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78 Page 21 States Department of Housing and Urban Development ("HUD"), which as of the date of this Resale Agreement, is two (2) persons per bedroom, plus one (1) person. In the event Owner fails to comply with this Section 5 or with Section 4 regarding leasing the Subject Affordable Unit, the City may, at its sole option, declare a default under this Resale Agreement. In addition, Owner shall be liable to the City for the difference between the rent being charged for the Subject Affordable Unit and the allowable rent had the Subject Affordable Unit been rented to a person of very low income whose income did not exceed Fifty percent (500/0) of the median income in San Mateo County for a family of two (2). 6. Refinance Restriction: Prohibition on Home Eauitv Lines of Credit: Home Eauity Loan Restrictions. (a) Refinance Restriction. .' ,;;'" . er may not, during the term of this Resale Agreement, refinance the loan(s) u' purchas~)".the Subject Affordable Units (the "Purchase Loan"), without the express '" ,J1 app ,1"." of the City, which shalf not be unreasonably withheld [the "Refinance R'~~!\'" . . rl The City's decision to approve or disapprove such refinancing shall be . pon such factors as whether; (i) the replacement loan (the "New Loan") provid '. . reasonable and tangible net benefit to Owner such as a reduction in the interest rat' "l~,-:-:,..monthly mortgage payment (ii) a reduction in the amortization period, (Ui) required dq"lJilo an order of a court of competent jurisdiction, or (iv) frustrates the City's ability td';-administer the covenants contained in this Resale Agreement. In no event shall Owner be permitted to refinance into an Ineligible Loan. Any New Loan approved by the City shall remain subject to this Refinance Restriction for the balance of the term of this Resale Agreement. Any such refinance shall be subject to the terms and conditions of the City's Subordination Policy, as may be amended from time to time. i:;j~lf~:I::m.i:lPknOWledges and agrees that the Refinance Restriction is not an ~:Ca~~s::~',,~o~~~:~~a~~~h~~~bj~~ i~~e,:::~~n~ o:~a~~~f~~ balance~0~f;l the event O. ~. Transfer, taking into account the Transfer Amount of the Subject AffQrdable Unit .~tip'on resale as set forth in Section 11. The Refinance t;.'-"":'.~,-.. :.,,,,,,\ .,. Restriction SIIHl",not be . : strued or understood to confer any rights upon any third parties whats6e~?. al)" , sts solely for the benefit of the City to assist the City in the administration oftFlI@.L;"E:." ale Agreement. (b) Prohibition on Home Eauitv Line(s) of Credit. Under no circumstances may Owner obtain home equity lines of credit secured by deeds of trust or similar security instruments upon the Subject Affordable Unit (a "Line of Credit"), during the term of this Resale Agreement. Owner understands and agrees that the prohibition against Lines of Credit is not an unreasonable restraint on property alienation rights and is necessary in order to ensure that sufficient equity is maintained in the Subject Affordable Unit to pay-off the existing loan balances in the event of a REDW\OOO1\DOC\023-2.DOC 11/24108 730 HvT 5