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AG 09-209 - WA STATE HOUSING FINANCE COMMISSIONRETURN TO: EXT: CITY OF FBDERAL WAY LAW DEPARTMENT ROUTING FORM 1. ORIGINATING DEPT./DIV: (�.0 — 2. ORIGINATING STAFF PERSON: EXT:��_ 3. DATE REQ. BY: 4. TYPE OF DOCUMENT (CHECK ONE): ❑ CONTRACTOR SELECTION DOCUMENT (E. Cz, RFB, RFP, RFQ) ❑ PUBLIC WORKS CONTRACT ❑ SMALL ORLIlVIITED PUBLIC WORKS CONTRACT ❑ PROFESSIONAL SERVICE AGREEMENT ❑ MAINTENANCE AGREEMENT � GOODS AND SERVICE AGREEMENT � HUMAN SERVICES / CDBG ❑ REAL ESTATE DOCiJMENT ❑ SECURITY DOCUMENT (E.c. sorm x�i,az�n nocu�taz's) ❑ ORDINANCE �?/ /� ❑ RESOLUTION �ONTRACTAMENDMENT(AG#): b� � 7 ❑ INTERLOCAL �� OTHER 5. PROJECTNAME: 6. NAME OF CONTRACTOR: ADDRESS: E-MAIL: SIGNATURE NAME: si� � �cv�a�t �e TELEPHONE FAX: T'ITLE 7. EXEIIBITS AND ATTACHIVIENTS: ❑ scorE WORK OR SERVICES ❑ COMPENSATION ❑ INSURANCE REQUIREMENTS/CERTIFICATE � OTHER REFERENCED EXHIBITS ❑ PROOF OF AiJTHORITY TO SIGN ❑ REQUIRED LICENSES OR CONTRACT/AMENDMENTS 8.' TERM: COMIVIENCEMENT DATE: COMPLETION DATE: � 9. TOTAL COMPENSATION $ `�'r � S � (O � O (INCLUDE EXPENSES AND SALES TAX, IF ANY� (IF CALCULATED ON HOURLY LABOR CHARG - ATTACf3 SCHEDULES OF EMPLOYEES TITLES AND FIOLIDAY RATES) REIlVIBURSABLE EXPENSE: � YES ❑ NO IF YES, MAXIMUM DOLI;AR AMOUNT: $ __ IS SALES TAX OWED ❑ YES ❑ NO IF YES, $ ❑ PURCHASING: PLEASE CHARGE TO: I I�1— / h( ) U`" 7�7 U� 10. DOCUMENT/CONTRACT REVIEW < ❑ PROJECT MANAGER ❑ DIRECTOR O RISK MANAGEMENT (IF APPLICABLE) a LAw il. COUNCILAPPROVAL(iF.�rr�c.�s�) INIT / TE REVIE ED D 27 ro �:'c'" G° //'1s''' COMMITTEE APPROVAL DATE: PAID BY: � CONTRACTOR ❑ CITY .�► / �-y � I1�iITIAL / DATE APPROVED a�,'��lj COUNCIL APPROVAL DATE: 12. CONTRACT SIGNATURE ROUTING �1 SENT TO VENDOR/CONTRACTOR DATE SENT: 5����f� ( C� DATE REC'D: � � �❑ ATTACH: SIGNATURE AUTHORITY, INSURANCE CERTIFICATE, LICENSES, EX�IIBITS �,AW DEPAR ❑ SIGNATORY C � OR DIRECTOR� ❑ CITY CLERK ❑ ASSIGNED AG# ❑ SIGNED COPY RETURNED COM1�fENTS: � INTTIAL / DATE SIGNED S/ . �h 1�•., -s Ifs �U l� AG# (� -� DATE SENT: �r,�►►;� , ,tm�r.���_ � _ . . �- . , �. ., ,. � , -, � , ;,w��r;�r,,ms.: . , _ . _ ' � �� .ri�. ;. + .1 _.«,�,. �r%71� l.� . , �. � . �Ei� ��' L'ET'Y Fit+l 3 �x25 St;� AY� �i� �outh • �Cf �v< �y'%1 S S��.ara Ys�� v1!� l0�>�33-�3 s'`: a a�;•<��2•��' . �. ,� '2r_ ( tL J3 �•-n: ?.+�t� ii�i5^rY: ��:%?fioit3; AMENDMENT NO. 2 TO AGREEMENT REGARDING DOWNPAYMENT ASSISTANCE HOUSE KEY FEDERAL WAY PROGRAM This Amendment ("Amendment No. 2") is made between the City of Federal Way, a Washington municipal corporation ("City"), and the Washington State Housing Finance Commission, a body corporate and politic and an instrumentality of the State�of Washington ("Commission"). The City and Commission (together "Parties"), for valuable consideration and by mutual consent of the parties, agree to amend the original Agreement Reqarding Downpayment Assistance House Key Federal Way Program ("Agreement") dated effective October 29, 2009, as follows: 1. AMENDED DETERMINATION OF CITY LOAN AMOUNT. Section 7.5 of the Agreement is amended to read as follows: 7.5 Determination of City Loan Amount On an annual basis, Commission and City staff will meet and decide if any adjustments are needed to the maximum NSP loan amounts described in this Subsection for each Eligible Homebuyer's Second Mortgage loan amount to be made in the coming year. For each Second Mortgage, the NSP loan funds will be as follows: Maximum NSP funds shall not exceed HUD N5P program limits, per qualified first-time homebuyer at or below 120% Area Median Income, adjusted for household size, or the House Key First Mortgage Limits, adjusted for household size, whichever is the most restrictive, for one hundred percent (1000) of available funds. For Eligible Households that qualify for City funds, up to $30,000 will be funded from City NSP funds. This limit shall be increased to up to $50,000 at any time, for any percentage of Eligible Households, by prior written authorization from City 5taff. $10,000 will be available from the Commission based on a need as determined by the Mortgage Subsidy Worksheet. The City funds and Commission funds, never to exceed $50,000 in City funds and $10,000 in Commission funds. 2. REVISED EXHIBIT A . Exhibit A has been revised to expand the qualified areas of Federal Way to include all areas with in the City Limits. See attached. 3. GENERAL PROVISIONS All other terms and provisions of the Agreement, together with any prior amendments thereto, not modified by this Amendment, shall remain in full force and effect. Any and all acts done by either Party consistent with the authority of the Aqreement, together with any AMENDMENT - 1 - 2/2010 �@?� �t� �F[{1Yi',J.'ili}, . � . � � s �:>�:,�, �ETY H�,1_;. � ix2� 8t� A�r���« �fl�th • �Cf ;a< �718 FBL�ra �15 'v,�� 5o�3b3-97 ': $ fiv�) �3y�-s�t� �rri^iY:uii'':?if ".t?; prior amendments thereto, after the previous expiration date and prior to the effective date of this Amendment, is hereby ratified as having been performed under the Agreement, as modified by any prior amendments, as it existed prior to this Amendment. The parties whose names appear below swear under penalty of perjury that they are authorized to enter into this Amendment, which is binding on the parties of this contract. IN WITNESS, the Parties execute this Agreement below, effective the last date written below. WASHINGTON STATE �3 FINANCE CONIlI�ISSION � : � Executive Director DATE: ,�' � �f,�0 IN WITNESS, the Parties execute this Agreement below, effective the last date written below. CITY OF FEDERAL WAY By: ^-� Brian son, City Manager/Police Chief DATE: s'���i���d AMENDMENT - 2 - 2/2010 Exhibit A ��r� a�� . �� ..... 14 - SPECIAL PROGRAMS �� ��°�� �� HOUSE KEY FEDERAL WAY DOWNPAYMENT ASSISTANCE PROGRAM PROGRAM DESCRIPTION House Key Federal Way is a down payment assistance program offered with House Key loan products. House Key Federal Way was created from a partnership between the Commission and Federal Way. Because Neighborhood Stabilization (NSP) / CDBG Investment Partnership Program funds axe being used in this program, Mortgage Lenders are encouraged to target outreach to residents and tenants of public housing, trailer parks, and manufactured housing, and to other families assisted by public housing agencies, for the purpose of ensuring that program funds are used for downpayment assistance for such residents, tenants and families. PROGRAM ELIGIBILITY First Mortgage must be a 30 year fixed, Fannie Mae MyCommunityMortgage, Freddie Mac Home Possible, FHA 203(b), 203 (k) Streamline, 234 (c) House Key Loan. 2. The Borrower must not have owned a home at any time in the three years preceding the closing of the Second Mortgage. 