HRA RES 1997-19 - 00001059HRA RESOLUTION NO. 19 - 1997
A RESOLUTION ESTABLISHING A POLICY FOR THE
SUBORDINATION OF HOUSING LOANS OF THE HOUSING
AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY
OF FRIDLEY; PROVIDING FOR THE DELEGATION OF
CERTAIN POWERS AND DUTIES
BE IT RESOLVED by the Board of Commissioners (the "Commissioners") of
the Housing and Redevelopment Authority in and for the City of Fridley,
Minnesota (the "Authority") as follows:
Section 1. Recitals.
1.01.The Authority has previously established, by HRA Resolution Nos.
3-1993, 4-1993, 16-1995, and 8-1996 housing rehabilitation programs
which, among other things, provided for the making of loans funded by
the Authority (collectively the "Loan Program") in the City of Fridley.
1.02.It has been proposed that the Authority now adopt a policy
regarding the subordination of its loans in the Loan Program.
Section 2. Findings.
2.01.The Authority hereby finds that the Loan Program promotes the
purposes of the Authority as those purposes are defined in Minnesota
Statutes, Section 469.001, et. seq. (the "Act").
2.02.The Authority hereby finds that the Loan Program assists in the
preservation, maintenance, and provision of adequate housing stock;
that accomplishing this is a public purpose in that there are many
residences in the City which require rehabilitation.
2.03.The Authority hereby finds that participants in the Loan Program
may have a need to refinance debt which is secured by a mortgage
superior to the Authority's mortgage.
Section 3. Adoption of Policy.
3.01.The Authority hereby approves and adopts the Subordination Policy
as described on Schedule A attached to this Resolution (the
"Subordination Policy").
Section 4. Delegation of Powers and Duties.
4.1. The Executive Director or the Chairman of the Authority are hereby
authorized to approve the subordination of any Authority debt in
accordance with the Subordination Policy and to execute any documents
necessary to implement the Subordination Policy.
Page 2-- HRA Resolution No. 19 - 1997
PASSED AND ADOPTED BY THE HOUSING & REDEVELOPMENT AUTHORITY OF THE
CITY OF FRIDLEY THIS 13TH DAY OF NOVEMBER, 1997.
LAWRENCE R. COMMERS - CHAIRMAN
ATTEST:
WILLIAM W. BURNS - EXECUTIVE DIRECTOR
Page 3-- HRA Resolution No. 19 - 1997
SCHEDULE A
SUBORDINATION POLICY
Introduction
The following policy covers all loans issued by the Authority through
its housing rehabilitation program, including:
1. Single Family Revolving Loan Program
2. 2. Single Family Last Resort Program
3. Multiple Family Last Resort Program
4. Hyde Park Matching Deferred Loan Program (Single Family)
5. Hyde Park Matching Deferred Loan Program (Multiple Family)
6. Hyde Park Last Resort Loan Program (Single Family)
7. Hyde Park Last Resort Program (Multiple Family)
8. Home Mortgage Assistance Program
9. Home Improvement "Gap" Loans
Loan Subordination Recruirements
The Authority will subordinate its secured debt under the following
conditions:
1. The borrower is current on their loan payments to the Authority.
2. The borrower has not filed for bankruptcy subsequent to receipt of
the Authority's loan.
3. No other liens or encumbrances have been filed against the
property.
4. Subordination only to a first mortgage.
5. The borrower is only using the loan proceeds to pay for closing
costs or other expenses incidental to the transaction. The
Authority will not subordinate if the borrower receives "cash out"
of the transaction.
6. The combined loan-to-value ratio of the new first mortgage and the
Authority's debt shall not exceed 1000 of the "after improved"
market value of the property.
7. To determine market value, the borrower must either furnish a copy
of a new lender appraisal or pay for separate appraisal conducted
by a licensed real estate appraiser.