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2.This Deed of Trust and Promissory Note shall constitute a lien on the <br />Properties, subordinate only to the Declaration of Restrictive Covenants <br />described in Section VI, Affordability Requirements of this Agreement, <br />the form of which is provided in Exhibit C and any lien as provided in <br />subsection 3 below. <br /> <br />3.At the time of closing of the sale of each of the dwelling units to a <br />homebuyer, the homebuyer shall receive HOME funds as second <br />mortgage assistance which shall be documented by a Promissory Note <br />from the homebuyer to the County, which shall be secured by a Deed of <br />Trust on the Properties naming the County as beneficiary. The County <br />agrees to subordinate its Deed of Trust lien to a lien securing private <br />permanent financing acquired by the homebuyer. <br /> <br />4.The amount of second mortgage assistance provided to each homebuyer <br />shall be determined using the Orange County Homebuyer Underwriting <br />Standards, in accordance with 24 CFR 92.250(b). The underwriting, <br />subsidy layering, and refinancing guidelines in the Homebuyer <br />Underwriting Standards are incorporated below. <br /> <br />Housing Debt (Front-End Ratio) <br />The County has established a maximum front-end ratio of 30 percent, <br />meaning the maximum ratio of principal, interest, taxes, and <br />insurance (PITI) to gross monthly income cannot be more than 30 <br />percent, to ensure housing costs are affordable to the homebuyer. <br />HOA dues and ground lease fees will also be included in calculating <br />PITI. <br /> <br />The County recommends a minimum front-end ratio of 20 percent to <br />ensure the household is only receiving enough HOME assistance to <br />complete the transaction and is not over-subsidized. Lower front-end <br />ratios may be considered, depending on the buyer’s circumstances, on <br />a case-by-case basis. <br /> <br />Total Debt (Back-End Ratio) <br />The maximum back-end ratio is 43 percent, meaning that long-term <br />debt (six months or longer) plus PITI cannot exceed 43 percent of <br />gross monthly income. Exceptions to this standard may be requested <br />if student loans cause a homebuyer’s back-end ratio to exceed 43 <br />percent, as long as the ratio does not exceed 50 percent. <br /> <br />Assets <br />HOME Awardees must have a liquid asset policy and establish a <br />method to evaluate liquid assets and the ability of assisted <br />homebuyers to financially contribute to the acquisition of their home. <br />All HOME-assisted homebuyers must contribute a minimum of $250 <br />to the purchase of the home. Exceptions to this standard may be <br />requested if the only source of household income is Supplemental <br />Security Income (SSI) or Social Security Disability Insurance (SSDI). <br />Docusign Envelope ID: 9307EECF-67A0-42F5-A601-DB137FFD8FA3