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<br />6.1G <br />Page 22 <br /> <br />States Department of Housing and Urban Development ("HUD"), which as of the date of <br />this Resale Agreement, is two (2) persons per bedroom, plus one (1) person. <br /> <br />In the event Owner fails to comply with this Section 5 or with Section 4 regarding <br />leasing the Subject Affordable Unit, the City may, at its sole option, declare a def~ult <br />under this Resale Agreement. In addition, Owner shall be liable to the City for the <br />difference between the rent being charged for the Subject Affordable. Unit and the <br />allowable' rent had the Subject Affordable Unit been rented to a person of very low <br />income whose income did not exceed Fifty percent (500/0) of the median income in San <br />Mateo County for a family of two (2). <br /> <br />6. Refinance Restriction: Prohibition on Home Eauity Lines of Credit: Home <br />Eauitv Loan Restrictions. <br /> <br />(a) Refinance Restriction. Owner may not, during the term of this <br />Resale Agreement, refinance the loan(s) used to purchase the Subject Affordable Units <br />(the "Purchase Loan"), without the express written approval of the City, which shall not <br />be unreasonably withheld [the "Refinance Restriction (s)"). The City's decision to <br />approve. or disapprove such refinancing shall be based upon such factors as whether; <br />(i) the replacement loan (the "New Loan") provides a reasonable and tangible net <br />benefit to Owner such as a reduction in the interest rate and monthly mortgage payment <br />(ii) a. reduction in the amortization period, (iii) required due to an order of a court of <br />competent jurisdiction, or (iv) frustrates the City's ability to administer the covenants <br />contained in this Resale Agreement. In no event shall Owner be permitted to refinance <br />into an Ineligible Loan. Any New Loan approved .by the City shall remain subject to this <br />Refinance Restriction for the balance of the term of this Resale Agreement. Any such <br />refinance shall be subject to the terms and conditlons of the City's Subordination Policy, <br />as may be amended from time to time. <br /> <br />Owner acknowledges and agrees that the Refinance Restriction is not an <br />unreasonable restraint on property alienation rights and is necessary in order to ensure <br />that there is sufficient equity maintained in the Subject Affordable Unit to pay-off loan <br />balances in the event of a Transfer, taking into account the Transfer Amount of the <br />Subject Afford'able Unit upon resale as set forth in Section 11. The Refinance <br />Restriction shall not be construed or understood to confer any rights upon any third . <br />parties whatsoever, and exists solely for the benefit of the City to assist the City in the <br />administration of this Resale Agreement. <br /> <br />(b) Prohibition on Home Eauity Line(s) of Credit. Under no <br />circumstances may Owner obtain home equity lines of credit secured by deeds of trust <br />or similar security instruments upon the Subject Affordable Unit (a "Line of Credir), <br />during the term of this Resale Agreement. Owner understands and agrees that the <br />prohibition against Lines of Credit is not an. unreasonable restraint on property <br />alienation rights and is necessary in order to ensure that sufficient equity is maintained <br />in the Subject Affordable Unit to pay-off the existing loan balances in the event of a <br /> <br />REDW\OO01\DOC\023-2.DOC <br />11/24/08 730 HvT <br /> <br />5 <br />