Katja Zimmerman qualified for and received a Housing Rehabilitation Deferred Loan for $13,128 in November 2009. The loan does not have to be repaid as long as Ms. Zimmerman 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. Ms. Zimmerman requested that the City subordinate its lien to a new first mortgage with a lower interest rate and will follow the City’s subordination policy, which does not require repayment under these circumstances. Ms. Zimmerman 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:

• Approve the request to subordinate $13,128 interest in the property in second position to a new first mortgage;
• Deny the subordination request which could result in the homeowner not being able to refinance in order to benefit from a lower interest rate. 

US Bank will loan up to $153,000 that will refinance existing debt on the property. The property recently appraised for $174,488. The City will retain its $13,128 interest in the property in second position and the City should still be protected by the current value of the home.

Staff recommends that Council subordinate the City’s lien securing a $13,128 CDBG Housing Rehabilitation Deferred Loan to Katja Zimmerman, 930 Burlington Avenue.