONSIBLE LENDING STANDARDS 11 C. REFINANCING AND SUBORDINATION OF HOME FUNDS 12 V. HOUSING COUNSELING 14 VI. PROVIDING HOMEBUYER ASSISTANCE THROUGH LENDERS 16 VII. QUESTIONS REGARDING THIS NOTICE 16 Exhibit "C" I. PURPOSE This Notice provides guidance to HOME participating jurisdictions (PJs) on the homebuyer program requirements set forth in the HOME regulations at 24 CFR 92.254(0. PJs must implement these requirements for all homebuyers who receive HOME assistance or purchase a unit developed with HOME funds. Specifically, this Notice will assist PJs to develop written policies and procedures for homebuyer projects and programs related to: • homebuyer underwriting standards; • responsible lending standards; and • standards for refinancing and subordination of the HOME loan. This Notice also addresses the requirement that all HOME -assisted homebuyers receive housing counseling provided by a HUD -approved counselor and housing counseling agency. In addition, it provides guidance on the requirements applicable to PJs that provide HOME homeownership assistance through lenders that also provide the primary mortgage. This Notice describes the requirements that must be met relative to individual homebuyers. It does not address the HOME requirements related to underwriting a HOME -assisted development project. Further guidance on underwriting homebuyer development projects may be found in Notice CPD-15-11: Requirements for the Development and Implementation of HOME Underwriting and Subsidy Layering Guidelines. The requirements for resale and recapture provisions applied to homebuyer projects are not covered in this Notice, but are outlined in Notice CPD-12-003: Guidance on Resale and Recapture Provision Requirements under the HOME Program, or successor notices. II. BACKGROUND The HOME regulations at 24 CFR 92.254(1) require PJs operating HOME -assisted homebuyer programs to develop and implement homebuyer program policies and procedures, including standards for underwriting HOME -assisted homebuyers, responsible lending standards, and standards for refinancing and subordination of HOME liens. The purpose of these requirements is to maximize the likelihood that homebuyers assisted with HOME funds will successfully sustain homeownership. Comprehensive homebuyer policies enable PJs to protect the HOME investment by mitigating many of the risks that result from deficient underwriting and risky mortgage loan features. Adequate standards will also provide certain protections for the low-income households PJs serve, and ensure that they receive equitable treatment. Without prudent underwriting, borrowers may not be able to meet the expenses involved in homeownership while still meeting their other financial demands. Expensive and risky mortgage products can further hinder the borrower's ability to repay the mortgage, increasing the risk of default and foreclosure. At the point of foreclosure, the PJ's HOME investment is at risk, and scarce affordable housing resources may be lost. Further, the low-income homebuyer who once owned the home is harmed Page 2 of 16 Exhibit "C" financially as equity is lost and his or her credit will reflect a residential mortgage default. Consequently, protecting the homebuyer and the HOME investment by mitigating the risk of default is critical. In addition, by requiring that all HOME -assisted homebuyers receive housing counseling, HUD seeks to ensure that homebuyers are well -prepared for the responsibilities of homeownership. III. APPLICABILITY The 2013 HOME final rule at §92.254(f) required all PJs to develop and adopt homebuyer policies and procedures by January 24, 2014, and to apply those policies to all homebuyers for whom HOME funds were committed on or after that date. The housing counseling requirement at §92.254(a)(3), and the requirements of §92.254(e) applicable to PJs that provide HOME homeownership assistance through lenders that also provide the primary mortgage, apply to projects for which HOME funds were committed on or after August 23, 2013. A PJ must apply its homebuyer underwriting and responsible lending standards when it provides HOME funds as direct subsidy to the homebuyer and when a homebuyer purchases a unit that was developed with HOME funds (regardless of whether the homebuyer receives any direct subsidy). A PJ's homebuyer underwriting and responsible lending standards apply irrespective of how the first mortgage loan is financed, and are not limited only to HOME - funded homebuyer loans. A PJ must review the underwriting and terms of other funders to ensure that the underwriting and loan product comply with the PJ's own standards for appropriate first mortgages. A PJ's refinancing standards apply to a HOME - assisted homebuyer who received direct subsidy in the form of a loan, regardless of whether the assistance was provided separately to the homebuyer at closing or was passed through to the homebuyer in a HOME -assisted development project. The housing counseling requirement at §92.254(a)(3) applies to all homebuyers who receive direct HOME subsidy or purchase units developed with HOME funds. A PJ is required to implement the safeguards for providing homebuyer assistance through lenders, at §92.254(e), when it provides direct homebuyer subsidy through a for -profit or nonprofit lender that provides the first mortgage loan to a low-income family. Direct Homebuyer Subsidy Direct HOME subsidy is the amount of HOME assistance, including any program income, that enabled the homebuyer to buy the unit. This includes downpayment, closing costs, interest subsidies, or other HOME assistance provided directly to the homebuyer. In addition, direct subsidy includes any assistance that reduced the purchase price from fair market value to an affordable price. If HOME funds are used for the cost of developing a property and the unit is sold below fair market value, the difference between the fair market value and the purchase price is considered to be directly attributable to the HOME subsidy. Applicability to Homeowner Rehabilitation Pursuant to §92.250(b)(3)(i), a PJ's underwriting guidelines must require the PJ to underwrite any owner -occupied HOME homeowner rehabilitation assistance provided, in whole or in part, Page 3 of 16 Exhibit "C" in the form of an amortizing loan, in accordance with its standards. The PJ may establish underwriting standards for its homeowner rehabilitation program which differ from its homebuyer underwriting standards. Housing counseling and the application of responsible lending and refinancing standards are only required for homebuyer activities. However, PJs may wish to apply some or all of these policies to amortizing loans for homeowner rehabilitation as a best practice. The applicability of these guidelines must be clearly established in the PJ's policies and procedures. IV. HOMEBUYER PROGRAM POLICY REQUIREMENTS The HOME regulations at §92.254(f) require PJs that use HOME funds for direct homebuyer subsidy (e.g., downpayment and closing cost assistance) and/or the development of homebuyer housing to develop and follow written policies that will ensure homeownership is sustainable for eligible homebuyers over the long term. Specifically, PJs must have and follow written policies that include: • Underwriting standards that evaluate housing debt and overall debt of the family, the appropriateness of the amount of HOME assistance, monthly expenses of the family, assets available to acquire the housing, and financial resources to sustain homeownership; • Responsible lending standards that ensure that the homebuyer's primary mortgage is affordable and sustainable and contains appropriate terms; and • Refinancing standards that ensure, in the event of a refinancing, that the HOME investment is protected and the homebuyer's total housing debt remains affordable and sustainable. HUD has not established specific numerical underwriting or financial benchmarks that PJs must apply when underwriting homebuyers, nor has HUD identified specific loan features that PJs must prohibit as part of a responsible lending standard. PJs have the discretion to determine the policies, including thresholds and limits, that are most appropriate in the context of their program design, local markets, and target populations. These policies and procedures must comply with HUD's requirements of nondiscrimination as set forth at 24 CFR Part 5, the Fair Housing Act and its implementating regulations at 24 CFR Part 100, and applicable U.S. Supreme Court rulings. A PJ's homebuyer program policies and procedures must include standards that clearly establish the required metrics and threshold requirements, and delineate the process for reviewing the primary mortgages of each HOME -assisted homebuyer, the staff responsible for the review, and the documentation that must be collected, reviewed and included in each homebuyer file. A PJ must apply its underwriting Page 4 of 16 Determining the appropriate amount of HOME assistance PJs may not establish programs that provide the same amount of HOME assistance to every assisted buyer; rather, PJs must utilize their underwriting standards to determine the amount of HOME assistance each applicant needs to sustain homeownership. It will not usually be feasible for a PJ to provide the exact dollar amount of HOME assistance each homebuyer requires, however. PJs may instead establish programs that provide assistance in reasonable increments, e.g., $500 or $1000. Exhibit "C" and responsible lending standards prior to executing a written agreement with a homebuyer. A. UNDERWRITING STANDARDS Underwriting is the process of analyzing a loan to determine the amount of risk involved in making the loan. Sound mortgage underwriting assists a lender in determining a borrower's ability to repay mortgage debt, and limits the risk of default on the mortgage. Lenders assess this risk by applying established underwriting guidelines to each potential borrower's circumstances, including the individual borrower's income, savings, debt and credit history. Once a borrower is underwritten, the lender is able to estimate the mortgage amount the borrower may be able to afford and the likelihood that the borrower will make on -time payments on the mortgage. HOME Program Requirements Limited credit history, above average debt -to -income ratios, and limited financial assets may contribute to a low-income homebuyer's need for HOME assistance. Consequently, each PJ must establish specific standards for determining the amount of HOME assistance it will provide to each homebuyer. The HOME regulations at §92.254(f) state that a PJ must determine the appropriate amount of HOME assistance to provide to each homebuyer based on individual financial circumstances. Proper underwriting of the HOME -assisted homebuyer will ensure the PJ makes an informed decision about the amount of HOME assistance needed to make the unit affordable to each specific homebuyer; that the homebuyer is not being over subsidized or under subsidized. A PJ may not provide a uniform amount of assistance to each homebuyer irrespective of income, assets or other circumstances. Such a program design does not take into account the individual financial circumstances of each homebuyer seeking HOME assistance, and does not comply with the requirements of §92.254(f). In order to determine the specific amount of HOME assistance needed to ensure that the unit is affordable and sustainable over the long-term, PJs must examine the following for each homebuyer: • housing and overall debt; • monthly expenses; • assets or cash reserves; and • appropriateness of the amount of assistance. While HUD does not mandate the specific standards that PJs must use to evaluate HOME - assisted homebuyers' ability to afford and sustain homeownership, PJs must include these minimum elements in the standards they develop. A PJ's policies and procedures must clearly establish how the underwriting review will be documented. HUD requires the PJ to maintain signed, dated documentation demonstrating compliance. Page5of16 Exhibit "C" 1) Housing and Overall Debt PJs are required to evaluate the housing and overall debt of each HOME -assisted homebuyer. An evaluation of a potential HOME -assisted homebuyer's housing and overall debt is essential to determining the amount of assistance that is appropriate to help the homebuyer meet the costs involved in homeownership while still meeting other necessary, recurring expenses. Typically, an assessment of a homebuyer's debt is made by calculating two key ratios: • The front-end ratio, or housing expense ratio, considers the percentage of gross monthly income the individual homebuyer is expected to pay for monthly housing costs (i.e., mortgage principal and interest, real estate taxes, and homeowner's insurance, known collectively as PITI, as well as any mortgage insurance premiums, association fees, ground lease fees, and other similar fees as applicable). • The back -end ratio, or debt -to -income ratio, reflects the percentage of gross monthly income the individual homebuyer is expected to pay for housing debt and expenses plus all recurring consumer debt (i.e., PITI and other fees plus credit card, auto loan, and student loan payments, other installment and revolving debt that appears on a credit report, alimony, child support, etc.). HUD has not established what constitutes an acceptable housing expense or debt -to - income ratio for a HOME -assisted homebuyer. Industry standards as well FHA guidelines provide guidance on appropriate housing expense ratios (monthly housing costs as a percentage of the homebuyer's gross income) and debt -to -income ratios (housing costs plus all recurring monthly debt obligations as a percentage of gross income). To determine the amount of assistance appropriate for each homebuyer, PJs may find it appropriate to implement ratios that ensure the low-income homebuyers they serve have sufficient residual income to meet anticipated and unanticipated expenses. Ultimately a PJ must determine, based on the typical characteristics of its low-income homebuyer population and the housing market within its jurisdiction, the specific standards that it will apply when determining the amount of assistance appropriate for each homebuyer and whether an individual can qualify for and likely sustain homeownership. The evaluation of the housing and overall debt of a HOME -assisted homebuyer is a process that requires a careful accounting of the homebuyer's monthly income, total monthly financial obligations, and projected monthly housing costs. Summary of Key Policy Provisions As applicable, a PJ's homebuyer underwriting policy must include the following relative to housing and overall debt: ❑ A definition of income for the purpose