3. The Borrower's income must not exceed the House Key Federal Way requirements (see Income Limits in this Section). 4. The Borrower must demonstrate a need for assistance (see Calculating House Key Federal Way Loan Amount in this Section). The downpayment assistance may not exceed twenty percent (20%) of the total purchase price of the property. This calculation includes subsidizing interest rate (points), mortgage insurance, and closing costs. 6. The property must be located in the City of Federal Way per NSP guidelines (see map in Eligible Areas in this section). Note: This is a revision from previous program parameters. 7. The property must be Foreclosed, Bank-Owned, 90+ day Delinquent or abandoned property per NSP guidelines. (11/30/09) 14HKFEDERALWAY.1 Exhibit A 8. The property must be discounted by at least 1% from the value established by an appraisal that has been completed within 60 days of the final offer and meet the URA appraisal definition along with 49 CFR 24.103 9(a)(2) standard appraisal requirements. 9. Prior to closing the loan, the Borrower must complete 3 hours of one-on-one pre- purchase counseling, in addition to the Commission's required, 5 hour homebuyer education seminar. Please see below for a complete list of housing counselors to schedule an appointment. The City of Federal Way will be paying for the required one- on-one counseling fee to agencies that cha.rge a fee for this service. A certificate of completion will be provided by the housing counseling prior to closing. Service Providers for House Kev Federal Wav: • Preferred — No Charge to Borrower: Home Sight Seattle (206) 760- 4244 Please contact Nicole to schedule an appointment with Pat Montgomery for a counseling session • Urban League of Metropolitan Seattle 800-368-1455 (Devin Stubblefield or Linda Taylor) • Parkview Services 206-529-4114 (Marnie Claywell or Marc Cote) • International District Housing Alliance 206-957-1316 (Joyce Saldanha) 10. The Seller must sign the "Disclosure of HOME Program Requirements" 14FEDERALWAY.10.1 (NOTE: See House Key Federal Way "Program Forms" at the end of this Section for all Program forms. 1 l. The Seller must sign the "Estimated Fair Market Value" Notice 14FEDERALWAY.10.2. 12. The Seller will sign a copy of the "NSP Voluntary Acquisition of Foreclosed Property — Eminent Domain" Notice to Owner that includes a statement that the property will not be acquired through the jurisdiction's powers of eminent domain and statement acknowledging the Owner's right to not sell the property 14FEDERALWAY.10.7. 13. The property must comply with the U. S. Department of Housing and Urban Development's (H[TD) Lead Paint Safety Requirements and HUD Housing Quality Standards. (See Property in this Section for additional information.) 14. The property must comply with H[JD's requirements for properties located within an FAA-designated civilian airport Runway Clear Zone or a Runway Protection Zone, or within the military Airfield Clear Zone or Accident Potential Zone/Approach Protection Zone, based upon information from the airport or military airfield administrator identifying the boundaries of such zones. (See Property in this Section for additional information.) (03/24/ 10) 14HKFEDERALWAY.2 Exhibit A MORTGAGE DETAILS Interest Rate - 0% interest, payment deferred for 15 years Loan Term - 15 years Ma�mum Program Loan Amount - $30,000 Minimum Program Loan Amount - $1,000 Repayment — Due at the time of sale, tra.nsfer, refinance within first 15 yeazs. Loan is forgiven in full at end of 15 year affordability period. Loan payoff is not pro-rated prior to 15 year period. Assumptions - House Key Federal Way loans are NOT assumable CALCULATING HOIISE KEY FEDERAL WAYLOANAMOUNT The House Key Federal Way Second Mortgage loan amount is the lesser of A) Amount of need as established by the Mortgage Subsidy Worksheet calculated by the underwriter; or B) $30,000 for families at or below the House Key first mortgage income limits for King County. On the Mortgage Subsidy Worl�sheet, if the borrower's front-end ratio (PITI/Income) is less than 25% based on household compliance income, the underwriter will decrease amount of subsidy to bring up the front-end ratio to acceptable assistance base levels for gap financing. If the borrower fails to meet the ratio test, then the underwriter can proceed using the House Key Plus Needs Assessment Form (15.30.1-2). The underwriter will calculate the House Key Federal Way Second Mortgage Subsidy Worksheet located in the Forms section of this Program Manual at underwriting approval to determine the exact amount of funds needed, 14HKFEDERALWAY.10.3.1-2. The forms should be completed using a current VOD or bank statements and should be adjusted as the borrower's situation changes. The underwriter determines the amount of cash required by the Borrower to close the transaction. Stocks, bonds, IRA's, 401(k)s, mutual funds, life insurance policies and annuities are not included in the calculation. The Borrower(s) may keep but is not required to have $5,000 or three month's payment for Principal, Interest, T�es and Insurance (PITI) in reserves left after closing. Subtract the proposed reserve amount from the total amount of verified assets available at underwriting approval. If the amount is less than or equal to 0 enter "0" on the appropriate form. House Key Federal Way funds are to be used for down payment, closing costs, and pre-paids. • House Key Federal Way funds cannot be used to buy either the first or second mortgage down. (03/24/10) 14HKFEDERALWAY.3 Exhibit A House Key Federal Way funds cannot be used to pay off bills or liens of the Borrower. If the Borrower is required by underwriting to pay off these items, these items must be