Wesley K. Hazen and Brandi L. Hazen, qualified for and received a Housing Rehabilitation Deferred Loan for $20,000 in June 2005. The loan was modified in March 2006 decreasing the principal balance to $19,600. The loan does not have to be repaid as long as the Hazens remain the owner/occupants of the property. The loan is to be 100% repaid when the property is sold or when the owner no longer occupies the property.  The Hazens requested the City subordinate its lien to a new first mortgage with a lower current interest rate and to follow the City’s subordination policy, which requires a 0% payback of the Rehabilitation Loan. The Hazens will not roll over additional debt into the first mortgage and the City’s position will not be affected by this action.

The City Council may   1) Approve the request to subordinate the $19,600 lien to a new first mortgage; 2) Do not approve the subordination request which could result in the homeowner not being able to refinance and to benefit from the current low interest rates.

A new first mortgage from Wells Fargo Bank will not exceed $78,800 and will be used to refinance existing debt on the property. A recent Comparative Market Analysis estimated a property market value of $197,000. The City will retain its $19,600 interest in the property in second position and the City is still protected by the current value of the home.

Staff recommends that Council subordinate the City’s lien securing a $19,600 CDBG Housing Rehabilitation Deferred Loan to Wesley K. Hazen and Brandi L. Hazen, 936 Governors Blvd.