of calculating front- and back -end ratios. ❑ A description of the debts and expenses that will be included in calculating front - and back -end ratios, (i.e., PITI and other fees, car loans, student loans, credit cards, etc.); Page 6of16 Exhibit "C" ❑ The front-end and back -end ratios that the PJ will use to determine the amount of assistance for which a homebuyer qualifies (sample: a homebuyer will receive the amount of assistance necessary to bring his or her front-end ratio down to % and back -end ratio down to %; and ❑ The process for applying the ratios, the staff responsible for performing the tasks, and the documentation that must be collected, reviewed and included in each homebuyer file. 2) Monthly Expenses In accordance with §92.254(f)(1), PJs are required to evaluate homebuyers' recurring monthly expenses in their homebuyer underwriting policies. While a debt -to -income ratio analysis will compare a homebuyer's monthly income to his or her total monthly recurring debt, it does not assess the effect of other substantial monthly living expenses on a borrower's ability to repay a mortgage. For example, fixed monthly living expenses such as utilities and costs for transportation to work are essential expenses that reduce the amount of income available to the homebuyer for the payment of the mortgage and other associated housing costs. For low-income homebuyers, whose available monthly income is lower than that of the average or median homebuyer, maximum loan -to -income and debt -to -income ratios alone may not be sufficient to ensure that residual income is sufficient to cover other necessary living expenses. When homebuyers are left with too little residual income after paying recurring monthly debt obligations for other essential living expenses, they are at higher risk of mortgage default. Therefore, consideration of recurring monthly expenses and residual income can inform the PJ's evaluation of a homebuyer's ability to sustain a mortgage as well as its determination of the appropriate amount of -HOME assistance to provide. A PJ's standards must identify the particular types of recurring monthly expenses that it will include in its evaluation. Typically, these expenses will be large and not discretionary in nature. To the extent feasible, the evaluation of monthly expenses should be performed consistently for all applicants. A PJ has the flexibility to determine how recurring monthly expenses will impact the overall underwriting of the homebuyer, and a PJ's homebuyer underwriting standards must clearly explain how the PJ will utilize the evaluation of recurring monthly expenses in determining the appropriate amount of assistance. For example, a PJ's standards might satisfy this requirement by: • Applying a lower front-end and back -end ratio to buyers with residual income below a certain amount, varying according to family size. The PJ may calculate residual income by deducting from gross monthly income the recurring monthly expenses identified in the PJ's policy, projected housing expenses, monthly debt obligations, and other items such as state, federal, and Social Security taxes. Such buyers may receive additional HOME assistance through the use of lower qualifying ratios, up to the PJ's maximum direct HOME assistance amount. Page 7 of 16 Exhibit "C Buyers with residual incomes above the PJ's threshold amount might be subject to slightly higher front-end and back -end ratios; • Including the selected recurring monthly expenses in a modified back -end ratio calculation; • Establishing a third underwriting ratio which examines the percentage of gross monthly income the individual homebuyer is expected to pay for the recurring monthly expenses identified by the PJ, in addition to all debt included in the back - end ratio; or • Utilizing another method developed by the PJ. A PJ must be careful not to establish a policy that violates the Fair Housing Act, including an unjustified discriminatory effect, which is one where the particular policy causes discrimination and there is not a valid interest served by the policy. Summary of Key Policy Provisions As applicable, a PJ's homebuyer underwriting policy must identify the following relative to monthly expenses: ❑ The specific recurring monthly expenses the PJ will examine; ❑ Any specific benchmarks or standards for monthly expenses; ❑ A description of how the evaluation of recurring monthly expenses will impact the underwriting or amount of assistance; and ❑ The process for reviewing the monthly expenses of the homebuyer, the staff responsible for the review, and the documentation that must be collected, reviewed and included in each homebuyer file. 3) Assets or Cash Reserves Thorough underwriting of the low-income homebuyer must also include an examination of the homebuyer's assets or cash reserves. By examining the low-income homebuyer's assets and establishing pre- and post -purchase asset standards, PJs can often mitigate some of the fmancial risks associated with homeownership. While most low-income households understandably do not have substantial liquid assets available to contribute to the purchase of a home, it is important to ascertain whether there is any cash on hand to contribute toward a downpayment or pay for closing costs, and if so, what constitutes a reasonable homebuyer investment. The industry standard often sets the minimum homebuyer contribution as a percentage of the purchase price, but many HOME -assisted homebuyer programs set a minimum dollar amount for the required downpayment. A PJ must establish its own minimum homebuyer contribution requirement based upon its assessment of what is reasonable given the low-income population it serves. While the minimum contribution may be zero, many PJs find it desirable for the low-income homebuyer to have an initial cash stake in their home. It is also important to determine whether there are sufficient cash reserves available after closing to sustain homeownership and address any unforeseen expenses that may arise. Page 8 of 16 Exhibit "C" A careful analysis of a homebuyer's liquid cash reserves will ensure that the buyer has sufficient resources on hand to pay for unexpected expenses without having to forego the monthly mortgage payment. Most conventional mortgages define post -purchase cash reserves in terms of the number of months' worth of mortgage payments (i.e., principal, interest, taxes, and insurance) the homebuyer must have on hand to cover any unexpected expenses. For example, many lenders require the homebuyer to have sufficient cash reserves to cover two to six months of mortgage payments and other associated housing costs (e.g., insurance, taxes). A PJ must decide if such a standard is feasible for low- income homebuyers or whether a different criterion should apply based on the unique circumstances of the low-income population it serves. At a minimum, the PJ will want to ensure that the homebuyer has adequate cash reserves to pay for unanticipated emergencies such as a medical bill or repairing or replacing a major appliance. There may also be cases in which low-income homebuyers have significant assets available to invest in the purchase of a home. This is most likely to be the case if the homebuyer has previously owned and sold a home. PJs must determine the level at which a buyer's assets are substantial enough that the need for HOME assistance is reduced or eliminated. For example, a PJ may require a homebuyer to invest liquid assets in excess of a locally determined limit toward the purchase before providing direct HOME assistance to the homebuyer. Summary of Key Policy Provisions As applicable, a PJ's homebuyer underwriting policy must reflect the following relative to assets and cash reserves: ❑ Minimum cash contribution (could be fixed amount or percentage of purchase price); ❑ Minimum cash reserves available post -purchase (sample: "homebuyer must have sufficient cash resources (including savings, checking, money market, or other non -retirement accounts) such that after closing there are financial resources of at least times the total monthly housing expenses, including principal, interest, taxes, insurance, and any association fees"); ❑ Assets required to be invested by homebuyer • Local limit; • Type of assets to include and exclude; and ❑ The process for reviewing homebuyers' assets and cash reserves, the staff responsible for the review, and the documentation that must be collected, reviewed and included in each homebuyer file. Page 9 of 16 Exhibit "C" Assessing Assets An asset review is separate from the PJ's examination and treatment of assets for the purpose of determining income eligibility under the HOME program. When making an income determination under 24 CFR 92.203(b), the PJ must examine the income and assets of the homebuyer in accordance with the requirements applicable to the definition of income chosen by the PJ (i.e., Part 5 or IRS Form 1040 adjusted gross income). An underwriting asset review, on the other hand, determines whether the income -eligible homebuyer is required to invest any assets before receiving assistance, and has sufficient assets to afford and sustain homeownership. The types of assets and the treatment of assets may vary between the income determination and asset review processes. For example, a PJ using the Part 5 definition of income would exclude a lump sum inheritance from any determination of income eligibility, while those same assets would likely be included in the PJ's examination of assets for the purpose of determining cash reserves and/or the amount required to be invested. 4) Appropriateness of the Amount of Assistance When making the determination of the appropriate amount of HOME assistance to provide to an individual homebuyer, the PJ must balance reasonableness and necessity with long-term sustainability. The goal is to "right -size" the level of assistance, in accordance with the PJ's own standards, to ensure that the homebuyer receives neither more HOME assistance than is necessary, nor an amount of assistance that is too low to achieve financial sustainability. The PJ must take into account the purchase price of the home, the individual financial circumstances of the homebuyer, and the financing terms of the primary mortgage. PJs are reminded that all HOME -assisted homeownership housing must be modest housing, as determined by the applicable homeownership value limits described in the HOME regulations at §92.254(a)(2). The PJ must take steps to ensure that, at the time of home purchase, assisted homebuyers have sufficient cash reserves to sustain the unit long-term while also meeting existing monthly expenses and other debts. In practice, the PJ's minimum cash contribution standard and asset limit will provide initial underwriting inputs and threshold requirements. Typically, the PJ's front-end ratio, back -end ratio, and policy for evaluating recurring monthly expenses and assets or cash reserves will then largely determine the appropriate amount of HOME assistance necessary to bring the assisted homebuyer below the specified standards. In some cases, the amount of HOME assistance an applicant requires in order to qualify will exceed what the PJ has determined is reasonable. To ensure reasonableness and consistency, most PJs establish a programmatic limit on the maximum amount of direct HOME subsidy they will provide to any homebuyer. Other applicants may not require secondary HOME financing to meet the PJ's standards, but may lack sufficient savings for the minimum downpayment required for a particular mortgage product, as well as closing costs. The PJ's homebuyer underwriting policy should explain how the appropriate amount of HOME assistance will be determined in such cases. In most programs, it will not be feasible for the PJ to provide HOME assistance in the Page 10of16 Exhibit "C" exact dollar amount necessary to bring each assisted homebuyer within its underwriting limits. PJs may establish programs that provide assistance in reasonable increments, e.g., $500 or $1000, or wider increments in markets with higher housing prices. In such programs, the appropriate amount of assistance will typically be determined by rounding up to the increment that brings the homebuyer within the PJ's underwriting standards. Summary of Key Policy Provisions As applicable, a PJ's homebuyer underwriting policy should include the following relative to the appropriateness and reasonableness of the amount of assistance: ❑ The maximum direct HOME subsidy amount; ❑ For housing developed with HOME funds, method for determining the sales price; ❑ The applicability of maximum homeownership value limits; and ❑ A clear description of the overall process for determining the appropriate amount of assistance for each HOME -assisted homebuyer, the staff responsible for the determination, and the documentation that must be collected, reviewed and included in each homebuyer file. Credit History PJs have the flexibility to determine whether and how the credit history of potential homebuyers will be evaluated, how much weight should be given to credit history, and whether traditional or alternative credit scoring methods will be used. For homebuyers with no traditional credit history, PJs may consider assessing rental payment or utility payment history as an alternative. While not required, a PJ may wish to include an assessment of credit history to evaluate potential homebuyers' history of making timely payments. Evaluating the credit history of potential borrowers will also help PJs to identify clients that would benefit from credit counseling and provide appropriate referrals to partner agencies in order to assist potential homebuyers to qualify for a first mortgage on the most advantageous terms possible. B. RESPONSIBLE LENDING STANDARDS Responsible lending is the practice of ensuring that a homebuyer's mortgage is sustainable over the long term and does not contain risky loan features that could threaten the homeowner's ability to meet the obligations of the mortgage. PJs are required to establish and implement their own responsible lending policies. HOME Program Requirements To comply with the requirements of §92.254(f)(2), a PJ must establish specific standards and policies to protect low-income HOME -assisted homebuyers from risky mortgage features that may threaten the long-term sustainability of the mortgage. A PJ must define the specific terms, features and costs, including maximum interest rates, each primary mortgage must include in order for the loan to be sustainable to the low-income population served by the PJ. A thorough review of each HOME -assisted homebuyer's primary mortgage will mitigate many of the financial risks associated with predatory and risky loan