HomeMy WebLinkAbout51-77 RESOLUTION•
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RESOLUTION NO. 57-77
A RESOLUTION AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE AN AGREEMENT WITH PARTICIPATING LENDING INSTITUTIONS
FOR THE ADMINISTRATION OF THE CITY'S COMMUNITY DEVELOPMENT
HOUSING REHABILITATION LOAN PROGRAM.
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
That the Mayor and City Clerk be, and they hereby are,
authorized and directed to execute an agreement with parti-
cipating lending institutions for the administration of the
city's Community Development Housing Rehabilitation Loan
Program. A copy of said agreement, marked Exhibit "A", is
attached hereto and made a part hereof.
PASSED AND APPROVED THIS 02/
ATTEST:.
DAY OF
APPROVED:
,Auce}
CITY CLERK
ar7Cer-0--et
1977.
MICROFILIAID
-VW 2 0 1978
DATE
1 75 1
AGREEMENT
THIS AGREEMENT, executed this day of
1977, by and between CITY OF FAYETTEVILLE, ARKANSAS, a municipal
corporation, hereinafter called the "City", and FIRST NATIONAL
BANK OF FAYETTEVILLE, ARKANSAS, NORTHWEST NATIONAL BANK OF
FAYETTEVILLE, ARKANSAS, McILROY BANK AND TRUST COMPANY OF FAYETTE-
VILLE, ARKANSAS, and FAYETTEVILLE SAVINGS & LOAN ASSOCIATION OF
FAYETTEVILLE, ARKANSAS, hereinafter called "Lending Institutions".
WHEREAS, the City has developed, under the Housing and
Community Development Act of 1974, a housing rehabilitation
program for homeowners within the City's corporate limits to
improve their homes; and
WHEREAS, the Lending Institutions have consented to par-
ticipate in a loan program for homeowners under said Housing
Rehabilitation Program and have consented to service loans made
under said program; and
WHEREAS, the purpose of this Agreement is to set forth the
terms and conditions under which the Lending Institutions will
participate in the aforesaid program.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the City and the Lending Institutions mutually
agree as follows:
1. The City shall provide from Community Development Block
Grant Funds 100% of the total amount of each loan to homeowners
under the City's Housing Rehabilitation Program. Loan funds shall
be deposited and disbursed as provided in Paragraph Number 15 of
this Agreement, and
to the homeowners.
no loan funds shall be disbursed directly
The Lending Institutions shall obtain a promissory
note from the homeowners in the amount of the loan and shall obtain
a mortgage on the homeowners' property to secure said note.
2. The Lending Institutions shall service housing rehabili-
tation loans made by the City. All loan payments by the home-
owners shall be made directly to the Lending Institutions. The
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Lending Institutions shall deposit loan payments received into
a special account in the name of the City and bearing interest
at the highest available rate. The City shall pay the Lending
Institutions a service fee in an amount equivalent to 4% of the
principal of each loan. Said service fee shall be paid at the time
each loan is closed.
3. The Lending Institutions shall provide the financial
expertise and administrative assistance necessary for establishing
loans under the City's Housing Rehabilitation Program. Loans
shall be made for the rehabilitation of owner -occupied single
family residences in the City.
4. Loans made by the City under its Housing Rehabilitation
Program shall be made in accordance with the schedule shown on
Attachment 1 entitled "Housing Assistance Plan - Financial Pro-
cedures" dated March 15, 1977, attached hereto and made a part
hereof. The term of each loan shall not be longer than the
maximum indicated on the aforesaid Attachment I but may be for
a shorter term where such a shorter term is appropriate due to
the size of the loan principal and the individual homeowner's
ability to repay the loan.
5. The City agrees to pay all abstracter's fees and other
front end expenses for each loan. Salt expenses shall be added
to, and become a part of, the loan principal.
6. The maximum interest rate to be charged by the Lending
Institutions on each loan shall not exceed 3% per annum. The
maximum interest provided hereby may be changed only upon written
approval by the -City. All interest paid to the Lending Institutions
on housing rehabilitation loans in accordance with this Agreement
shall belong to the City and shall be deposited in the City's
special account specified in Paragraph 2 above as said interest
is received.
7. Any loss resulting from the establishment of housing
rehabilitation loans shall be borne by the City as a part of
its Community Development Program.
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8. A steering committee consisting of a representative
from each of the Lending Institutions and from the City's Community
Development and Housing Department shall approve or disapprove
all loan applications.
9. The Lending Institutions shall maintain accurate
accounting records for all loans made under this Agreement.
The Lending Institutions shall submit to the City, by the 20th
day of each month, a written statement reflecting the status
of each loan account.
10. The steering committee shall be charged with the re-
sponsibility of fully analyzing all delinquent loans and shall
recommend whether the City should institute foreclosure proceedings,
or take other action as dicated by the individual circumstances.
11. The term of this Agreement shall be for a period of one
(1) year from the date hereof; provided, either the City or
the Lending Institutions may terminate this Agreement prior to
the termination date hereof upon thirty (30) days written notice,
Upon termination of this Agreement, all loan repayment funds,
including interest collected on the loans and interest accrued
on the City's special account, shall be returned to the City.