satisfied prior to closing and verification of the Borrower's funds for the Subsidy Worksheet form should be determined after the funds have cleared the Borrower's accounts. House Key Federal Way funds cannot be used to replenish the Borrower's bank account if they do not have reserves in the bank after closing. • House Key Federal Way funds cannot be used to pay for repairs to the property. Furthermore, if the Borrower chooses to pay for repairs from their own funds, escrow holdbacks must be for an exact bid from contractor. In order to avoid cash back, escrow cannot over collect Borrower funds (i.e., 1'h times). Please refer to Page 2.5 (Escrow Holdbacks) and Page 4.2 (Acquisition Cost) of the House Key Manual. In order to avoid cash back issues at closing, the Mortgage Lender should re-calculate the need after receiving an estimated HCTD 1 closing statement from the Escrow Company. Adjustments should be made to the loan amount if necessary prior to releasing loan documents. If in doubt, it is always a good idea to reduce the loan amount slightly than risk the chance of the borrower receiving cash back. COMBINED LOAN TO VALUE (CLTT� FHA, FHA 203(k) Streamline — Cannot exceed 100% of FHA's Acquisition Cost. FHA's Acquisition Cost does not include 2" mortgage fees. MyCommunityMortgage — CLTV of 103%. Freddie Mac Home Possible — TLTV of 103% BORROWER'S CASH TO CLOSE The Borrower's minimum downpayment requirement is 1% of the purchase price or $1000, whichever is greater. Up to '/Z of the 1% can be from gift funds. BUYDOWNS Buydowns are not allowed for House Key Federal Way. Furthermore, if the Borrower's first mortgage is an FHA or MyCommunityMortgage temporary buydown, the buydown cannot be paid by Borrower's assets and must be paid for by Seller or Mortgage Lender with documentation in file. First mortgage temporary buydown funds paid by Seller or Mortgage Lender are not included in the needs assessment. (03/24/ 10) 14HKFEDERALWAY.4 Exhibit A CASH BACK In no event will House Key Federal Way funds result in cash back to the Borrower. Please refer to Page 13.3 of House Key Manual for further information. CALCULATING INCOME The calculation used by underwriters to determine compliance income for the House Key Federal Way Second Mortgage is the same as the calculation used to determine compliance income for the House Key first mortgage as shown in Section 3 of the House Key Manual. Please contact the Commission if you need assistance calculating compliance income. After the applicant's income for the Second Mortgage has been calculated, refer to the Maximum Income Limits chart in this Section to determine if the applicant is at or below the income limits. MAXIMUM INCOME LIMITS Households may qualify for a maximum loan amount of up to $30,000. To be eligible for the program, an applicant's Annualized Crross Household Income (as of the date of signing the purchase agreement or as of the date of purchase in the case of an e�sting home) must not exceed House Key First mortgage income limits: 1-2 persons 3+ Persons $90,000 $97,000 PROPERTY Property Cost Limit May NOT exceed the acquisition cost for the House Key first mortgage program guidelines. Lead-Based Paint and Housing Quality Standards Mortgage Lenders must provide a copy of HLTD's "Lead Paint Safet�' Field Guide (6/1999) (HUD #1779-LHC) to appraisers and instruct them to specifically address the condition of the paint and note any areas of deterioration. Mortgage Lenders are also required to have the appraiser complete HUD's Housing Choice Voucher Program Inspection Checklist form HUD- 52580-A (9/00) to ensure the property meets HCTD's Housing Quality Standards. If the appraiser identifies areas of deteriorated paint, the Mortgage Lender must provide a written letter to the Seller, notifying them that the paint deterioration must be corrected in a lead paint-safe manner. Once the paint condition has been corrected, the appraiser must re-certify the painted surfaces of the home. (03/24/10) 14HKFEDERALWAY.S Exhibit A Property Occupancy Properties that are currently occupied by a tenant, other than the House Key Federal Way Borrower, are NOT eligible properties. The Seller must sign the "Disclosure of HOME Program Requ�rements" form 14FEDERALWAY.10.1 stating that the property is not tenant occupied. (other than by the Program borrower) and that no displacement of an individual(s) has occurred or shall occur. Seller Notices Because federal funds are used in House Key Federal Way, the Seller must be informed that 1) the Bonower does not have the power of eminent domain or condemnation to use to acquire the property if negotiations between the Seller and the Borrower fail to result in an amicable agreement and 2) prior to the closing of the sale, the Mortgage Lender must provide the Seller with a written estimate of the fair market value of the property. The "Disclosure of HOME Program Requirements" form 14FEDERALWAY.10.1 is used to provide notice to the Seller of these requirements. Once the Mortgage Lender has the appraised value and before the loan closes, the Seller must be notified using the "Estimated Fair Market Value Notice" form 14FEDERALWAY.10.2 and the "NSP Voluntary Acquisition of Foreclosed Property — Eminent Domain" form 14FEDERALWAY.10.7. If the estimated fair market value of the property is in excess of the contract price, the Seller may withdraw from the selling agreement. Property Located Around Civil Airports and Military Airfields Because federal funds from the HOME Program are used in the House Key Federal Way Downpayment Assistance Program, Borrowers purchasing properties located around civil airports and military airfields must be notified of potential circumstances. If the property being acquired is located within 3,000 feet of a civil airport or 2 and'h half miles of a military airfield and within an FAA-designated civilian airport Runway Clear Zone or a Runway Protection Zone, or within the military Airfield Clear Zone or Accident Potential Zone/Approach Protection Zone, the Buyer Notification Form (#14HKFEDERALWAY.10.4) must be used to provide the required Borrower notification required by HLTD. INSURANCE REQUIREMENTS Hazard Insurance. Hazard insurance is required