terms and features, and will promote long-term sustainability for the low-income beneficiaries the PJ serves. Page 11 of 16 Exhibit "C" Certain loan features that contribute to higher risk of mortgage default have been identified in various existing federal standards. For example, to meet the Consumer Financial Protection Bureau's Qualified Mortgage (QM) standards, a mortgage cannot exceed a 30-year term and must require periodic payments without risky features and terms such as negative amortization, interest -only periods and, in most cases, balloon payments. In addition, lender fees and points are restricted to a percentage of the loan amount. The standards define "higher priced" loans as first mortgages with interest rates more than 1.5% above the "average prime offer rate" reported by the Federal Financial Institutions Examinations Council (www.ffiec.gov). Although these and other established standards can provide a sound basis for identifying many of the terms and features which typically safeguard a buyer from an unsustainable and risky mortgage, a PJ may consider additional safeguards prudent. For example, QM regulations do not prohibit adjustable rate mortgage products, but many PJs have established local policies requiring buyers to obtain only fixed rate loans or set other critieria. To adequately protect the low-income homebuyers in their markets from risky and unsustainable mortgages, PJs will likely find it necessary to establish additional criteria. Summary of Key Policy Provisions As applicable, a PJ's homebuyer responsible lending policy must address the required characteristics of loans to HOME -assisted homeowners and should include the following: ❑ Any prohibited features, for example • Maximum loan term; • Adjustable rate loans; • Loans with risky features (e.g., balloon payments, negative amortization or interest -only periods); ❑ Limitations on higher -priced loans (maximum interest rate); ❑ Reasonable closing costs, including origination fees, points, and other lender charges; ❑ Permissibility of prepayment penalties; and ❑ The process for reviewing the primary mortgages of each HOME -assisted homebuyer, the staff responsible for the review, and the documentation that must be collected, reviewed and included in each homebuyer file. C. REFINANCING AND SUBORDINATION OF HOME FUNDS A subordination agreement is a legal document that reduces the priority of one lien on a piece of property relative to another. HOME funds provided in the form of a loan or placed as a lien to enforce the HOME affordability restrictions and recapture provisions are typically placed in subordinate position to the homeowner's first mortgage. This priority of debts is important should the debtor default on payments, declare bankruptcy, or refinance the first mortgage. Should the homeowner default on the first mortgage, the first mortgage lender will attempt to recoup the full value of its loan, but has no obligation to ensure that sufficient funds remain to repay any subordinate lenders or lien holders. Often, there are insufficient funds to repay both the first and Page 12 of 16 Re -subordination Fees PJs may not charge a re - subordination fee to HOME - assisted homebuyers, but may charge the cost of re -subordinating the HOME loan as an administrative cost. Exhibit "C" subordinate mortgages in full, and the subordinate lender may only realize a partial repayment of the original loan amount, or no repayment at all. Subordination plays an important role should a homeowner who has both a first mortgage and subordinate HOME mortgage choose to refinance his or her first mortgage. Most conventional mortgage lenders will not agree to refinance a loan unless they are in first position. This requires that the subordinate lender, which is legally entitled to move into first position when the first mortgage is refinanced, agree to remain in subordinate position rather than moving into first position. If the terms of the refinanced mortgage are risky, or the new first lender failed to underwrite the borrower appropriately, the subordinate lender may be placed at increased risk should the borrower declare bankruptcy or default on the new first mortgage. HOME Program Requirements Given the inherent increased risk of being the subordinate lender, the HOME regulations at §92.254(f)(3) require PJs to develop and implement specific policies and procedures to reduce this risk. As noted above, PJs are required to establish and apply underwriting guidelines and responsible lending standards in order to ensure low- income homebuyers are able to afford and sustain homeownership, and to reduce the risk of default on both the first mortgage and subordinate HOME fmancing. PJs must have and follow similar policies for evaluating the risks associated with the refmancing of a homebuyer's first mortgage. Generally, there are two forms of refinancing: refmancing to alter the interest rate and/or term of the loan, and refinancing to cash -out a portion of the homebuyer's equity in the home. When developing its written refinancing and subordination policies, a PJ must determine if it will permit refinancing of the homeowner's primary mortgage and if so, under what circumstances. If the PJ permits refinancing of the first mortgage and re -subordination of the HOME loan or lien, it must review the new mortgage to ensure that its terms, features, and costs comply with the PJ's established responsible lending policies. State -specific Automatic Subordination Statutes Some states have passed laws that automatically resubordinate a junior loan (such as a subordinate HOME downpayment loan) to a refinancing of the first mortgage under certain circumstances. These automatic subordination policies are limited to rate and term refinances, and have specific requirements for the interest rate (it must be lower than the original mortgage), the amount of the new loan (it cannot exceed the unpaid balance of the existing first mortgage by more than a set amount), and the amount of the junior loan being automatically resubordinated (it cannot exceed a certain set amount). HUD recognizes that in these instances, a PJ will not have control over the resubordination, and PJs should consider local laws such as these when drafting their own policies. The PJ's refinancing policies must delineate the process for reviewing the new primary mortgage of the HOME -assisted homebuyer, the staff responsible for the review, and the documentation that must be collected, reviewed and included in each homebuyer file. Further, while PJs are not required to complete a full underwriting analysis as noted in Section IV above, PJs must have policies and procedures in place that ensure that the new loan will be affordable and sustainable to the homeowner, particularly if the PJ will permit cash -out refinancing. Accordingly, PJs may choose to revisit the homeowner's housing and overall debt, Page 13 of 16 Written Agreement The written agreement with the homebuyer must clearly reflect the PJ's refinancing policy. It is important for the homebuyer to understand the circumstances under which he or she will be permitted to refinance. Exhibit "C" monthly expenses, and assets. If cash -out refinancing is permitted, the PJ must also establish standards that describe the circumstances under which cash -out refinancing will be permitted, and the amount of equity the homeowner is permitted to borrow. Summary of Key Policy Provisions As applicable, a PJ's homebuyer subordination policy should include the following: ❑ Specification of acceptable "types" of refmancing (change to rate or term or cash out); ❑ For cash out refinancing, an explanation of: • Any limitations on the amount of equity that can be borrowed • Any limitations on the reasons for borrowing (e.g., economic/medical emergencies, education, home improvements, business expenses); ❑ Explanation of policies regarding affordability and sustainability of new mortgage • What underwriting standards apply? • What will the PJ review? ❑ Description of how responsible lending standards will apply to the new loan; and ❑ The process for reviewing the new primary mortgage of each HOME -assisted homebuyer, the staff responsible for the review, and the documentation that must be collected, reviewed and included in each homebuyer file. V. HOUSING COUNSELING HOME Program Requirements The HOME regulations at §92.254(a)(3) require that all homebuyers who receive HOME assistance or purchase units developed with HOME funds must receive housing counseling. In a final rule published December 14, 2016, HUD's Office of Housing Counseling established housing counseling certification requirements that apply to all housing counseling funded by or provided in connection with a HUD program. Under the rule, all homebuyers assisted under the HOME program must receive housing counseling that is performed by a certified housing counselor who has passed the HUD certification examination and is employed by a HUD - approved housing counseling agency, effective August 1, 2020. More information on the Housing Counseling Certification requirements is available on the HUD Exchange How Counseling page. The Housing Counseling must be independent, expert advice customized to the need of the consumer to address the consumer's housing barriers and to help achieve their housing goals and must include the following processes: intake; financial and housing affordability analysis; an action plan, except for reverse mortgage counseling; and a reasonable effort to have follow-up communication with the client when possible. The content and process of housing counseling must meet the standards outlined in 24 CFR part 214. Homeownership counseling is a type of Housing Counseling. Agencies that provide homeownership counseling must address the decision to purchase a home, the selection and purchase of a home, issues arising during or affecting the period of ownership of a home (including financing, refinancing, default, and foreclosure, and other fmancial decisions) and the sale or other disposition of a home. While there is flexibility as to the delivery method (in -person, phone, or internet), housing counseling Page 14 of 16 Exhibit "C" must be individualized to ensure the guidance and advice provided is tailored to the client's specific needs. Some of the homeownership topics may be provided in a group setting as the foundation for an individual counseling session. Housing counseling may be provided by the PJ, state recipient, subrecipient, or a contracted third party, as long as the provider meets the HUD certification requirements. The PJ must ensure the potential homebuyer has received housing counseling prior to executing the written agreement with the buyer. Since some time may lapse between when a potential homebuyer receives housing counseling and when the buyer purchases a home, the PJ should establish a standard for the timing of counseling, or how long a potential homebuyer's housing counseling certificate issued by the HUD -approved housing counseling agency will remain valid for the purposes of the PJ's program. Paying for Housing Counseling The costs associated with housing counseling may be charged as administrative costs under §92.207(b) or as project -related soft costs under §92.206(d)(6). Housing counseling expenses may only be charged as project -related soft costs if the counseled homebuyer ultimately receives HOME assistance, and the cost of housing counseling, when added to the amount of HOME assistance, does not exceed the HOME maximum per -unit subsidy limit. Note that the cost of housing counseling should not be included in the direct homebuyer subsidy amount that is subject to recapture and used to determine the period of affordability when using the recapture option under §92.254(a)(5)(ii). When housing counseling is provided to a homebuyer that ultimately is not assisted with HOME funds, the costs of counseling must be charged as administrative costs, subject to the ten percent administrative cost cap. The PJ, its state recipient, subrecipient, or contracted third party may charge a reasonable fee to the homebuyer under new authority provided by §92.214(b)(1)(iii). A HUD -approved housing counseling agency's fee structure must comply with the requirements of 24 CFR 214.313. Any fee charged for the delivery of homebuyer counseling must be related to the actual cost of the counseling and should be set at a reasonable amount to ensure that counseling is affordable and does not create financial hardship to low-income families seeking assistance. All housing counseling fees collected by the PJ, its state recipient, subrecipient, or contracted third party are considered applicable credits. Donated housing counseling is eligible HOME match. Summary of Key Policy Provisions The PJ must establish housing counseling policies and procedures, which should include: ❑ Counselor qualifications (after August 1, 2020, counselor and agency must be HUD - approved); ❑ Acceptable delivery methods (i.e., in -person, phone, and/or interne* ❑ Duration of housing counseling (minimum number of hours/days); O Content of housing counseling; ❑ Timing of housing counseling (i.e., how long is counseling certificate valid for the PJ's program --1 year, 2 years?) O Funding for housing counseling (administrative cost, project -related soft cost, reasonable fee charged to the buyer); and ❑ Process for confirming and documenting homebuyer participation. Page 15 of 16 Exhibit "C VI. PROVIDING HOMEBUYER ASSISTANCE THROUGH LENDERS The HOME regulations permit PJs to provide HOME downpayment assistance through for -profit or nonprofit lenders that also provide the first mortgage loan to HOME -assisted homebuyers. However, if a PJ permits a lender to provide both the first mortgage loan and the HOME homeownership assistance, the PJ must implement certain safeguards, as required at §92.254(e). Because the lender may have a financial incentive to provide HOME assistance to homebuyers, the lender's objectivity in assessing the qualifications of the buyer or the eligibility of a property for HOME assistance is potentially jeopardized. The required safeguards include: • Income eligibility: The PJ must verify, prior to provision of any HOME assistance, that each homebuyer assisted through the lender qualifies as low-income per the income determination requirements of §92.203. The PJ must either determine the family's income -eligibility for HOME assistance itself, or must verify the income determination done by the lender or another party. • Unit inspection: Before the lender provides the assistance, the PJ must inspect the unit to ensure it complies with the applicable HOME property standards of §92.251. Inspections may also be performed by a PJ's state