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ORANGE COUNTY <br />BOARD OF COMMISSIONERS <br />Action Agenda <br />Item No. ~_ <br />ACTION AGENDA ITEM ABSTRACT <br />Meeting Date: Apri120, 1999 <br />SUBJECT: CDBG Program -Loan Subordination <br />DEPARTMENT: Housing/Community Development <br />PUBLIC HEARING: (Y/l~ <br />ATTACHMENT(S): <br />Subordination Agreement <br />INFORMATION CONTACT: <br />Taza L. Fikes <br />TELEPHONE NUMBERS: - - ezt. 2490 <br />Hillsborough 732-8181 <br />Chapel Hill 968-4501 <br />Durham 688-7331 <br />Mebane 227-2031 <br />PURPOSE: _- <br />To approve the execution of a Loan Subordination Agreement under the CDBG Program. <br />BACKGROUND: <br />The 1993 CDBG Program provided funding for a second mortgage program which enabled eligible <br />first-time homebuyers in the County to purchase houses in the Magnolia Place subdivision.. The <br />amount of the second mortgages was $12,500 and aze secured by a Deed of Trust. <br />Presently, a homebuyer who received a second mortgage in the amount of $12,500 wants to <br />refinance the principal amount of the first mortgage to obtain a better interest rate. of 5.250% <br />initially for an adjustable rate mortgage. A review of the transaction reveals that no money will be <br />taken out of the deal by the homebuyer. The County is being asked to subordinate its second <br />mortgage interest to the new mortgage. In order to facilitate this refinancing, a Subordination <br />Agreement must be executed by the Chair of the Board of County Commissioners. The County's <br />lien position will not be materially changed after the proposed refinancing. The lower interest rate <br />should benefit the homeowner and strengthen the County's security interest in the property. <br />The County Attorney has reviewed and approved the Subordination Agreement. <br />The Board of County Commissioners has approved similaz subordination requests in the past year. <br />Many first-time homebuyers, like all homeowners, have sought to reduce the interest rate on their <br />home mortgages during this current period of low mortgage interest rates. <br />FINANCIAL IMPACT: <br />None <br />RECOMMENDATON(S): <br />The Manager recommends authorizing the Manager and the County Attorney to execute the Loan <br />Subordination Agreement. <br />