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1 <br /> ' ORANGE COUNTY <br /> BOARD OF COMMISSIONERS <br /> Action Agenda <br /> Item No. <br /> ACTION AGENDA ITEM ABSTRACT <br /> Meeting Date: April 20, 1999 <br /> SUBJECT: CDBG Program-Loan Subordination <br /> DEPARTMENT: Housing/Community Development PUBLIC HEARING: (Y/1) <br /> ATTACHMENT(S): INFORMATION CONTACT: <br /> Subordination Agreement Tara L. Fikes <br /> TELEPHONE NUMBERS: --ext. 2490 <br /> Hillsborough 732-8181 <br /> Chapel Hill 9684501 <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 are 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 similar 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 />