sufficient to cover both the first and second mortgages, or the maximum insurable value of the property whichever is less. The policy must contain a guazanteed replacement cost endorsement. Binder must indicate the first loan be payable to Bank of America, N.A. using the standard Mortgagee clause as written as shown on Page 2.5. Please refer to Page 2.5 for more information. Binder must indicate the second loan be payable to the Washington State Housing Finance Commission, its successors andlor assigns, c% Bank of America, N.A., P.O. Box 961206, Fort Worth, TX 76161-0291. (03/24/10) 14HKFEDERALWAY.6 Exhibit A Title Insurance Title insurance coverage is required for the first mortgage only. The Second Mortgage appears as a lien of record in second position when the policy is issued. As title insurance is not required for House Key Federal Way the Mortgage Lender is not allowed to charge a title fee on the 2na mortgage. RESERYATIONS Reservations for House Key Federal Way Second Mortgage loans are made at the same time as the House Key first mortgage loan reservation. Funds are reserved on a first-come, first-served basis. Loan originators may reserve the maximum allowable House Key Federal Way funds for their bonower since cash to close cannot be exactly determined at loan reservation. The underwriter will complete the House Key Federal Way Subsidy Worksheet form at underwriting approval to determine the exact amount of funds needed. Increases in the reservation amount are subject to the availability of funds. NOTE: House Key Federal Way Second Mortgage loans may be combined with the Commission's House Key Plus or HomeChoice downpayment assistance funds. However, HomeChoice Program underwriting guidelines may be used for eligible HomeChoice first mort�age borrowers. The Commission's House Key Plus or HomeChoice DPA programs will be in 2" lien position with House Key Federal Way in 3r position. PRE-CLOSING COMPLIANCE REVIEW Documents submitted to the Commission with the Pre-closing Compliance Review file: 1) Original "Disclosure of HOME Program Requirements" (14FEDERALWAY.10.1). 2) Original "Estimated Fair Market Value Notice" (14FEDERALWAY.10.2). 3) Copy of "Subsidy Worksheet (14FEDERALWAY.10.3.1-2). 4) Original "of "Buyer Notification Form (14FEDERALWAY.10.4) 5) Original NSP Voluntary Acquisition of Foreclosed Property - Eminent Domain (14HKFEDERALWAY.10.7) 6) All pages of the property appraisal. 7) Copy of completed HCTD's Housing Choice Voucher Program Inspection Checklist (HUD-52580). CLOSING AND DELIVERING THE LOAN Program Application Fee There is a$40.00 fee for House Key Federal Way loans. This amount will be subtracted from the amount reimbursed to the Mortgage Lender. This fee must be disclosed on the Second Mortgage Truth-in-Lending and the HUD-1 Settlement Statement. (11/30/09) 14HKFEDERALWAY.7 Exhibit A Housing Counseling One-on-one pre-purchase counseling is required in addition to Commission approved Homebuyer Education Seminar. A counseling certificate must be provided in the post-closing package to Commission. Refer to page 14.2 above. Funding and Delivery Participating Mortgage Lenders fund the Second Mortgage at loan closing. The funding and delivery procedures are as follows: 1) House Key Federal Way Second Mortgage notes aze originated under the Commission's name; 2) The Master Servicer will purchase loans with a copy of the Deed of Trust with the original recorded copies to follow. Please indicate marital status of Borrower(s) on House Key Federal Way Deed of Trust. Please see Appendix II (18.2) for Fannie Mae's Catastrophic Language policy for loans at 100.01% to 105% CLTV from the House Key Program Manual. ELIGIBLE AREAS House Key Federal Way is available for properties being purchased in City of Federal Way city limits, as shown on map (5/O 1/10) 14HKFEDERALWAY.8 Exhibit A Estimated For�cic�sur� A�ater��nt Risk �y Census Bia�� Graup� �s���� �f, . ,o� ;.;:,;;;: �st. Abatement Risk »>::: t -- l.ou Risk ;;; 2 3 __ ; 4 :5 :;:;:; 8 ..,,,,,.;;;;' 7 — R1ecEiuro� Higl� Ris�c Gene3'al Legend: Fed�ral 1EVay Gi:y Lim3ts �, - ff,, ::r:. { Potant�alRnnexat�orsArea �:xrf,:;:::<: ;; Census Tracts ... . . � Cens�s Block Groups � : $E3lf2C+B VYat�1' Source: Hiid: 2i}Qi3 Census _� � L+.S 1 � � 1�4::es ciry tts ����'��� �d� Th�s t»m� ia accomgar;icd �t no warran+.ies, �.d is singly a gr�rhic rw�resen+.afior:. (11/30/09) 14HKFEDERALWAY.9 Exhibit A HOUSE KEY FEDERAL WAY PROGRAM FORMS ORIGINATION AND LOAN PRE-CLOSING Name of Form, Date of Form, Page Number Disclosure of HOME Program Requirements (11/30/09) (14HKFEDERALWAY.10.1) Estimated Fair Market Value Notice (11/30/09) (14HKFEDERALWAY.10.2) NSP Voluntary Acquisition of Foreclosed Property -Eminent Domain (11/30/09) { 14HKFEDERALWAY.10.7) Federal Way Subsidy Worksheet (03/24/10) (14HKFEDERALWAY.10.3.1-2) Federal Way Buyer Notification Form (11/30/09) (14HKFEDERALWAY.10.4). HLTD's Lead Paint Safety Field Guide (6/1999) (HCTD #1779-LHC). HUD's Housing Choice Voucher Program Inspection Checklist (9/00) (HLJD-52580-A). LOAN CLOSING Name of Form, Date of Form, Page Number House Key Federal Way Note, (11/30/09) (14HKFEDERALWAY.10.5.1-5) House Key Federal Way Deed of Trust, (11/30/09) (14HKFEDERALWAY.10.6.1-16) (03/24/10) 14HKFEDERALWAY.10 RETURN TO: CITY OF FEDERAL WAY LAW DEPARTMENT REQUEST FOR CONTRACT PREPARATION/DOCUMENT REVIEW/SIGNATURE ROUTING SLIP 1. ORIGINATING DEPT./DIV: C �j�� 2. ORIGINATING STAFF PERSON: ��� ��� wYt�C� EXT: G�� 3. DATE REQ. BY: 4. TYPE OF DOCiJMENT REQUESTED (CHECK ONE) ❑ CONTRACTOR SELECTION DOCUMENT (E. Cz, RFB, RFP, RFQ) ❑ PUBLIC WORKS CONTRACT ❑ SMALL PUBLIC WORKS CONTRACT ❑ PROFESSIONAL SERVICEAGREEMENT ❑ MAIN'TENANCEAGREEMENT � GOODS AND SERVICE AGREEMENT � HUMAN SERVICES / CDBG ❑ REAL ESTATE DOCUMENT ❑ SECURITY DOCU1v1ENT ($.c. soxn x�,az�n nocu�rrrs� ❑ ORbINANCE ❑ RESOLUTION � CONTRACTA1vIENDMENT (AG#): — oZO ❑ �THER � ♦ w s 1 i 5. PRO7ECT NAME: 6. NAME OF CONTRACTOR: ADDRESS: SIGNATURE NAME: TELEPHONE TITLE 7. EX�IIBITS AND ATTACHIVIENTS: � scorE WORK OR SERVICES ❑ COMPENSATION ❑ INSURANCE REQUIREMENTS/CERTIFICATE ❑ ALL OTHER REFERENCED EXI�IBTTS ❑ PROOF OF AVfHORITY TO SIGN ❑ REQUIRED LICENSES �RIOR CONTRACT/AMENDMENTS � ., 8. TERM: CONIlVIENCEMENT DATE: I�/ COMPLETION DATE: � 9. TOTAL COMPENSATION $ � � s � r � a � (INCLUDE EXPENSES AND SALES TAX, IF ANY� (IF CALCULATED ON HOURLY �AB6R CHARGE - ATTACH SCHEDULES OF EMPLOYEES TITLES AND HOLIDAY RATES) REIIvIBURSABLE EXPENSE: ❑ YES ❑ rro IF YES, MAXIMUM DOLLAR AMOUNT: $ IS SALES TAX OWED ❑ YES ❑NO IF YES, $ PAID BY: ❑ CONTRACTOR 0 CITY ❑ PURCHASING: PLEASE CHARGE TO: 10. CONTRACT REVIEW ❑ PROJECT MANAGER �IRECTOR ❑ RISKMANAGEMENT (iFArr�caBLE) o LAW �✓`7/1 /��L,��/��� ��� AL / DA VIEWED INITIAL / DATE APPROVED u t�i o 11. CONTRACT SIGNATURE ROUTING O SENT TO VENDOR/CONTRACTOR DATE SENT: DATE REC'D: ❑ ATTACH: SIGNATURE AUTHORITY, INSURANCE CERTIFICATE, LICENSES, EX�IIBITS ❑ LAW DEPAR NT ❑ SIGNATORY c1v� R DIRECTOR� '�P1'CITY CLE !!0"'ASSIGNED AG# [�SIGNED COPY RETURNED ;• i i � I1�iI / DATE SIGNED -, L � �� . �► r1A.