recipient or subrecipient, or a third party contracted for this purpose by the PJ, its state recipient, or subrecipient. Because third parties not contracted by the PJ, such as consumer inspectors or FHA appraisers, are not contractually obligated to perform the PJ's obligations, their inspections cannot be used to determine compliance with HOME property standards requirements. • Fees and charges: The PJ must ensure that the lender is not charging any origination or other fees to the HOME -assisted homebuyer for the application for or use of the HOME funds. In addition, the PJ must determine that the fees and other amounts the lender charges to the homebuyer for the first mortgage financing are reasonable. The PJ must execute a written agreement with each lender that complies with the written agreement requirements of §92.504(c)(2) or (4), as applicable. The written agreement must specify the form and amount of HOME assistance the lender may provide to eligible families, and must delineate any conditions that apply to the provision of HOME assistance, including the PJ's homebuyer program policies, as established in accordance with §92.254(f). The PJ's policies and procedures must delineate the process through which the lender notifies the PJ of the need for a property inspection and an income determination review, the PJ staff responsible for undertaking these responsibilities, the records needed to document that the property inspection and income -eligibility verification were completed, as well as the monitoring process used to verify that lenders are not charging fees for the application for and use of HOME funds. VII. QUESTIONS REGARDING THIS NOTICE For questions about the guidance provided in this notice, HUD field office staff should contact their Desk Officer in the Office of Affordable Housing Programs; a HOME PJ should contact its local HUD Field Office. Page 16 of 16 Insurance Springboard CDFI INSURANCE AOR L® CERTIFICATE OF LIABILITY INSURANCE Insurance Springboard 2"t3FIMM/DDrYYY) 4/15/2019 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER The Liberty Company Insurance Brokers Lic #0D79653 111 Pacifica, Suite 230 Irvine CA 92618 CONTACT Jeffrey Knowles NAME: PHONE NNo. Exu: (949)777-0570 FAX No): i 877)693-9834 E-MAIL •kles@libert com ADDRESS. -nowycom an p y' INSURER(S) AFFORDING COVERAGE NAIC # INSURER A:Ohio Security Insurance Company 24082 INSURED Springboard CDFI 4351 Latham St Ste 100 Riverside CA 92501 INSURERB:AmeriCan Fire & Casualty 24066 INSURER c:Underwriters at Lloyds London 15792 INSURER D:Underwriters at Lloyds London INSURERE: Oh10 Security Insurance Company 24082 INSURER F: COVERAGES CERTIFICATE NUMBER:18-19 MASTER REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OF INSURANCE ADDL INSD SUBR WVD POLICY NUMBER POLICY EFF (MM/DD/YYYY) POLICY EXP (MM/DD/YYYY) LIMITS A X COMMERCIAL GENERAL LIABILITY X BKS57531806 10/1/2018 10/1/2019 EACH OCCURRENCE S 1,000,000 CLAIMS -MADE X OCCUR DAMAGE TO RENTED PREMISES (Ea occurrence) $ 500, 000 MED EXP (Any one person) $ 15,000 PERSONAL & ADV INJURY $ 1,000,000 GEN'L AGGREGATE POLICY OTHER: LIMIT APPLIES PRO— JECT PER' LOC GENERAL AGGREGATE $ 2,000,000 PRODUCTS - COMP/OPAGG $ 2,000,000 $ A AUTOMOBILE X —_ LIABILITY ANY AUTO ALL OWNED AUTOS HIRED AUTOS SCHEDULED AUTOS NON -OWNED AUTOS X SA.557531806 10/1/2018 10/1/2019 COMBINED SINGLE LIMIT (Ea accident) $ 1,000,000 BODILY INJURY (Per person) $ BODILY INJURY (Per accident) $ PROPERTY DAMAGE (Per accident) $ B X UMBRELLALIAB EXCESS LIAR _ OCCUR CLAIMS -MADE USA57531806 10/1/2018 10/1/2019 EACH OCCURRENCE $ 1,000,000 AGGREGATE $ 1,000,000 DED X RETENTION S 10,000 $ E WORKERS COMPENSATION AND EMPLOYERS' LIABILITY Y / N ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MEMBER EXCLUDED? (Mandatory in NH) If yes, describe under DESCRIPTION OF OPERATIONS below N / A Y XWS57531806 10/01/2018 10/01/2019 X PER OTH- STATUTE ER E.L. EACH ACCIDENT $ 1,000,000 E.L. DISEASE - EA EMPLOYEE $ 1 , 000, 000 E.L. DISEASE - POLICY LIMIT $ 1,000,000 C D Professional Liability Fidelity/Crime SUA137141804 SUA58151804 10/1/2018 10/1/2018 10/1/2019 10/1/2019 Limit/Retention $1M/$25,000 Limit/Deductible $1M/$20,000 DESCRIPTION OF OPERATIONS I LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) RE: City of National City and its officers, agents, employees, and volunteers are included as Additional Insured in regards to General Liability per CG88100413 attached, and form CA8810 0113 for Auto Liability. -) Per Location Aggregate per form #CG88601208. WC Waiver of Subrogation applies per form WC990679. *When required by written contract or agreement. CERTIFICATE HOLDER CANCELLATION City of National City c/o Risk Manager 1243 National City Boulevard National City, CA 91950-4397 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE Jeffrey Knowles/JKNOW ACORD 25 (2014/01) INS025 t201a01) © 1988-2014 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY Insurance Springboard CDFI WC 99 06 79 (Ed. 01-13) WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT - CALIFORNIA We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) You must maintain payroll records accurately segregating the remuneration of your employees while en- gaged in the work described in the Schedule. The additional premium for this endorsement is $ 250 Schedule Person or Organization per written contract Job Description This endorsement changes the policy to which it is attached and is effective on the date issued unless otherwise stated. (The information below is required only when this endorsement is issued subsequent to preparation of the policy.) Endorsement Effective 10/01/2018 Policy Effective State Policy No. XWS (19) 57 53 18 06 Insured SPRINGBOARD CDFI Endorsement No. 0012 Premium Insurance Company Ohio Security Insurance Company 19291 Countersigned by WC 99 06 79 (Ed. 01-13) © 2013 Liberty Mutual Insurance Includes copyrighted material of WCIRB,with its permission. Insurance Springboard CDFI COMMERCIAL GENERAL LIABILITY CG 88 60 12 08 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. EACH LOCATION GENERAL AGGREGATE LIMIT This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART A. For all sums which the insured becomes legally obligated to pay as damages caused by "occurrences" under Section I - Coverage A - Bodily Injury And Property Damage Liability, and for all medical ex- penses caused by accidents under Section I - Coverage C Medical Payments, which can be attributed only to operations at a single "location" owned by or rented to you: 1. A separate Each Location General Aggregate Limit applies to each "location", and that limit is equal to the amount of the General Aggregate Limit shown in the Declarations. 2. The Each Location General Aggregate Limit is the most we will pay for the sum of all damages 'under Coverage A, except damages because of "bodily injury" or "property damage" included in the "products -completed operations hazard", and for medical expenses under Coverage C regard- less of the number of: a. Insureds; b. Claims made or "suits" brought; or c. Persons or organizations making claims or bringing "suits". 3. Any payments made under Coverage A for damages or under Coverage C for medical expenses shall reduce the Each Location General Aggregate Limit for that "location". Such payments shall not reduce the General Aggregate Limit shown in the Declarations nor shall they reduce any other Each Location General Aggregate Limit for any other "location". 4. The limits shown in the Declarations for Each Occurrence, Fire Damage and Medical Expense continue to apply. However, instead of being subject to the General Aggregate Limit shown in the Declarations, such limits will be subject to the applicable Each Location General Aggregate Limit. B. For all sums which the insured becomes legally obligated to pay as damages caused by "occurrences" under Section I - Coverage A - Bodily Injury And Property Damage Liability, and for all medical ex- penses caused by accidents under Section I - Coverage C Medical Payments, which cannot be attrib- uted only to operations at a single "location" owned by or rented to you: 1. Any payments made under Coverage A for damages or under Coverage C for medical expenses shall reduce the amount available under the General Aggregate Limit or the Products -Completed Operations Aggregate Limit, whichever is applicable; and 2. Such payments shall not reduce any Each Location General Aggregate Limit. C. When coverage for liability arising out of the "products -completed operations hazard" is provided, any payments for damages because of "bodily injury" or "property damage" included in the "products - completed operations hazard" will reduce the Products -Completed Operations Aggregate Limit, and not reduce the General Aggregate Limit nor the Each Location General Aggregate Limit. D. For the purposes of this endorsement, the following definition is added to Sectio n V - Definitions: "Location" means premises involving the same or connecting lots, or premises whose connection is interrupted only by a street, roadway, waterway or right-of-way of a railroad. E. The provisions of Section III - Limits Of Insurance not otherwise modified by this endorsement shall continue to apply as stipulated. CG 88 60 12 08 Includes copyrighted material of ISO Properties, Inc., with its permission. Page 1 of 1 Insurance Springboard CDFI COMMERCIAL GENERAL LIABILITY CG 88 10 04 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. COMMERCIAL GENERAL LIABILITY EXTENSION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART INDEX SUBJECT PAGE NON -OWNED AIRCRAFT 2 NON -OWNED WATERCRAFT 2 PROPERTY DAMAGE LIABILITY - ELEVATORS 2 EXTENDED DAMAGE TO PROPERTY RENTED TO YOU (Tenant's Property Damage) 2 MEDICAL PAYMENTS EXTENSION 3 EXTENSION OF SUPPLEMENTARY PAYMENTS - COVERAGES A AND B 3 ADDITIONAL INSUREDS - BY CONTRACT, AGREEMENT OR PERMIT 3 PRIMARY AND NON-CONTRIBUTORY- ADDITIONAL INSURED EXTENSION 5 ADDITIONAL INSUREDS - EXTENDED PROTECTION OF YOUR "LIMITS OF INSURANCE" 6 WHO IS AN INSURED - INCIDENTAL MEDICAL ERRORSIMALPRACTICE AND WHO IS AN INSURED - FELLOW EMPLOYEE EXTENSION - MANAGEMENT EMPLOYEES 6 NEWLY FORMED OR ADDITIONALLY ACQUIRED ENTITIES 7 FAILURE TO DISCLOSE HAZARDS AND PRIOR OCCURRENCES 7 KNOWLEDGE OF OCCURRENCE, OFFENSE, CLAIM OR SUIT 7 LIBERALIZATION CLAUSE 7 BODILY INJURY REDEFINED 7 EXTENDED PROPERTY DAMAGE 8 WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US - 8 WHEN REQUIRED IN A CONTRACT OR AGREEMENT WITH YOU CG 88 10 04 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 1 of 8 Insurance Springboard CDFI With respect to coverage afforded by this endorsement, the provisions of the policy apply unless modified by the endorsement. A. NON -OWNED AIRCRAFT Under Paragraph 2. Exclusions of Section I - Coverage A - Bodily Injury And Property Damage Liability, exclusion g. Aircraft, Auto Or Watercraft does not apply to an aircraft provided: 1. It is not owned by any insured; 2. It is hired, chartered or loaned with a trained paid crew; 3. The pilot in command holds a currently effective certificate, issued by the duly constituted authority of the United States of America or Canada, designating her or him a commercial or airline pilot; and 4. It is not being used to carry persons or property for a charge. However, the insurance afforded by this provision does not apply if there is available to the insured other valid and collectible insurance, whether primary, excess (other than insurance written to apply specifically in excess of this policy), contingent or on any other basis, that would also apply to the loss covered under this provision. B. NON -OWNED WATERCRAFT Under Paragraph 2. Exclusions of Section I - Coverage A - Bodily Injury And Property Damage Liability, Subparagraph (2) of exclusion g. Aircraft, Auto Or Watercraft is replaced by the following: This exclusion does not apply to: (2) A watercraft you do not own that is: (a) Less than 52 feet long; and (b) Not being used to carry persons or property for a charge. C. PROPERTY DAMAGE LIABILITY - ELEVATORS 1. Under Paragraph 2. Exclusions of Section I - Coverage A - Bodily Injury And Property Damage Liabil- ity, Subparagraphs (3), (4) and (6) of exclusion j. Damage To Property do not apply if such "property damage" results from the use of elevators. For the purpose of this provision, elevators do not include vehicle lifts. Vehicle lifts are lifts or hoists used in automobile service or repair operations. 2. The following is added to Section IV - Commercial General Liability Conditions, Condition 4. Other Insurance, Paragraph b. Excess Insurance: The insurance afforded by this provision of this endorsement is excess over any property insurance, whether primary, excess, contingent or on any other basis. D. EXTENDED DAMAGE TO PROPERTY RENTED TO YOU (Tenant's Property Damage) If Damage To Premises Rented To You is not otherwise excluded from this Coverage Part: 1. Under Paragraph 2. Exclusions of Section I - Coverage A - Bodily Injury and Property Damage Liability: a. The fourth from the last paragraph of exclusion j. Damage To Property is replaced by the follow- ing: Paragraphs (1), (3) and (4) of this exclusion do not apply to "property damage" (other than damage by fire, lightning, explosion, smoke, or leakage from an automatic fire protection system) to: (i) Premises rented to you for a period of 7 or fewer consecutive days; or (ii) Contents that you rent or lease as part of a premises rental or lease agreement for a period of more than 7 days. Paragraphs (1), (3) and (4) of this exclusion do not apply to "property damage" to contents of premises rented to you for a period of 7 or fewer consecutive days. A separate limit of insurance applies to this coverage as described in Section III - Limits of Insurance. CG 88 10 04 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 2 of 8 Insurance Springboard CDFI b. The last paragraph of subsection 2. Exclusions is replaced by the following: Exclusions c. through n. do not apply to damage by fire, lightning, explosion, smoke or leakage from automatic fire protection systems to premises while rented to you or temporarily occupied by you with permission of the owner. A separate limit of insurance applies to Damage To Premises Rented To You as described in Section III -Limits Of Insurance. 2. Paragraph 6. under Section III - Limits Of Insurance is replaced by the following: 6. Subject to Paragraph 5. above, the Damage To Premises Rented To You Limit is the most we will pay under Coverage A for damages because of "property damage" to: a. Any one premise: (1) While rented to you; or (2) While rented to you or temporarily occupied by you with permission of the owner for damage by fire, lightning, explosion, smoke or leakage from automatic protection sys- s tems; or b. Contents that you rent or lease as part of a premises rental or lease agreement. 