Agenda - 09-09-2008- 1 - Laserfiche WebLink

Browse Search

In the Basic Model, the financial assistance provided by the County is structured as a deferred loan for the full period of the loan or 99 years. In most cases the County loan is in a second position, subordinate to the first mortgagor. It is acknowledged that a second lien position is "frail", however, it often necessary to enable project developers to obtain other sources of funding. The loan documents include a Declaration of Restrictive Covenants, Deed of Trust and Promissory Note. (For projects that receive financial assistance in the form of a grant, only the Development Agreement and Restrictive Covenants are applicable. These documents have been drafted and "tweaked" a few times over the last few years by the County Attorney and Housing/Community Development Director as the number of affordable housing projects have increased and the type of projects have become more diversified. As information for the Board, the following outlines important details regarding these documents. Default Provisions The following default provisions are contained in the Deed of Trust. a. the failure to make when due any payment, whether of principal or interest under the Note; b. the failure to make any other payment to Lender required by the Loan Documents within ten (70) days after notice from Lender directing Borrower to make the paymenf, but in any event before the same is past due; c. any covenant, represenfatlon, warranty made by Borrower or material Information supplied to fhe Lender proves to be materially false or misfeading when made or given; the transfer of all or part of the Premises (including a beneficial interest) without Lender's prior written consent; d. the death, dissolution, merger, consolidation or termination of existence of Borrower or any guarantor hereof or the transfer of any beneficial interest In Borrower without Lender's prior written consent (if Borrower is a married couple, the death of Borrower means the death of the survivor of the married couple); e. the application for the appointment of a receiver for Borrower or any guarantor, or the Kling of a petition under any provisions of the Bankruptcy Code or Act by Borrower or any guarantor, or the filing of a petition under any provisions of the Bankruptcy Code or Act against Borrower or guarantor which is not dismissed within 30 days; or the Kling of an answer in an involuntary proceeding admitting insolvency or inability fo pay debts; or any assignment for the benefit of creditors by or against Borrower or any guarantor; or the attachment, execution or other judicial seizure of any portion of Borrower`s or any guarantor's assets which is not discharged within ten (70) days; or f. the failure of any Borrower to perform any other non-monetary obligation or condition of the Loan Documents within 30 days after notice from Lender, provided that if such default cannot reasonably be cured within 30 days, it shall not constitute an Event of Default as long as Borrower is diligently pursuing such cure unless it is not cured within 180 days after the original notice of default from Lender. Upon any Event of Default, the entire principal sum evidenced by the Note and accrued but unpaid interest hereon may, at the sole option of Lender, be declared at once due and payable, time being of the essence of this obligation. Failure of Lender fo exercise Phis option in the event of any Event of Default shall not constitute a waiver of the right of Lender fo exercise the same in the event of a subsequent Event of Default.