� ��� �• �\(7 AG# OG • 2D�i R DATE SENT: 3•`j � � C7 ✓I 4/9 �ITY OF CITY HALL �► Federa I Wa 33325 8th Avenue South - PO Box 9718 Federai Way, WA 98063-9718 � (253)835-7000 www cityoifedera/way com AMENDMENT NO. 1 TO AGREEMENT REGARDING DOWNPAYMENT ASSISTANCE HOUSE KEY FEDERAL WAY PROGRAM This Amendment ("Amendment No. 1") is made between the City of Federal Way, a Washington municipal corporation ("City"), and the Washington State Housing Finance Commission, a body corporate and politic and an instrumentality of the State of Washington ("Commission"). The City and Commission (together "Parties"), for valuable consideration and by mutual consent of the parties, agree to amend the original Agreement Regarding Downpayment Assistance House Key Federal Way Program (��Agreement") dated effective October 29, 2009, as follows: 1. AMENDED PROGRAM AND FUNDING; SCHEDULE: BUDGET. Section 2 of the Agreement is amended to read as follows: 2 Program and Funding; Schedule; Budget. The Program will provide down payment and closing cost assistance to Eligible Homebuyers acquiring homes in Federal Way. Subject to the terms and conditions of this Agreement: (a) the City will provide NSP Funds ("City Contribution") in the amount of up to $624,104, the portion of the Federal Way NSP Funds available for pown Payment Assistance, to finance, in part, qualified second or third mortgages for down payment and closing costs assistance and all HUD required counseling for low-income, and moderate-income and middle- income home buyers; and (b) the Commission will provide funds (��Commission Contribution") from its Program Investment Fund in the amount of up to $190,000 when used as leverage under the House Key Plus Down Payment Assistance Program. The Commission will endeavor to ensure that all Second Mortgage Loans funded with NSP Funds are originated within one years of the date of this Agreement. Funding is contingent upon receipt of NSP funds by the City of Federal Way towards the costs of this program. 2. AMENDED DETERMINATION OF CITY LOAN AMOUNT. Section 7.5 of the Agreement is amended to read as follows: 7.5 Determination of City Loan Amount. On an annual basis, Commission City staff will meet and decide if any adjustments are needed to the maximum NSP loan amounts described in this Subsection for each Eligible Homebuyer's Second Mortgage loan amount to be made in the coming year. each Second Mortgage, the NSP loan funds will be as follows: Maximum NSP funds $30,Od0 per qualified first-time homebuyer below 80o Area Median Income for one hundred percent (100g) available funds. This may be modified upon written approval City staff to be as follows: Maximum NSP funds $20,000 per qualified first-time homebuyer at or below 100s Area Median for one hundred percent (100%) of available funds. and For at or of by Income AMENDMENT - 1 - 2/2010 CITY OP �, Federal Way CITY HALL 33325 8th Avenue South • PO Box 9718 Federal Way, WA 98063-9718 (253)835-7000 �snvw. c�ryotfederahvay. com 3. GENERAL PROVISIONS All other terms and provisions of the Agreement, together with any prior amendments thereto, not modified by this Amendment, shall remain in full force and effect. Any and all acts done by either Party consistent with the authority of the Agreement, together with any prior amendments thereto, after the previous expiration date and prior to the effective date of this Amendment, is hereby ratified as having been performed under the Agreement, as modified by any prior amendments, as it existed prior to this Amendment. The parties whose names appear below swear under penalty of perjury that they are authorized to enter into this Amendment, which is binding on the parties of this contract. [Signature page follows] AMENDMENT - 2 - 2/2010 CITY OF ,�;, Federal Way CITY HALL 33325 8th Avenue South • PO Box 9718 Federal Way, WA 98063-9718 (253j835-7000 w�ww cityoffederahray com IN WITNESS, the Parties execute this Agreement below, effective the last date written below. WASHINGTON STATE HOUSING FINANCE COMMISSION By: Paul Edwards, Deputy Director � ' t/ � � � � • � STATE OF WASHINGTON ) ) ss. COUNTY OF �Cf r'} � ) On this day personally a peared before me � , to me kn wn to b the of � ���,,n� �.�., S(�_ q�l� !� - that executed the oregoing instrume t, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he/she was authorized to execute said instrument and that the seal affixed, if any, is the corporate seal of said corporation. GNEN my hand and official a this �5 � day of , 20�Q Notary's signature Notary' s printed name ,c. [_ 'S' Notary Public in and for the State of Washington. My commission expires '7�[�_/�� AMENDMENT - 3 - 2/2010 �r ,�' . ; ,,�' ' � �. ,. �. � 7 'z� ��' � � . . f . �,i : S � �� � t,� � So �}° .� A ,`� ���. �� � ,'�� �r sr'�� b'` .,�..�.'"• �.