3. As regards coverage provided by this provision D. EXTENDED DAMAGE TO PROPERTY RENTED TO YOU (Tenant's Property Damage) - Paragraph 9.a. of Definitions is replaced with the following: 9.a. A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire, lightning, explosion, smoke, or leakage from automatic fire protection systems to premises while rented to you or temporarily occupied by you with the permission of the owner, or for damage to contents of such premises that are included in your premises rental or lease agreement, is not an "insured contract". E. MEDICAL PAYMENTS EXTENSION If Coverage C Medical Payments is not otherwise excluded, the Medical Payments provided by this policy are amended as follows: Under Paragraph 1. Insuring Agreement of Section 1 - Coverage C - Medical Payments, Subparagraph (b) of Paragraph a. is replaced by the following: (b) The expenses are incurred and reported within three years of the date of the accident; and F. EXTENSION OF SUPPLEMENTARY PAYMENTS - COVERAGES A AND B 1 Under Supplementary Payments - Coverages A and B, Paragraph 1.b. is replaced by the following: b. Up to $3,000 for cost of bail bonds required because of accidents or traffic law violations arising out of the use of any vehicle to which the Bodily Injury Liability Coverage applies. We do not have to furnish these bonds. 2. Paragraph 1.d. is replaced by the following: d. All reasonable expenses incurred by the insured at our request to assist us in the investigation or defense of the claim or "suit", including actual loss of earnings up to $500 a day because of time off from work. G. ADDITIONAL INSUREDS - BY CONTRACT, AGREEMENT OR PERMIT 1. Paragraph 2. under Section II - Who Is An Insured is amended to include as an insured any person or organization whom you have agreed to add as an additional insured in a written contract, written agreement or permit. Such person or organization is an additional insured but only with respect to liability for "bodily injury", "property damage" or "personal and advertising injury" caused in whole or in part by: a. Your acts or omissions, or the acts or omissions of those acting on your behalf, in the performance of your on going operations for the additional insured that are the subject of the written contract or written agreement provided that the "bodily injury" or "property damage" occurs, or the "per- sonal and advertising injury" is committed, subsequent to the signing of such written contract or written agreement; or CG 88 10 04 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 3 of 8 Insurance Springboard CDFI b. Premises or facilities rented by you or used by you; or c. The maintenance, operation or use by you of equipment rented or leased to you by such person or organization; or d. Operations performed by you or on your behalf for which the state or political subdivision has issued a permit subject to the following additional provisions: (1) This insurance does not apply to "bodily injury", "property damage", or "personal and ad- vertising injury" arising out of the operations performed for the state or political subdivision; (2) This insurance does not apply to "bodily injury" or "property damage" included within the "completed operations hazard". Insurance applies to premises you own, rent, or control but only with respect to the following hazards: (3) (a) The existence, maintenance, repair, construction, erection, or removal of advertising signs, awnings, canopies, cellar entrances, coal holes, driveways, manholes, marquees, hoist away openings, sidewalk vaults, street banners, or decorations and similar expo- sures; or (b) The construction, erection, or removal of elevators; or (c) The ownership, maintenance, or use of any elevators covered by this insurance. However: 1. The insurance afforded to such additional insured only applies to the extent permitted by law; and 2. If coverage provided to the additional insured is required by a contract or agreement, the insur- ance afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured. With respect to Paragraph 1.a. above, a person's or organization's status as an additional insured under this endorsement ends when: (1) All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or (2) That portion of "your work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project. With respect to Paragraph 1.b. above, a person's or organization's status as an additional insured under this endorsement ends when their written contract or written agreement with you for such premises or facilities ends. a With respects to Paragraph 1.c. above, this insurance does not apply to any "occurrence" which takes place after the equipment rental or lease agreement has expired or you have returned such equipment to the lessor. The insurance provided by this endorsement applies only if the written contract or written agreement is signed prior to the "bodily injury" or "property damage". We have no duty to defend an additional insured under this endorsement until we receive written notice of a "suit" by the additional insured as required in Paragraph b. of Condition 2. Duties In the Event Of Occurrence, Offense, Claim Or Suit under Section IV - Commercial General Liability Condi- tions. CG 88 10 04 13 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 4 of 8 Insurance Springboard CDFI 2. With respect to the insurance provided by this endorsement, the following are added to Paragraph 2. Exclusions under Section I - Coverage A - Bodily Injury And Property Damage Liability: This insurance does not apply to: a. "Bodily injury" or "property damage" arising from the sole negligence of the additional insured. b. "Bodily injury" or "property damage" that occurs prior to you commencing operations at the location where such "bodily injury" or "property damage" occurs. c. "Bodily injury", "property damage" or "personal and advertising injury" arising out of the render- ing of, or the failure to render, any professional architectural, engineering or surveying services, including: (1) The preparing, approving, or failing to prepare or approve, maps, shop drawings, opinions, reports, surveys, field orders, change orders or drawings and specifications; or (2) Supervisory, inspection, architectural or engineering activities. This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the "occur- rence" which caused the "bodily injury" or "property damage", or the offense which caused the "personal and advertising injury", involved the rendering of, or the failure to render, any professional architectural, engineering or surveying services. d. "Bodily injury" or "property damage" occurring after: All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the location of the covered operations has been completed; or (2) That portion of "your work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project. e. Any person or organization specifically designated as an additional insured for ongoing operations by a separate ADDITIONAL INSURED -OWNERS, LESSEES OR CONTRACTORS endorsement is- sued by us and made a part of this policy. 3. With respect to the insurance afforded to these additional insureds, the following is added to Section III - Limits Of Insurance: If coverage provided to the additional insured is required by a contract or agreement, the most we will pay on behalf of the additional insured is the amount of insurance: a. Required by the contract or agreement; or b. Available under the applicable Limits of Insurance shown in the Declarations; $ whichever is less. a This endorsement shall not increase the applicable Limits of Insurance shown in the Declaratio ns. (1) H. PRIMARY AND NON-CONTRIBUTORY ADDITIONAL INSURED EXTENSION This provision applies to any person or organization who qualifies as an additional insured under any form or endorsement under this policy. Condition 4. Other Insurance of SECTION IV - COMMERCIAL GENERAL LIABILITY CONDITIONS is amend- ed as follows: a. The following is added to Paragraph a. Primary Insurance: If an additional insured's policy has an Other Insurance provision making its policy excess, and you have agreed in a written contract or written agreement to provide the additional insured coverage on a primary and noncontributory basis, this policy shall be primary and we will not seek contribution from the additional insured's policy for damages we cover. CG 88 10 04 13 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 5 of 8 Insurance Springboard CDFI b. The following is added to Paragraph b. Excess Insurance: When a written contract or written agreement, other than a premises lease, facilities rental contract or agreement, an equipment rental or lease contract or agreement, or permit issued by a state or political subdivision between you and an additional insured does not require this insurance to be primary or primary and non-contributory, this insurance is excess over any other insurance for which the addi- tional insured is designated as a Named Insured. Regardless of the written agreement between you and an additional insured, this insurance is excess over any other insurance whether primary, excess, contingent or on any other basis for which the additional insured has been added as an additional insured on other policies. 1. ADDITIONAL INSUREDS - EXTENDED PROTECTION OF YOUR "LIMITS OF INSURANCE" This provision applies to any person or organization who qualifies as an additional insured under any form or endorsement under this policy. 1. The following is added to Condition 2. Duties In The Event Of Occurrence, Offense, Claim or Suit: An additional insured under this endorsement will as soon as practicable: a. Give written notice of an "occurrence" or an offense that may result in a claim or "suit" under this insurance to us; b. Tender the defense and indemnity of any claim or "suit" to all insurers whom also have insurance available to the additional insured; and c. Agree to make available any other insurance which the additional insured has for a loss we cover under this Coverage Part. d. We have no duty to defend or indemnify an additional insured under this endorsement until we receive written notice of a "suit" by the additional insured. 2. The limits of insurance applicable to the additional insured are those specified in a written contract or written agreement or the limits of insurance as stated in the Declarations of this policy and defined in Section III - Limits of Insurance of this policy, whichever are less. These limits are inclusive of and not in addition to the limits of insurance available under this policy. J. WHO IS AN INSURED - INCIDENTAL MEDICAL ERRORS / MALPRACTICE WHO IS AN INSURED - FELLOW EMPLOYEE EXTENSION - MANAGEMENT EMPLOYEES Paragraph 2.a.(1) of Section II - Who Is An Insured is replaced with the following: (1) "Bodily injury" or "personal and advertising injury": (a) To you, to your partners or members (if you are a partnership or joint venture), to your members (if you are a limited liability company), to a co -"employee" while in the course of his or her employ- ment or performing duties related to the conduct of your business, or to your other "volunteer workers" while performing duties related to the conduct of your business; (b) To the spouse, child, parent, brother or sister of that co -"employee" or "volunteer worker" as a consequence of Paragraph (1) (a) above; (c) For which there is any obligation to share damages with or repay someone else who must pay damages because of the injury described in Paragraphs (1) (a) or (b) above; or (d) Arising out of his or her providing or failing to provide professional health care services. However, if you are not in the business of providing professional health care services or providing profes- sional health care personnel to others, or if coverage for providing professional health care ser- vices is not otherwise excluded by separate endorsement, this provision (Paragraph (d)) does not apply. Paragraphs (a) and (b) above do not apply to "bodily injury" or "personal and advertising injury" caused by an "employee" who is acting in a supervisory capacity for you. Supervisory capacity as used herein means the "employee's" job responsibilities assigned by you, includes the direct supervision of other "employ- ees" of yours. However, none of these "employees" are insureds for "bodily injury" or "personal and CG 88 10 04 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 6 of 8 Insurance Springboard CDFI advertising injury" arising out of their willful conduct, which is defined as the purposeful or willful intent to cause "bodily injury" or "personal and advertising injury", or caused in whole or in part by their intoxica- tion by liquor or controlled substances. The coverage provided by provision J. is excess over any other valid and collectable insurance available to your "employee". K. NEWLY FORMED OR ADDITIONALLY ACQUIRED ENTITIES Paragraph 3. of Section II - Who Is An Insured is replaced by the following: 3. Any organization you newly acquire or form and over which you maintain ownership or majority interest, will qualify as a Named Insured if there is no other similar insurance available to that organization. However: a. Coverage under this provision is afforded only until the expiration of the policy period in which the entity was acquired or formed by you; b. Coverage A does not apply to "bodily injury" or "property damage" that occurred before you acquired or formed the organization; and c. Coverage B does not apply to "personal and advertising injury" arising out of an offense committed before you acquired or formed the organization. d. Records and descriptions of operations must be maintained by the first Named Insured. No person or organization is an insured with respect to the conduct of any current or past partnership, joint venture or limited liability company that is not shown as a Named Insured in the Declarations or qualifies as an insured under this provision. L. FAILURE TO DISCLOSE HAZARDS AND PRIOR OCCURRENCES Under Section IV - Commercial General Liability Conditions, the following is added to Condition 6. Repre- sentations: Your failure to disclose all hazards or prior "occurrences" existing as of the inception date of the policy shall not prejudice the coverage afforded by this policy provided such failure to disclose all hazards or prior "occurrences" is not intentional. M. KNOWLEDGE OF OCCURRENCE, OFFENSE, CLAIM OR SUIT Under Section IV - Commercial General Liability Conditions, the following is added to Condition 2. Duties In The Event of Occurrence, Offense, Claim Or Suit: Knowledge of an "occurrence, offense, claim or "suit" by an agent, servant or "employee" of any