Agenda - 05-06-1998 - 8i - Laserfiche WebLink

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i ~~ ORANGE COUNTY BOARD OF COMMISSIONERS Action Agenda Item No. S- i ACTION AGENDA ITEM ABSTRACT Meeting Date: May 6, 1998 SUBJECT: HOME Program -Subordination Agreement DEPARTMENT: Housing and Community Development PUBLIC HEARING: (Y/N) ;'v BUDGET AMENDMENT: (Y/N) >~.,« ATTACHMENT(S): INFORMATION CONTACT: Subordination Agreement Tara L. Fikes TELEPHONE NUMBERS: - -eat. 2490 Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 PURPOSE: To approve the execution of a Loan Subordination Agreement under the HOME Program. BACKGROUND: The 1992 HOME Program provided funding for a second mortgage program which enabled eligible first-time homebuyers in the County to purchase existing townhouses and condominiums. The amount of the second mortgages ranged from $12,000 to $15,000 and are secured by a Deed of Trust. Presently, a homebuyer who received a second mortgage in the amount of $15,000 wants to refinance the principal amount of the first mortgage, which has a current interest rate of 9.375% for thirty years, for a better rate at 7.75% for fifteen years. A review of the transaction reveals that no money will be taken out of the deal by the homebuyer, although the principal amount of the loan will be $2,500 more than is owing on the present loan refinanced. The County is being asked to subordinate its second mortgage interest to the new mortgage. In order to facilitate this refinancing, a Subordination Agreement must be executed by the Chair of the Board of County Commissioners. The County's lien position will not be materially changed after the proposed refinancing. The lower interest rate and shorter repayment period should benefit the homeowner and strengthen the County's security interest in the property. The County Attorney has reviewed and approved the Subordination Agreement. RECOMMENDATION(S): The Manager recommends authorizing the Chair of the Board to execute the Loan Subordination Agreement.