� yr CITY OP �,,�..., Federal Way CITY HALL 33325 8th Avenue South • PO Box 9718 Federal Way, WA 98063-9718 (253)835-7000 www cityoffederal�vay. com IN WITNESS, the Parties execute this Agreement below, effective the last date written below. CITY OF FEDERAL WAY By: Brian Wilso ity Manager/Police Chief DATE: -�i�s�d�/� .s� City Attorney, Patricia A Richardson CITY OF FEDERAL WAY By: Printed Name: Title: DATE: STATE OF WASHINGTON ) ) ss. 0 COUNTY OF ) On this day personally appeared before me , to me known to be the of that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he/she was authorized to execute said instrument and that the seal affixed, if any, is the corporate seal of said corporation. GNEN my hand and official seal this _ Notary's signature Notary's printed name Notary Public in and for the day of , 20_. State of Washington. My commission expires ATTEST: � City Clerk, Carol Mc eilly, AMENDMENT - 4 - 2/2010 RETURN TO: CITY OF FEDERAL WAY LAW DEPARTMENT REQUEST FOR CONTRACT PREPARATION/DOCUMENT REVIEW/SIGNATURE ROUTING SLIP 1. ORIGINATING DEPT./DIV: 2. ORIGINATING STAFF PERSON: ���_�Q EXT: �D, 3. DATE REQ. BY: 4. TYPE OF DOCUMENT REQUESTED (CHECK ONE) CONTRACTOR SELECTION DOCUMENT (E.G., RFB, RFP, RFQ) PUBLIC WORKS CONTRACT SMALL PUBLIC`WORKS CONTRACT PROFESSIO1r1AL SERVICE AGREEMENT MAINTENANCE AGREEMENT D GOODS AND SERVICE AGREEMENT �UMAN SERVICES CDBG f S� REAL ESTATE DOCUMENT SECURITY DOCUMENT �E.G. BONDRELATEDDOCUMENTS) ORDINANCE RESOLUTION 0 CONTRACT AMENDMENT (AG#): D OTHER 5. PROJECT NAME: 6. NAME OF CONTRACTOR: ADDRESS: SIGNATURE NAME: TELEPHONE TITLE 7. EXHIBITS ANDATTACHMENTS: SCOPE, WORK OR SERVICES COMPENSATION INSURANCE REQUIREMENTS/CERTIFICATE ALL OTHER REFERENCED EXHIBITS PROOF OF AUTHORITY TO SIGN REQUIRED LICENSES PRIOR CONTRACT/AMENDMENTS 8. TERM: COMMENCEMENT DATE: 1\I f� COMPLETION DATE: 9. TOTAL COMPENSATION lY t!/ U� (INCLUDE EXPENSES AND SALES TAX, IF ANY� (IF CALCULATED ON HOURLY LA`�OR CHARGE -ATTACH SGHEDULES OF EMPLOYEES TITLES AND HOLIDAY RATES) REIMBURSABLE EXPENSE: ❑�S rro IF YES, MAXIMUM DOLLAR AMOUNT: IS SALES TAX OWED YES NO IF YES, PAID BY: O CONTRACTOR CITY PURCHASING: PLEASE CHARGE TO: "!�D I 4' Z� o 10. CONTRACT REVIEW INITIAL DATE REVIEWED INITIAL DATE APPROVED PROJECT MANAGER N� M 0� DIRECTOR D t 2 O G i RISKMANAGEMENT (iF,�rPLiCasr:E) a LAVV �D 13• c�� �u .c��� I 1. GONTPACT' SIGNATURE ROUTING q e SENT TO VENDOR/CONTRACTOR DATE SENT: �V 1 DATE REC'D: �O Z ATTACH: SIGNATtJRE AUTHORITY, INSURANCE CERTIFICATE, LICENSES, EXHIBITS �'LAW DEPARTMENT �IGNATORY (C R DIRECTOR� ITY CLE ASSIGNED AG# �IGNED COPY RETURNED nllT .Tk dL'ATTC� 4/9 w AGREEMENT REGARDING DOWNPAYMENT ASSISTANCE HOUSE KEY FEDERAL WAY PROGRAM HIS AGREEMENT REGARDING DOWNPAYMENT ASSISTANCE, dated as of, 2009 (the "Agreement"), is made and entered into by the City of Federal Way, a Washington municipal corporation (the "City") and the Washington State Housing Finance Commission, a body corporate and politic and an instrumentality of the State of Washington (the "Commission"). RECITALS WHEREAS, the City has been designated by the State of Washington to receive an allocation Neighborhood Stabilization Program (NSP) funds to utilize within the requirements of Public Law 110-289, Housing and Recovery Act of 2008 (HERA), section 2301 for the purpose of establishing financing mechanisms for purchase and redevelopment of foreclosed upon homes and residential properties; WHEREAS, the City has adopted a strategy to increase homeownership opportunities for low- and moderate-income first-time homebuyers as part of the Housing and Human Services Consolidated Plan; WHEREAS, while many potential homebuyers may be able to make monthly mortgage payments especially at a time of relatively modest interest rates, a primary obstacle to homeownership remains the ability of working individuals and households to amass adequate funds for down payment and closing costs; WHEREAS, the Commission has developed a program to provide financial assistance to single-family homebuyers in the form of second, subordinate loans to provide down payment and closing cost assistance in cooperation with local mortgage lenders, the Federal National Mortgage Association and the Federal Housing Administration (FHA); WHEREAS, it is appropriate and mutually desirable that the Commission be designated by the City to undertake Neighborhood Stabilization Program eligible activities as a subrecipient, so long as the requirements of the Neighborhood Stabilization Program (NSP) funds to utilize within the requirements of Public Law 110-289, Housing and Recovery Act of 2008 (HERA), section 2301 HCD Act, NAHA, HUD Regulations, State law, County and City ordinances are adhered to, as provided for herein; WHEREAS, the City and the Commission intend to establish the House Key Federal Way Program ("the Program") as a pilot program with an initial fund commitment of up to $619,104 from Neighborhood Stabilization Program funds and approximately $190,000 from the Commission in the form of House Key Plus down payment assistance, with the intent that additional funding to extend the Program may be deemed appropriate based upon the results of an analysis of the Program and upon the availability of Commission, City and other funds; WHEREAS an additional purpose of this Agreement is to set forth the requirements for the use of federal Neighborhood Stabilization Program funds as prescribed by the U.S. Department of Housing and Urban Development (HUD); 10/21/2009 City of Federal Way Page 1 of 33 FW Human Services Contract for 2009 NSP CDBG Funds NOW, THEREFORE, in consideration of the mutual agreements hereinafter contained, the parties hereto agree as follows: Definitions AGREEMENT 1.1. "Annual Income" means "annual income" as defined at 24 CFR Section 5.609, as estimated by projecting the prevailing rate of income at the time when a determination of income eligibility is made or required. Annual Income shall include income of all Household members, except as excluded by laws, regulations or HUD interpretations applicable to income determinations under that Section."Appraisal" means an appraisal that conforms to the requirements of URA at 49 CFR 29.103, "Criteria for Appraisals" that was conducted within 60 days prior to an offer on the properly. 1.2. "Commission Contribution" means (a) the total amount of money expended by the Commission to acquire Second Mortgages that become part of the Loan Pool, reduced by any amounts retained by the Commission in respect of payments or amounts recovered on any Second Mortgage Loan, minus (b) the City's Contribution. 1.3. "Commission Loan Amount" means, for any Second Mortgage listed in a request for reimbursement hereunder, the lesser of (a) $10,000, or (b) the Commission's Proportionate Share of a Second Mortgage amount as specified in Section 7 of this Agreement. 