insured shall not in itself constitute knowledge of the insured unless an insured listed under Paragraph 1. of Section II - Who Is An Insured or a person who has been designated by them to receive reports of "occurrences", offenses, claims or "suits" shall have received such notice from the agent, servant or "employee". N. LIBERALIZATION CLAUSE If we revise this Commercial General Liability Extension Endorsement to provide more coverage without additional premium charge, your policy will automatically provide the coverage as of the day the revision is effective in your state. O. BODILY INJURY REDEFINED Under Section V - Definitions, Definition 3. is replaced by the following: 3. "Bodily Injury" means physical injury, sickness or disease sustained by a person. This includes mental anguish, mental injury, shock, fright or death that results from such physical injury, sick- ness or disease. CG 88 10 04 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 7 of 8 Insurance Springboard CDFI P. EXTENDED PROPERTY DAMAGE Exclusion a. of COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY is replaced by the following: a. Expected Or Intended Injury "Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" or "property damage" resulting from the use of reasonable force to protect persons or property. Q. WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US - WHEN REQUIRED IN A CONTRACT OR AGREEMENT WITH YOU Under Section IV - Commercial General Liability Conditions, the following is added to Condition 8. Trans- fer Of Rights Of Recovery Against Others To Us: We waive any right of recovery we may have against a person or organization because of payments we make for injury or damage arising out of your ongoing operations or "your work" done under a contract with that person or organization and included in the "products -completed operations hazard" provided: 1. You and that person or organization have agreed in writing in a contract or agreement that you waive such rights against that person or organization; and 2. The injury or damage occurs subsequent to the execution of the written contract or written agree- ment. CG 88 10 04 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 8 of 8 COMMERCIAL AUTO Insurance Spr Qd, 6t1 13 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. BUSINESS AUTO COVERAGE ENHANCEMENT ENDORSEMENT This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM With respect to coverage afforded by this endorsement, the provisions of the policy apply unless modified by the endorsement. COVERAGE INDEX mm - SUBJECT ADDITIONAL INSURED BY CONTRACT, AGREEMENT OR PERMIT ACCIDENTAL AIRBAG DEPLOYMENT AMENDED DUTIES IN THE EVENT OF ACCIDENT, CLAIM, SUIT OR LOSS AMENDED FELLOW EMPLOYEE EXCLUSION AUDIO, VISUAL AND DATA ELECTRONIC EQUIPMENT COVERAGE BROAD FORM INSURED BODILY INJURY REDEFINED EMPLOYEES AS INSUREDS (including employee hired auto) EXTENDED CANCELLATION CONDITION EXTRA EXPENSE -BROADENED COVERAGE GLASS REPAIR - WAIVER OF DEDUCTIBLE HIRED AUTO PHYSICAL DAMAGE (including employee hired auto and loss of use) HIRED AUTO COVERAGE TERRITORY LOAN / LEASE GAP PARKED AUTO COLLISION COVERAGE (WAIVER OF DEDUCTIBLE) PERSONAL EFFECTS COVERAGE PHYSICAL DAMAGE - ADDITIONAL TRANSPORTATION EXPENSE COVERAGE RENTAL REIMBURSEMENT SUPPLEMENTARY PAYMENTS TOWING AND LABOR TWO OR MORE DEDUCTIBLES UNINTENTIONAL FAILURE TO DISCLOSE HAZARDS WAIVER OF TRANSFER OF RIGHTS OF RECOVERYAGAINST OTHERS TO US PROVISION NUMBER 3 12 19 5 13 1 22 2 23 10 15 6 20 14 16 11 8 9 4 7 17 18 20 SECTION II - LIABILITY COVERAGE is amended as follows: 1. BROAD FORM INSURED SECTION II - LIABILITY COVERAGE, paragraph A.1. - WHO IS AN INSURED is amended to include the following as an insured: d. Any legally incorporated entity of which you own more than 50 percent of the voting stock during the policy period. However, "insured" does not include any organization that: (1) Is a partnership or joint venture; or (2) Is an insured under any other automobile policy; or (3) Has exhausted its Limit of Insurance under any other automobile policy. Paragraph d. (2) of this provision does not apply to a policy written to apply specifically in excess of this policy. e. Any organization you newly acquire or form, other than a partnership or joint venture, of which you own more than 50 percent of the voting stock. This automatic coverage is afforded only for 180 days from the date of acquisition or formation. However, coverage under this provision does not apply: (1) If there is similar insurance or a self -insured retention plan available to that organization; © 2013 Liberty Mutual Insurance CA 88 10 01 13 Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 1 of 7 Insurance Springboard CDFI (2) If the Limits of Insurance of any other insurance policy have been exhausted; or (3) To "bodily injury" or "property damage" that occurred before you acquired or formed the organization. 2. EMPLOYEES AS INSUREDS SECTION II - LIABILITY COVERAGE, paragraph A.1. - WHO IS AN INSURED is amended to include the following as an insured: f. Any "employee" of yours while using a covered "auto" you do not own, hire or borrow, but only for acts within the scope of their employment by you. Insurance provided by this endorse- ment is excess over any other insurance available to any "employee". g. An "employee" of yours while operating an "auto" hired or borrowed under a written contract or agreement in that "employee's" name, with your permission, while performing duties re- lated to the conduct of your business and within the scope of their employment. Insurance provided by this endorsement is excess over any other insurance available to the "employee". 3. ADDITIONAL INSURED BY CONTRACT, AGREEMENT OR PERMIT SECTION II - LIABILITY COVERAGE, paragraph A.1. - WHO IS AN INSURED is amended to include the following as an insured: h. Any person or organization with respect to the operation, maintenance or use of a covered "auto", provided that you and such person or organization have agreed in a written contract, agreement, or permit issued to you by governmental or public authority, to add such person, or organization, or governmental or public authority to this policy as an "insured". However, such person or organization is an "insured": (1) Only with respect to the operation, maintenance or use of a covered "auto"; (2) Only for "bodily injury" or "property damage" caused by an "accident" which takes place after you executed the written contract or agreement, or the permit has been issued to you; and (3) Only for the duration of that contract, agreement or permit 4. SUPPLEMENTARY PAYMENTS SECTION II - LIABILITY COVERAGE, Coverage Extensions, 2.a. Supplementary Payments, para- graphs (2) and (4) are replaced by the following: (2) Up to $3,000 for cost of bail bonds (including bonds for related traffic violations ) required because of an "accident" we cover. We do not have to furnish these bonds. (4) All reasonable expenses incurred by the insured at our request, including actual loss of earn- ings up to $500 a day because of time off from work. 5. AMENDED FELLOW EMPLOYEE EXCLUSION In those jurisdictions where, by law, fellow employees are not entitled to the protection afforded to the employer by the workers compensation exclusivity rule, or similar protection, the following provision is added: SECTION II - LIABILITY, exclusion B.5. FELLOW EMPLOYEE does not apply if the "bodily injury" results from the use of a covered "auto" you own or hire. SECTION III - PHYSICAL DAMAGE COVERAGE is amended as follows: 6. HIRED AUTO PHYSICAL DAMAGE Paragraph A.4. Coverage Extensions of SECTION III - PHYSICAL DAMAGE COVERAGE, is amended by adding the following: If hired "autos" are covered "autos" for Liability Coverage, and if Comprehensive, Specified Causes of Loss or Collision coverage are provided under the Business Auto Coverage Form for any "auto" you own, then the Physical Damage coverages provided are extended to "autos": a. You hire, rent or borrow; or CA 88 10 01 13 ® 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 2 of 7 Insurance Springboard CDFI b. Your "employee" hires or rents under a written contract or agreement in that "employee's" name, but only if the damage occurs while the vehicle is being used in the conduct of your business, subject to the following limit and deductible: A. The most we will pay for "loss" in any one "accident" or "loss" is the smallest of: (1) $50,000; or (2) The actual cash value of the damaged or stolen property as of the time of the "loss"; or (3) The cost of repairing or replacing the damaged or stolen property with other property of like kind and quality, minus a deductible. B. The deductible will be equal to the largest deductible applicable to any owned "auto" for that coverage. C. Subject to the limit, deductible and excess provisions described in this provision, we will provide coverage equal to the broadest coverage applicable to any covered "auto" you own. D. Subject to a maximum of $1,000 per "accident", we will also cover the actual loss of use of the hired "auto" if it results from an "accident", you are legally liable and the lessor incurs an actual financial loss. E. This coverage extension does not apply to: (1) Any "auto" that is hired, rented or borrowed with a driver; or (2) Any "auto" that is hired, rented or borrowed from your "employee". For the purposes of this provision, SECTION V - DEFINITIONS is amended by adding the following: "Total loss" means a "loss" in which the cost of repairs plus the salvage value exceeds the actual cash value. 7. TOWING AND LABOR SECTION III - PHYSICAL DAMAGE COVERAGE, paragraph A.2. Towing, is amended by the addition of the following: We will pay towing and labor costs incurred, up to the limits shown below, each time a covered "auto" classified and rated as a private passenger type, "light truck" or "medium truck" is dis- abled: a. For private passenger type vehicles, we will pay up to $50 per disablement. b. For "light trucks", we will pay up to $50 per disablement. "Light trucks" are trucks that have a gross vehicle weight (GVW) of 10,000 pounds or less. c. For "medium trucks" , we will pay up to $150 per disablement. "Medium trucks" are trucks that have a gross vehicle weight (GVW) of 10,001 - 20,000 pounds. However, the labor must be performed at the place of disablement. 8. PHYSICAL DAMAGE - ADDITIONAL TRANSPORTATION EXPENSE COVERAGE Paragraph A.4.a., Coverage Extension of SECTION III - PHYSICAL DAMAGE COVERAGE, is amend- ed to provide a limit of $50 per day and a maximum limit of $1,500 CA 88 10 01 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 3 of 7 Insurance Springboard CDFI 9. RENTAL REIMBURSEMENT SECTION III - PHYSICAL DAMAGE COVERAGE, A. COVERAGE, is amended by adding the following: a. We will pay up to $75 per day for rental reimbursement expenses incurred by you for the rental of an "auto" because of "accident" or "loss", to an "auto" for which we also pay a "loss" under Comprehensive, Specified Causes of Loss or Collision Coverages. We will pay only for those expenses incurred after the first 24 hours following the "accident" or "loss" to the covered "auto." b. Rental Reimbursement will be based on the rental of a comparable vehicle, which in many cases may be substantially less than $75 per day, and will only be allowed for the period of time it should take to repair or replace the vehicle with reasonable speed and similar quality, up to a maximum of 30 days. c. We will also pay up to $500 for reasonable and necessary expenses incurred by you to remove and replace your tools and equipment from the covered "auto". d. This coverage does not apply unless you have a business necessity that other "autos" avail- able for your use and operation cannot fill. e. If "loss" results from the total theft of a covered "auto" of the private passenger type, we will pay under this coverage only that amount of your rental reimbursement expenses which is not already provided under Paragraph 4. Coverage Extension. f. No deductible applies to this coverage. For the purposes of this endorsement provision, materials and equipment do not include "personal effects" as defined in provision 11. 10. EXTRA EXPENSE - BROADENED COVERAGE Under SECTION III - PHYSICAL DAMAGE COVERAGE, A. COVERAGE, we will pay for the expense of returning a stolen covered "auto" to you. The maximum amount we will pay is $1,000. 11. PERSONAL EFFECTS COVERAGE A. SECTION III - PHYSICAL DAMAGE COVERAGE, A. COVERAGE, is amended by adding the following: If you have purchased Comprehensive Coverage on this policy for an "auto" you own and that "auto" is stolen, we will pay, without application of a deductible, up to $600 for "personal effects" stolen with the "auto." The insurance provided under this provision is excess over any other collectible insurance. B. SECTION V - DEFINITIONS is amended by adding the following: For the purposes of this provision, "personal effects" mean tangible property that is worn or carried by an insured." "Personal effects" does not include tools, equipment, jewelry, money or securities. 12. ACCIDENTAL AIRBAG DEPLOYMENT SECTION III - PHYSICAL DAMAGE COVERAGE, B. EXCLUSIONS is amended by adding the follow- ing: If you have purchased Comprehensive or Collision Coverage under this policy, the exclusion for "loss" relating to mechanical breakdown does not apply to the accidental discharge of an airbag. Any insurance we provide shall be excess over any other collectible insurance or reimbursement by manufacturer's warranty. However, we agree to pay any deductible applicable to the other cov- erage or warranty. 13. AUDIO, VISUAL AND DATA ELECTRONIC EQUIPMENT COVERAGE SECTION III - PHYSICAL DAMAGE COVERAGE, B. EXCLUSIONS, exception paragraph a. to exclu- sions 4.c. and 4.d. is deleted and replaced with the following: CA 88 10 01 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 4 of 7 Insurance Springboard CDFI Exclusion 4.c. and 4.d. do not apply to: a. Electronic equipment that receives or transmits audio, visual or data signals, whether or not designed solely for the reproduction of sound, if the equipment is permanently installed in the covered "auto" at the time of the "loss" and such equipment is designed to be solely operated by use of the power from the "auto's" electrical system, in or upon the covered "auto" and physical damage coverages are provided for the covered "auto"; or If the "loss" occurs solely to audio, visual or data electronic equipment or accessories used with this equipment, then our obligation to pay for, repair, return or replace damaged or stolen property will be reduced by a $100 deductible. 