12. The City's Community Development and Housing Department
shall provide the Lending Institutions with assistance in processing
all loans made in accordance with this Agreement. The procedure to
be followed by the City's Community Development and Housing De-
partment is set forth in Attachment II hereto, which attachment
is made a part hereof. Any substantial change in said procedure
for processing loans, insofar as said change affects the Lending
Institutions, must first be approved in writing by the Lending
Institutions.
13. The amount of loans to be processed under this Agreement
shall be approximately $75,000.00 to $100,000.00.
14. In the event a homeowner becomes more than three payments
delinquent, the loan shall be considered in default. Upon default,
the Lending Institution shall assign its promissory note and mort-
gage to the City and shall transfer to the City all loan payments,
including interest, which the Lending Institution has collected.
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15. All bills submitted by contractors and suppliers shall
be paid by the Community Development Department of the City from
loam proceeds which proceeds shall be deposited in a checking
account in the name of the Community Development Department of
the City and of the homeowner. All checks to contractors or
suppliers shall bear the signature of the property owner, and
the signature of the Director of the Community Development Department.
At the time each bill is paid, the City shall obtain a lien waiver
from the contractor or supplier.
IN WITNESS WHEREOF, the City and the Lending Institutions
have executed this Agreement on the date first above written.
CITY OF FAYETTEVILLE, ARKANSAS,
A Municipal Corporation
BY
ATTEST:
CITY CLERK
MAYOR
FIRST NATIONAL BANK OF FAYETTEVILLE,
ARKANSAS
BY
George Shelton, President
NORTHWEST NATIONAL BANK OF FAYETTEVILLE,
ARKANSAS
BY
Wilmer Smith, President
McILROY BANK AND TRUST OF FAYETTEVILLE,
ARKANSAS
BY
Obert Undem, President
FAYETTEVILLE SAVINGS AND LOAN ASSOCIATION
OF FAYETTEVILLE, ARKANSAS
BY
David McNair, President
Attachment
- FINANCIAL PROCEDURES
HOUSING ASSISTANCE P
HOME OWNERS
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Less Than $4,000
$4,000 - $5,000
$5,500 - $7,499
$7,500 - $8,448
Loans may be repaid sooner than scheduled without any penalty.
for the Grant amount.
receive prorata credit over a 5 -year period
Homeowners will
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a loan if they so wish.
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Attachment II.
PROCEDURE FOR PROCESSING HOUSING REHABILITATION LOANS
CITY OF FAYETTEVILLE
Housing Rehabilitation Loans are provided by an 49reement between the City
of Fayetteville, First National Bank of Fayetteville, Northwest National Bank and
McIlroy Bank & Trust and will be initially processed by the Community Development
and Housing Department (CDHD) and referred to the "Lending Institution(s)". The
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purpose of the loan program is to provide a low-interest home improvement loan for
low and moderate income families as owners of owner -occupied, single-family resi-
dents of the City of Fayetteville.
A maximum loan and repayment schedule is shown on Attachment 1 to the Memo-
randum of Agreement.
A three percent (3%) interest will be charged for each loan.
A lien on the property will be required in accordance with standard practice
of the industry
The City of Fayetteville will absorb expenses incurred if a loan is disapproved
or the loan is refused by the owner.
Procedures:
1. CDHD will provide a qualified applicant for a loan. The basis of
qualification referring to the Housing Assistance Policies and Cri-
teria utilized by the City of Fayetteville. (See Attachment 1)
2, A "Loan File" will be prepared for each loan applicant and assigned
a line item account number.
3. CDHD will accomplish an appraisal of the property in question and
furnish same as a part of the "Loan File" to the Lending Institution(s).
4. The following costs are to be charged to each loan:
a. Cost of Credit Report
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14.
Attachment II. (Cont..)
b. Cost of Title Insurance
c. Cost of Abstract
d. Attorney's fees, if any
e. Cost of Recording Loan
5. CDHD to develop a sketch of work proposed and an estimate of cost to
be included in the "Loan File".
6. CDHD and City of Fayetteville will advertise projects for hid and award
contracts on each Housing Rehabilitation Loan Program project.
7. CDHD will accomplish all inspections of work -in -progress, final inspec-
tions, keep appropriate HUD reports, make payments, and generally ad-
minister the impl mentation of each loan,
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Loan to lue ratio will be 75% — 100%, including all liens,
9. CDHD will notify the Committee when the final inspection and fin41
payment to contractor has been made,
10. City of Fayetteville shall be responsible for adglinistrAtive det4i1s
associated with "mechanics liens" evolving from contract actions.
11. Owner -occupant of property will be kept apprised of status of con-
struction and payment of construction costs to contractor..
12. Work to be accomplished in accordance with the Housing Assistance Policies
and Criteria dated March 15, 1977, and as approved by the Board of Directors,
City of Fayetteville.
March 30, 1977
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