1.4. "Commission Share" means, for any calendar quarter, the total Loan Receipts less the City's Share for such quarter. 1.5. "City Contribution" means, at any time, the cumulative amount of NSP Funds disbursed by the City to or for the benefit of the Commission under this Agreement, less the sum of any amounts that become payable to the City for the purchase of the City's interest in Second Mortgages upon termination of this Agreement. 1.6. "City Loan Amount" means, for each Second Mortgage purchased by the Commission, (a) the total amount paid by the Commission, consistent with this Agreement, to acquire such Second Mortgage, minus (b) the Commission Loan Amount, and the Loan Amount of any other public funders providing funds for each Second Mortgage as described in Section 7.5 of this Agreement. 1.7. "City's Loan Receipts Account" means the separate account set up by the Commission at a financial institution acceptable to the City for the City's Proportionate Share of Loan Receipts from Loans made with NSP Funds. 1.8. "City Interest" means, for each Second Mortgage for which the City makes any reimbursement hereunder, the sum of the Loan Receipts for that Second 10l21/2009 City of Federal Way Page 2 of 33 FW Human Services Contract for 2009 NSP CDBG Funds Mortgage during such quarter, multiplied by the City's Proportionate Share interest in such Second Mortgage under Section 7.1 hereof, determined by taking into account any reimbursement made prior to the end of such calendar quarter or to be made pursuant to a request made by the Commission for such calendar quarter. 1.9 "Deed of Trust" means a deed of trust securing a Second Mortgage loan. 1.10 "Discount" means a minimum one percent (1%) discount of the appraised value purchase price of the property purchased with NSP funds. 1.11 "City of Federal Way" means all areas incorporated within the city limits of Federal Way. 1.12 "Eligible Homebuyer" means one or more adult members of a Household who sign the Deed of Trust, related Promissory Note and other documents required for a Second Mortgage; who have completed a Homebuyer Education Program meeting NSP requirements; and whose Household has an Annual Income (as of the date of signing the purchase agreement, in the case of new home being constructed, or as of the date of purchase, in the case of an existing home) that does not exceed the maximum income level in 24 CFR 92.203 and any other federal regulations applicable to loans of NSP Funds for home buyer assistance and are First-Time Homebuyers as defined in 24 CFR 92.2. 1.13 "Household" means "family" as described in 24 CFR Section 5.403, or successor provision, and includes an individual person. 1.14 "Homebuyer Education Program" means a program of education and counseling for persons intending to become First Time Homebuyers conducted by a nonprofit housing counseling agency approved by the Commission. The curriculum shall include a five hour Commission- approved homebuyer seminar plus three hours of one-on-one pre-purchase homebuyer counseling session provided by the housing counseling agency to meet the 8 hour homebuyer education requirement for NSP. T'he pre- purchase counseling shall be offered to applicants upon loan approval. Mortgage lenders shall refer approved applicants to the nonprofit housing counseling agency. 1.15 "HOME" means the federal HOME Investment Partnerships Act Program. 1.16 "HUD" means the United States Department of Housing and Urban Development or any successor to its functions. 1.17 "Loan Documents" means, with respect to any loan, each original document evidencing or securing the loan (or any part thereo�, and all documents incidental or collateral to the loan, including without limitation, the note or notes evidencing the loan, the deed of trust, each guarantee securing the loan, all applications, loan commitments, reports, security and loan agreements, disclosure statements, appraisals, ioan 10/21/2009 City of Federal Way Page 3 of 33 FW Human Services Contract for 2009 NSP CDBG Funds settlement statements, title evidence, title insurance, hazard insurance, flood liability insurance, and all other insurance policies and any assignments thereof, correspondence applicable to the loan, and all other documents relating to the loan, all as the same may be amended, and all such documents or instruments subsequently executed and delivered. 1.18 "Loan Pool" means all Second Mortgages that are purchased by the Commission for which the Commission receives a reimbursement under this Agreement, and replacements, substitutions, or property (other than money) received in place of, or in respect of the rights of the holder pursuant to, any Second Mortgages that have not been removed from the Loan Pool pursuant to the terms of this Agreement. 1.19 "Loan Receipts" means, for any period, all payments and collections actually received by or for the benefit of the Commission or its Servicer on account of any Second Mortgages and other assets in the Loan Pool, including without limitation payments on account of principal, interest, shared appreciation, and insurance proceeds. "Low- and moderate- income" shall mean a household income equal to or less than 80 percent of area median income, adjusted by family size. 1.20 "Low- moderate, and middle-income" shall mean a household income equal to or less than 120 percent of the area median income, measured as 2.4 times the current Section 8 income limit for households below 50 percent of inedian income, adjusted by family size. For purposes of the Neighborhood Stabilization Program only, the term "low- income, and moderate-income person" as it appears throughout the CDBG regulations at 24 CFR part 570 shall be defined as a member of a low-moderate and middle-income household. 1.21 "Modest Housing" means the housing defined in 24 CFR 92.254(a) (2). 1.22 "Mortgage Lender" means a bank or other financial institution that has agreed to comply with bank regulator's guidance for non-traditional mortgages approved by the Commission and the City to originate Second Mortgage loans for purchase under this Agreement. An Approved Mortgage Lender list is to be made available by the Commission."Neighborhood Stabilization Program" means the program created by Public Law 110-289, Housing and Recovery Act of 2008 (HERA), including all implementing regulations and guidance by HUD and the State of Washington. 