14. LOAN / LEASE GAP COVERAGE A. Paragraph C., LIMIT OF INSURANCE of SECTION III - PHYSICAL DAMAGE COVERAGE is amended by adding the following: The most we will pay for a "total loss" to a covered "auto" owned by or leased to you in any one "accident" is the greater of the: 1. Balance due under the terms of the loan or lease to which the damaged covered "auto" is subject at the time of the "loss" less the amount of: a. Overdue payments and financial penalties associated with those payments as of the date of the "loss", b. Financial penalties imposed under a lease due to high mileage, excessive use or ab- normal wear and tear, c. Costs for extended warranties, Credit Life Insurance, Health, Accident or Disability Insurance purchased with the loan or lease, d. Transfer or rollover balances from previous loans or leases, e. Final payment due under a "Balloon Loan", f. The dollar amount of any unrepaired damage which occurred prior to the "total loss" of a covered "auto", g. Security deposits not refunded by a lessor, h. All refunds payable or paid to you as a result of the early termination of a lease agreement or as a result of the early termination of any warranty or extended service agreement on a covered "auto", i. Any amount representing taxes, j. Loan or lease termination fees; or 2. The actual cash value of the damage or stolen property as of the time of the "loss". An adjustment for depreciation and physical condition will be made in determining the actual cash value at the time of the "loss". This adjustment is not applicable in Texas. B. ADDITIONAL CONDITIONS This coverage applies only to the original loan for which the covered "auto" that incurred the loss serves as collateral, or lease written on the covered "auto" that incurred the loss. C. SECTION V - DEFINTIONS is changed by adding the following: As used in this endorsement provision, the following definitions apply: "Total loss" means a "loss" in which the cost of repairs plus the salvage value exceeds the actual cash value. A "balloon loan" is one with periodic payments that are insufficient to repay the balance over the term of the loan, thereby requiring a large final payment. CA 88 10 01 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 5 of 7 Insurance Springboard CDFI 15. GLASS REPAIR - WAIVER OF DEDUCTIBLE Paragraph D. Deductible of SECTION III - PHYSICAL DAMAGE COVERAGE is amended by the addition of the following: No deductible applies to glass damage if the glass is repaired rather than replaced. 16. PARKED AUTO COLLISION COVERAGE (WAIVER OF DEDUCTIBLE) Paragraph D. Deductible of SECTION III - PHYSICAL DAMAGE COVERAGE is amended by the addition of the following: The deductible does not apply to "loss" caused by collision to such covered "auto" of the private passenger type or light weight truck with a gross vehicle weight of 10,000 lbs. or less as defined by the manufacturer as maximum loaded weight the "auto" is designed to carry while it is: a. In the charge of an "insured"; b. Legally parked; and c. Unoccupied. The "loss" must be reported to the police authorities within 24 hours of known damage. The total amount of the damage to the covered "auto" must exceed the deductible shown in the Declarations. This provision does not apply to any "loss" if the covered "auto" is in the charge of any person or organization engaged in the automobile business. 17. TWO OR MORE DEDUCTIBLES Under SECTION III PHYSICAL DAMAGE COVERAGE, if two or more company policies or coverage forms apply to the same accident, the following applies to paragraph D. Deductible: a. If the applicable Business Auto deductible is the smaller (or smallest) deductible it will be waived; or b. If the applicable Business Auto deductible is not the smaller (or smallest) deductible it will be reduced by the amount of the smaller (or smallest) deductible; or c. If the loss involves two or more Business Auto coverage forms or policies the smaller (or smallest) deductible will be waived. For the purpose of this endorsement company means any company that is part of the Liberty Mutual Group. SECTION IV - BUSINESS AUTO CONDITIONS is amended as follows: 18. UNINTENTIONAL FAILURE TO DISCLOSE HAZARDS SECTION IV- BUSINESS AUTO CONDITIONS, Paragraph B.2. is amended by adding the following: If you unintentionally fail to disclose any hazards, exposures or material facts existing as of the inception date or renewal date of the Business Auto Coverage Form, the coverage afforded by this policy will not be prejudiced. However, you must report the undisclosed hazard of exposure as soon as practicable after its discovery, and we have the right to collect additional premium for any such hazard or exposure. 19. AMENDED DUTIES IN THE EVENT OF ACCIDENT, CLAIM, SUIT, OR LOSS SECTION IV - BUSINESS AUTO CONDITIONS, paragraph A.2.a. is replaced in its entirety by the following: a. In the event of "accident", claim, "suit" or "loss", you must promptly notify us when it is known to: 1. You, if you are an individual; 2. A partner, if you are a partnership; 3. Member, if you are a limited liability company; 4. An executive officer or the "employee" designated by the Named Insured to give such notice, if you are a corporation. CA 88 10 01 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 6 of 7 Insurance Springboard CDFI To the extent possible, notice to us should include: (1) How, when and where the "accident" or "loss" took place; (2) The "insureds" name and address; and (3) The names and addresses of any injured persons and witnesses. 20. WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US SECTION IV - BUSINESS AUTO CONDITIONS, paragraph A.5., Transfer of Rights of Recovery Against Others to Us, is amended by the addition of the following: If the person or organization has waived those rights before an "accident" or "loss", our rights are waived also. 21. HIRED AUTO COVERAGE TERRITORY SECTION IV - BUSINESS AUTO CONDITIONS, paragraph B.7., Policy Period, Coverage Territory, is amended by the addition of the following: f. For "autos" hired 30 days or less, the coverage territory is anywhere in the world, provided that the insured's responsibility to pay for damages is determined in a "suit", on the merits, in the United States, the territories and possessions of the United States of America, Puerto Rico or Canada or in a settlement we agree to. This extension of coverage does not apply to an "auto" hired, leased, rented or borrowed with a driver. SECTION V - DEFINITIONS is amended as follows: 22. BODILY INJURY REDEFINED Under SECTION V - DEFINTIONS, definition C. is replaced by the following: "Bodily injury" means physical injury, sickness or disease sustained by a person, including mental anguish, mental injury, shock, fright or death resulting from any of these at any time. COMMMON POLICY CONDITIONS 23. EXTENDED CANCELLATION CONDITION COMMON POLICY CONDITIONS, paragraph A. - CANCELLATION condition applies except as fol- lows: If we cancel for any reason other than nonpayment of premium, we will mail to the first Named Insured written notice of cancellation at least 60 days before the effective date of cancellation. This provision does not apply in those states which require more than 60 days prior notice of cancella- tion. CA 88 10 01 13 © 2013 Liberty Mutual Insurance Includes copyrighted material of Insurance Services Office, Inc., with its permission. Page 7 of 7 COMMON POLICY CONDITIONS All Coverage Parts included in this policy are subject to the following conditions. A. CANCELLATION 1. The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance writ- ten notice of cancellation. 2. We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least: a. 10 days before the effective date of cancellation if we cancel for nonpay- ment of premium; or b. 30 days before the effective date of cancellation if we cancel for any oth- er reason. 3. We will mail or deliver our notice to the first Named Insured's last mailing ad- dress known to us. 4. Notice of cancellation will state the effec- tive date of cancellation. The policy pe- riod will end on that date. 5. If this policy is cancelled, we will send the first Named Insured any premium re- fund due. If we cancel, the refund will be pro rata. If the first Named Insured can- cels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund. 6. If notice is mailed, proof of mailing will be sufficient proof of notice. B. CHANGES This policy contains all the agreements be- tween you and us concerning the insurance afforded. The first Named Insured shown in the Declarations is authorized to make changes in the terms of this policy with our consent. This policy's terms can be amended or waived only by endorsement issued by us and made a part of this policy. C. EXAMINATION OF YOUR BOOKS AND RECORDS We may examine and audit your books and records as they relate to this policy at any time during the policy period and up to three years afterward. Insurance Springboard CDFI IL 00 17 11 98 D. INSPECTIONS AND SURVEYS 1. We have the right to: a. Make inspections and surveys at any time; b. Give you reports on the conditions we find; and c. Recommend changes. 2. We are not obligated to make any inspec- tions, surveys, reports or recommenda- tions and any such actions we do under- take relate only to insurability and the premiums to be charged. We do not make safety inspections. We do not un- dertake to perform the duty of any person or organization to provide for the health or safety of workers or the public. And we do not warrant that conditions: a. Are safe or healthful; or b. Comply with laws, regulations, codes or standards. 3. Paragraphs 1. and 2. of this condition ap- ply not only to us, but also to any rating, advisory, rate service or similar organiza- tion which makes insurance inspections, surveys, reports or recommendations. 4. Paragraph 2. of this condition does not apply to any inspections, surveys, reports or recommendations we may make rela- tive to certification, under state or mu- nicipal statutes, ordinances or regula- tions, of boilers, pressure vessels or elevators. E. PREMIUMS The first Named Insured shown in the Dec- larations: 1. Is responsible for the payment of all pre- miums; and 2. Will be the payee for any return premi- ums we pay. F. TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS POLICY Your rights and duties under this policy may not be transferred without our written con- sent except in the case of death of an individ- ual named insured. IL00171198 Copyright, Insurance Services Office, Inc., 1998 Page 1 of 2 If you die, your rights and duties under this policy will be transferred to your legal repre- sentative but only while acting within the scope of duties as your legal representative. Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property. Insurance Springboard CDFI IL001711 98 Copyright, Insurance Services Office, Inc., 1998 Page 2 of 2 Insurance SprinecoodSiDo 08 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. NUCLEAR ENERGY LIABILITY EXCLUSION ENDORSEMENT (Broad Form) This endorsement modifies insurance provided under the following: COMMERCIAL AUTOMOBILE COVERAGE PART COMMERCIAL GENERAL LIABILITY COVERAGE PART FARM COVERAGE PART LIQUOR LIABILITY COVERAGE PART MEDICAL PROFESSIONAL LIABILITY COVERAGE PART OWNERS AND CONTRACTORS PROTECTIVE LIABILITY COVERAGE PART POLLUTION LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART RAILROAD PROTECTIVE LIABILITY COVERAGE PART UNDERGROUND STORAGE TANK POLICY 1. The insurance does not apply: A. Under any Liability Coverage, to "bodily injury" or "property damage": (1) With respect to which an "insured" under the policy is also an insured under a nuclear energy liability poli- cy issued by Nuclear Energy Liabil- ity Insurance Association, Mutual Atomic Energy Liability Underwrit- ers, Nuclear Insurance Association of Canada or any of their succes- sors, or would be an insured under any such policy but for its termina- tion upon exhaustion of its limit of liability; or (2) Resulting from the "hazardous properties" of "nuclear material" and with respect to which (a) any person or organization is required to maintain financial protection pur- suant to the Atomic Energy Act of 1954, or any law amendatory there- of, or (b) the "insured" is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agree- ment entered into by the United States of America, or any agency thereof, with any person or organi- zation. B. Under any Medical Payments coverage, to expenses incurred with respect to "bodily injury" resulting from the "haz- ardous properties" of "nuclear materi- al" and arising out of the operation of a "nuclear facility" by any person or or- ganization. C. Under any Liability Coverage, to "bodily injury" or "property damage" resulting from "hazardous properties" of "nuclear material", if: (1) The "nuclear material" (a) is at any "nuclear facility" owned by, or op- erated by or on behalf of, an "in- sured" or (b) has been discharged or dispersed therefrom; (2) The "nuclear material" is contained in "spent fuel" or "waste" at any time possessed, handled, used, pro- cessed, stored, transported or disposed of, by or on behalf of an "insured"; or IL 00 21 09 08 © ISO Properties, Inc., 2007 Page 1 of 2 (3) The "bodily injury" or "property damage" arises out of the furnish- ing by an "insured" of services, materials, parts or equipment in connection with the planning, con- struction, maintenance, operation or use of any "nuclear facility", but if such facility is located within the United States of America, ritories or possessions or this exclusion (3) applies "property damage" to such ar facility" and any thereat. its ter - Canada, only to "nucle- property 2. As used in this endorsement: "Hazardous properties" includes radioactive, toxic or explosive properties. "Nuclear material" means "source materi- al", "special nuclear material" or "by-prod- uct material". "Source material", "special nuclear mate- rial", and "by-product material" have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory there- of. "Spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a "nuclear reactor". "Waste" means any waste material (a) con- taining "by-product material" other than the tailings or wastes produced by the extrac- tion or concentration of uranium or thorium from any ore processed primarily for its "source material" content, and (b) resulting from the operation by any person or or- ganization of any "nuclear facility" included under the first two paragraphs of the defini- tion of "nuclear facility". Insurance Springboard CDFI "Nuclear facility" means: (a) Any "nuclear reactor"; (b) Any equipment or device designed or used for (1) separating the iso- topes of uranium or plutonium, (2) processing or utilizing "spent fuel", or (3) handling, processing or pack- aging "waste"; (c) Any equipment or device used for the processing, fabricating or alloying of "special nuclear