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<br />6.11 <br />Page 14 <br /> <br />REDWOOD CITY <br /> <br /> <br />.f'~'\ <br />\~) <br /> <br />..~ HUM,"" c; <br /> <br />Housing Loan <br />Subordination Policy <br /> <br />OBJECTIVE: To provide administrative guidance on processing requests for <br />subordination of City/Agency loans <br /> <br />PURPOSE: In consideration that the City of Redwood City and <br />Redevelopment Agency collectively owns several million dollars In second <br />mortgages on real property, and further that the Interest rates are at an all <br />time low and generating refinancings to approximately 75% of the City and <br />Agency's loan portfolio, this Subordination Policy Is Intended to standardize <br />the manner In which Subordination Requests are submitted and approved <br />by the City/Agency. <br /> <br />POLICY: <br /> <br />A. <br /> <br />The purpose of the City/Agency's loan shaU always accomplish a public <br />benefit purpose and in no way shall subordinate to cash out in order to <br />payoff consumer credit debt not related to affordable housing costs. <br /> <br />\ <br /> <br />Subordination of the City of Redwood City/Agency's loan in favor of a <br />new loan in the amount of the current balance of the original senior loan <br />plus the costs of refinancing ~acceptable as long as: <br /> <br />1. appraisals accepted by the City and or Agency indicate the loan to <br />value ratio standards are not exceeded, and <br /> <br />2. the purpose of the refinance Is to lessen the borrower's monthly <br />financial obligations for housing costs. <br /> <br />B. No subordination will be approved which provides: <br /> <br />. Cash or equity being taken from the property (unless the cash is being <br />used to remediate code violations at the property, or other extenuating <br />circumstances as determined by the Home Improvement Loan~ <br />Committee for investor owner loans), or - <br />- <br />1 1- ...... <br />n. ~n."-IiNIT' <br />