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home purchase. The homeowners previously refinanced the purchase of the replacement <br />home, thereby necessitating the preparation and approval of a subordination agreement. The <br />new subordination agreements will place the County's deed of trust in a "third" lien position <br />behind the homeowners' first mortgage and the equity line of credit. The County Attorney and <br />the attorney for the homeowners have collaborated to prepare and compile the accompanying <br />documents far the Board's review and approval, <br />FINANCIAL IMPACT: The County will experience no direct financial impact as a result of this <br />action. <br />Because the County is the "grantee' for the HMGP, SARF, and related grant funding programs, <br />the County is a party to the subordination agreement, If the homeowners were to sell their <br />replacement home before they have lived there ten years, they would repay to Orange County <br />all or some portion of the SARF funds, which might in turn then need to be repaid to the original <br />grantor, If the property were foreclosed, and there were insufficient sale proceeds to pay off the <br />first and second mortgages as well as any outstanding portion of the SARF loan (the $17,070 <br />loan is proportionally forgiven between years 6 through 10 that the homeowners maintain <br />ownership of it), the County could conceivably be approached by the original grantor to satisfy <br />any unforgiven portion of the SARF loan, <br />Based on the attached subordination agreements that are the subject of this agenda item, the <br />first and second mortgages total $197,000 and $30,000 respectively. Combined with the SARF <br />loan balance of $17,070, the liens against the property total $244,070. The State Employees <br />Credit Union, which has offered the prospective equity line of credit to the homeowners, has <br />estimated the value of the property at $255,827. <br />RECOMMENDATION(S): The Manager recommends that the Board approve the <br />subordination agreements in substantially the attached form, subject to final review by staff and <br />the County Attorney, and authorize the Chair to sign them, <br />