mate- rial" if at any time the total amount of such material in the custody of the "insured" at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235; (d) Any structure, basin, excavation, premises or place prepared or used for the storage or disposal of "waste"; and includes the site on which any of the foregoing is located, all operations conduct- ed on such site and all premises used for such operations. "Nuclear reactor" means any apparatus de- signed or used to sustain nuclear fission in a self-supporting chain reaction or to con- tain a critical mass of fissionable material. "Property damage" includes all forms of ra- dioactive contamination of property. IL 00 21 09 08 © ISO Properties, Inc., 2007 Page 2 of 2 Insurance Spring4593?ri74bPP 12 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. CALIFORNIA CHANGES - CANCELLATION AND NONRENEWAL This endorsement modifies insurance provided under the following: CAPITAL ASSETS PROGRAM (OUTPUT POLICY) COVERAGE PART COMMERCIAL AUTOMOBILE COVERAGE PART COMMERCIAL GENERAL LIABILITY COVERAGE PART COMMERCIAL INLAND MARINE COVERAGE PART COMMERCIAL PROPERTY COVERAGE PART CRIME AND FIDELITY COVERAGE PART EMPLOYMENT -RELATED PRACTICES LIABILITY COVERAGE PART EQUIPMENT BREAKDOWN COVERAGE PART FARM COVERAGE PART LIQUOR LIABILITY COVERAGE PART MEDICAL PROFESSIONAL LIABILITY COVERAGE PART POLLUTION LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART A. Paragraphs 2. and 3. of the Cancellation Common Policy Condition are replaced by the 2. following: All Policies In Effect For 60 Days Or Less If this policy has been in effect for 60 days or less, and is not a renewal of a policy we have previously issued, we may cancel this policy by mailing or delivering to the first Named Insured, at the mailing address shown in the poli- cy, and to the producer of record, ad- vance written notice of cancellation, stating the reason for cancellation, at least: a. 10 days before the effective date of cancellation if we cancel for: (1) Nonpayment of premium; or (2) Discovery of fraud by: (a) Any insured or his or her representative in obtaining this insurance; or (b) You or your representative in pursuing a claim under this policy. b. 30 days before the effective date of cancellation if we cancel for any other reason. 3. All Policies In Effect For More Than 60 Days a. If this policy has been in effect for more than 60 days, or is a renewal of a policy we issued, we may can- cel this policy only upon the occur- rence, after the effective date of the policy, of one or more of the fol- lowing: (1) Nonpayment of premium, in- cluding payment due on a prior policy we issued and due dur- ing the current policy term cov- ering the same risks. (2) Discovery of fraud or material misrepresentation by: (a) Any insured or his or her representative in obtaining this insurance; or (b) You or your representative in pursuing a claim under this policy. A judgment by a court or an administrative tribunal that you have violated a California or Federal law, having as one of its necessary elements an act which materially increases any of the risks insured against. (3) IL 02 70 09 12 © Insurance Services Office, Inc., 2012 Page 1 of 4 (4) Discovery of willful or grossly negligent acts or omissions, or of any violations of state laws or regulations establishing safe- ty standards, by you or your representative, which materially increase any of the risks in- sured against. Failure by you or your repre- sentative to implement reason- able loss control requirements, agreed to by you as a condition of policy issuance, or which were conditions precedent to our use of a particular rate or rating plan, if that failure ma- terially increases any of the risks insured against. (6) A determination by the Com- missioner of Insurance that the: (a) Loss of, or changes in, our reinsurance covering all or part of the risk would threaten our financial integ- rity or solvency; or (b) Continuation of the policy coverage would: (i) Place us in violation of California law or the laws of the state where we are domiciled; or (ii) Threaten our solvency. A change by you or your repre- sentative in the activities or property of the commercial or industrial enterprise, which re- sults in a materially added, in- creased or changed risk, unless the added, increased or changed risk is included in the policy. b. We will mail or deliver advance written notice of cancellation, stat- ing the reason for cancellation, to the first Named Insured, at the mailing address shown in the poli- cy, and to the producer of record, at least: (1) 10 days before the effective date of cancellation if we can- cel for nonpayment of premium or discovery of fraud; or (2) 30 days before the effective date of cancellation if we can- cel for any other reason listed in Paragraph 3.a. (5) (7) B. The following proVisionnceiSpriaghtlatid C1DFI the Cancellation Common Policy Condition: 7. Residential Property This provision applies to coverage on real property which is used predomi- nantly for residential purposes and con- sisting of not more than four dwelling units, and to coverage on tenants' household personal property in a resi- dential unit, if such coverage is written under one of the following: Commercial Property Coverage Part Farm Coverage Part - Farm Property - Farm Dwellings, Appurtenant Structures And Household Personal Property Cov- erage Form a. If such coverage has been in effect for 60 days or less, and is not a renewal of coverage we previously issued, we may cancel this cover- age for any reason, except as pro- vided in b. and c. below. b. We may not cancel this policy sole- ly because the first Named Insured has: (1) Accepted an offer of earthquake coverage; or (2) Cancelled or did not renew a policy issued by the California Earthquake Authority (CEA) that included an earthquake policy premium surcharge. However, we shall cancel this poli- cy if the first Named Insured has accepted a new or renewal policy issued by the CEA that includes an earthquake policy premium sur- charge but fails to pay the earth- quake policy premium surcharge authorized by the CEA. c. We may not cancel such coverage solely because corrosive soil condi- tions exist on the premises. This restriction (c.) applies only if cov- erage is subject to one of the fol- lowing, which exclude loss or dam- age caused by or resulting from corrosive soil conditions: (1) Commercial Property Coverage Part - Causes Of Loss - Special Form; or (2) Farm Coverage Part - Causes Of Loss Form - Farm Property, Paragraph D. Covered Causes Of Loss - Special. IL 02 70 09 12 © Insurance Services Office, Inc., 2012 Page 2 of 4 C. The following is added and supersedes any provisions to the contrary: N on re newel 1. Subject to the provisions of Paragraphs C.2. and C.3. below, if we elect not to renew this policy, we will mail or de- liver written notice, stating the reason for nonrenewal, to the first Named In- sured shown in the Declarations, and to the producer of record, at least 60 days, but not more than 120 days, before the expiration or anniversary date. We will mail or deliver our notice to the first Named Insured, and to the pro- ducer of record, at the mailing address shown in the policy. 2. Residential Property This provision applies to coverage on real property used predominantly for residential purposes and consisting of not more than four dwelling units, and to coverage on tenants' household property contained in a residential unit, if such coverage is written under one of the following: Commercial Property Coverage Part Farm Coverage Part - Farm Property - Farm Dwellings, Appurtenant Structures And Household Personal Property Cov- erage Form a. We may elect not to renew such coverage for any reason, except as provided in b., c. and d. below. b. We will not refuse to renew such coverage solely because the first Named Insured has accepted an of- fer of earthquake coverage. However, the following applies only to insurers who are associate par- ticipating insurers as established by Cal. Ins. Code Section 10089.16. We may elect not to renew such cov- erage after the first Named Insured has accepted an offer of earthquake coverage, if one or more of the fol- lowing reasons applies: (1) The nonrenewal is based on sound underwriting principles that relate to the coverages provided by this policy and that are consistent with the ap- proved rating plan and related documents filed with the De- partment of Insurance as re- quired by existing law; (2) The CorntuissierspringbiahftDEnce finds that the exposure to po- tential losses will threaten our solvency or place us in a haz- ardous condition. A hazardous condition includes, but is not limited to, a condition in which we make claims payments for losses resulting from an earth- quake that occurred within the preceding two years and that required a reduction in policyholder surplus of at least 25% for payment of those claims; or (3) We have: (a) Lost or experienced a sub- stantial reduction in the availability or scope of re- insurance coverage; or (b) Experienced a substantial increase in the premium charged for reinsurance coverage of our residential property insurance policies; and the Commissioner has ap- proved a plan for the nonrenewals that is fair and equitable, and that is respon- sive to the changes in our re- insurance position. c. We will not refuse to renew such coverage solely because the first Named Insured has cancelled or did not renew a policy, issued by the California Earthquake Authority, that included an earthquake policy premium surcharge. d. We will not refuse to renew such coverage solely because corrosive soil conditions exist on the prem- ises. This restriction (d.) applies only if coverage is subject to one of the following, which exclude loss or damage caused by or resulting from corrosive soil conditions: (1) Commercial Property Coverage Part - Causes Of Loss - Special Form; or (2) Farm Coverage Part - Causes Of Loss Form - Farm Property, Paragraph D. Covered Causes Of Loss - Special. IL 02 70 09 12 © Insurance Services Office, Inc., 2012 Page 3 of 4 • 3. We are not required to send notice of nonrenewal in the following situations: a. If the transfer or renewal of a poli- cy, without any changes in terms, conditions or rates, is between us and a member of our insurance group. b. If the policy has been extended for 90 days or less, provided that no- tice has been given in accordance with Paragraph C.1. c. If you have obtained replacement coverage, or if the first Named In- sured has agreed, in writing, within 60 days of the termination of the policy, to obtain that coverage. d. If the policyrisiisanfiarspaingiericedcatit no more than 60 days and you are no- tified at the time of issuance that it will not be renewed. e. If the first Named Insured requests a change in the terms or conditions or risks covered by the policy with- in 60 days of the end of the policy period. f. If we have made a written offer to the first Named Insured, in accor- dance with the timeframes shown in Paragraph C.1., to renew the policy under changed terms or con- ditions or at an increased premium rate, when the increase exceeds 25%. IL 02 70 09 12 © Insurance Services Office, Inc., 2012 Page 4 of 4 Insurance Springboard CDFI This page intentionally left blank. Insurance Sptlnyboard CDFI This Declaration Page is attached to and forms part of Certificate provisions (Form SLC-3 (COR) California I -MA 3102) Previous No. SUA 13714-1703 Authority Ref No. B0621PFD010417 Certificate No. SUAL3714-1804 1. Name and address of the insured; SPRINGBOARD CDFi 4351 LATHAM STREET RIVERSIDE, CA 92501 2. Effective from October 01, 2018 loth days at 12:01 a.m. starndard time. to October Ol, 2019 3. insurance is effective with certain UNDF.RWRiTERS AT 1.i.OYD'S, LONDON. Percentage: 100% 4. Amount Coverage Rate Premium $1,000.000 Mortgage Company Professional Liability $7,150.00 (Scc Policy for any applicable sub -limits) POLICY FEE S225.00 STAMPING FEE S 14.30 STATE TAX $214.50 GROSS TOTAL $7,603,80 5, Forms attached hereto and special conditions: SLC-3 (COR), MCPL DEC CA, SUA MCPL, Al, A2, A6, A7, A8, A9, A13, A 14, A15, A17, A75, A87, A110, Application, lending Supplement 6. Service of Suit may be made upon: Gordon & Rees, LLP Onc North Franklin, Suite 800, Chicago, IL 60606 7. In the event of a claim, please notify the following: Gordon & Rees, LLP Attn: Randall Marmor One North Franklin, Suite SOO, Chicago, IL 60606 Dated Stateside Underwriting Agency, A Division of Johnson & Johnson Inc_ October 25, 2018 By Surplus Lines Licensee: JJiNS insurance Services PO Box 899 Charleston, SC License #: 0F74450 This insurance is issued pursuant to the California Insurance Code, Sections 1760 through 1780, and is place in an insurer or insurers not holding a Certificate of Authority form or regulated by the California insurance Commissioner. Insurance Springboard CDFI PROFESSIONAL SERVICES LIABILITY POLICY THIS POLICY IS LIMITED TO LIABILITY FOR ONLY THOSE CLAIMS THAT ARE FIRST MADE AGAINST THE INSUREDS DURING THE POLICY PERIOD. CLAIMS EXPENSES REDUCE AND MAY EXHAUST THE COVERAGE LIMITS, AND ARE SUBJECT TO THE RETENTION. SUA 13714-1804 POLICY NUMBER UNDERWRITERS AT LLOYD'S, LONDON DECLARATIONS Item 1. Name and Address of Insured: SPRINGBOARD CDFI 4351 LATHAM STREET RIVERSIDE, CA 92501 A. Insured's Profession: MORTGAGE BANKER/MORTGAGE BROKER Item 2. Policy Period (Month Day Year) From: October 1, 2018 To: October 1, 2019 12:01 A.M. Local Time at the Address of the Organization as stated in Item 1 above. Item 3. L.imit of Liability (Inclusive of Defense Costs): S 1,000.000 Aggregate for each Policy Period Item 4. Retention: $25.000 each Claim Item 5. The Premium for this Policy is: $7,150.00 Item 6. Retroactive Date: October 1, 2015 Item 7. Coverage Date: October 1, 2015 Item 8. Notice Pursuant to Article VI: Gordon & Rees, LLP Attn: Randall Marmor One North Franklin„ Suite 800, Chicago, IL 60606 Item 9. Endorsements Attached at Issuance: SLC-3 (COR), MCPL DEC CA, SUA MCPL, A l , A2, A6, A7, A8, A9, A13, A14, A15, A17, A75, A87, A 110, Application, Lending Supplement Authorized Representative: / $fgnaturc October 25, 2018 Date CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950-4397 619-336-4228 Michael R. Dalla, CMC - City Clerk May 21, 2019 Mr. Al Nemerofsky Compliance/Risk Management VP Springboard CDFI Nationwide Mortgage Collaborative 4351 Latham Street, Suite 100 Riverside, CA 92501 Dear Mr. Nemerofsky, On May 20th, 2019, an Agreement was entered into between the City of National City and Springboard CDFI. We are enclosing a fully executed original Agreement and one fully executed copy for your records. Sinc ely, Michael'. Dalla, CMC City Clerk Enclosures cc: Yasmin Felix, DPA and Servicing Administrator, Springboard CDFI