Julie Slevira qualified for and received a Housing Rehabilitation Deferred Loan in June, 2005. The loan does not have to be repaid as long as Ms. Slevira remains the owner/occupant of the property. The loan is to be 100% repaid when the property is sold or when the owner no longer occupies the property. In order to refinance and take advantage of the current low interest rates, Ms. Slevira has requested the City subordinate its lien to a new first mortgage and will follow the City’s subordination policy, which requires a 33% payback of the Housing Rehabilitation Loan.

The Council may:

• Approve the request to subordinate $14,523.91 interest in the property in a second position to a new first mortgage; or
• Not approve the subordination request, which could result in the homeowner not being able to refinance in order to benefit from the current low interest rates.

Staff recommends that the City subordinate $14,523.91 of its interest to a new first mortgage from First Interstate Bank not to exceed $94,000.00. This new first mortgage will refinance existing debt on the property. It will include a $5,000 payoff for an existing First Time Homebuyer Loan and 33% repayment of the Housing Rehabilitation Loan in the amount of $7,153.57 and partially will pay-off medical and consumer debt. A Comparative Market Analysis valued the home at $120,200. The City will retain $14,523.91 interest in the property in second position, and the City is still protected by the current value of the home.

Staff recommends approval of the subordination request as the new loan partially repays the City’s Housing Rehabilitation Loan and the remaining amount owed the City is still protected by the current value of the home. Staff recommends that Council subordinate the City’s lien securing a $14,523.91 CDBG Housing Rehabilitation Deferred Loan to Julie Slevira, 214 South 38th Street.