1.23 "NSP Program Income" means all NSP Loan Receipts plus any interest income earned on the City Loan Receipts Account. 1.24 "Origination Agreement" means an agreement between the Commission, Servicer and a Mortgage Lender with respect to the participation of the Mortgage Lender in the Program. 10/21/2009 City of Federal Way Page 4 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 1.25 "Proportionate Share" means the City's and Commission's percentage share of each Second Mortgage, based upon the percentage of the City's Contribution and Commission's Contribution, as detailed in Section 7. 1.26 "Program" means the House Key Federal Way Program as established by this Agreement, as more particularly described in the Program Manual attached hereto as Exhibit A. 1.27 "Program Manual" means the manual for the Program attached to this Agreement as Exhibit A, including all attachments; as such manual and attachments may be modified from time to time with the express written consent of the City and the Commission. 1.28 "Promissory Note" means the written instniment executed to evidence the Mortgagor's obligation to repay the Second Mortgage, which shall be substantially in the form attached to the Program Manual (Exhibit A). 1.29 "Qualifying Home" means a legal dwelling unit in Federal Way as defined in Section 1.10. This home can be a detached single family resident or town home on its own lot and includes such lot and any appurtenances; a condominium unit which includes all rights in common elements and other rights appurtenant to the unit; or a manufactured housing unit that meets the Manufactured Home Construction and Safety Standards established in 24 CFR Part 3280. A Qualifying Home, as of the date of purchase by an Eligible Homebuyer: 1.29.1 satisfies federal Housing Quality Standards as defined in 24 CFR Section 982.401, and satisfies all other applicable standards in the Program Manual; 1.29.2 is single family housing as defined in 24 CFR 92.254 (a)(1); and 1.29.3 may be legally sold separately from any other dwelling unit or structure, whether as a separate lot or condominium unit. 1.30 "Second Mortgage" means a second or third lien loan purchased by the Commission for inclusion in the Loan Pool, and the Note, Deed of Trust and other Loan Documents evidencing and securing such loan. 1.31 "Servicer" means a financial institution now or hereafter under contract with the Commission to administer and service the Second Mortgages in the Loan Pool. At the time this Agreement is executed, the Servicer is identified as Bank of America, N.A. 8501 Fallbrook Avenue, Mail Stop CA9-901-03-03, West Hills, California 91304. 1.32 "Start Date" means the effective date of this Agreement. 1.33 "Subrecipient" the Commission will act as a Subrecipient of the City as defined in the federal Community Development Block Grant (CDBG) 10/21/2009 City of Federal Way Page 5 of 33 FW Human Services Contract for 2009 NSP CDBG Funds rules and regulations shall mean the same as the term "contractor" found in the procedures and policies in state's CDBG Management Handbook. 2 Program and Funding; Schedule; Budget The Program will provide down payment and closing cost assistance to Eligible Homebuyers acquiring homes in Federal Way. Subject to the terms and conditions of this Agreement: (a) the City will provide NSP Funds ("City Contribution") in the amount of up to $619,104, the portion of the Federal Way NSP Funds available for pown Payment Assistance, to finance, in part, qualified second or third mortgages for down payment and closing costs assistance for low-income, and moderate-income and middle-income home buyers; and (b) the Commission will provide funds ("Commission Contribution") from its Program Investment Fund in the amount of up to $190,000 when used as leverage under the House Key Plus Down Payment Assistance Program. The Commission will endeavor to ensure that all Second Mortgage Loans funded with NSP Funds are originated within one years of the date of this Agreement. Funding is contingent upon receipt of NSP funds by the City of Federal Way towards the costs of this program. Commission Purchase of Second Mort�ages The Commission will purchase from Mortgage Lenders for the Loan Pool only Second Mortgages that represent loans made to Eligible Homebuyers for purposes of acquiring Qualifying Homes. The Commission may utilize the City's Contributions for a portion of the cost of each such Second Mortgage as provided in Section 7.5; provided that the closing costs do not exceed three percent (3%) of the property's gross purchase price and down payment assistance does not exceed twenty percent (20%) of the total purchase price of the property. The calculation of the total purchase price may include subsidizing interest rates (points), subsidizing mortgage principle amounts (balloon payments), mortgage insurance, and closing costs. And, provided that no more than the maximum amount of NSP funds per household established in section 7.5. 4 Ori�ination of Second Mortgages The Commission has entered into Origination Agreements with certain Mortgage Lenders in King County and may enter into additional Origination Agreements with Mortgage Lenders. The Commission shall ensure that, prior to origination of any Second Mortgage to be purchased for the Loan Pool, there is an Origination Agreement in effect with a Mortgage Lender making such loan that is consistent with this Agreement, including the Program Manual. The Commission sha11 provide to the City, promptly upon request, a copy of each Origination Agreement and any amendments thereto. No Origination Agreement shall purport to impose any obligation or liability on the City. The Origination Agreements shall provide that the Mortgage Lenders will originate FHA or conventional, primary mortgage loans to Eligible Homebuyers and, in conjunction therewith, will'originate and close Second Mortgages. Each Mortgage Lender will originate, close, and sell the Second Mortgages it originates for sale to the Commission in accordance with the Origination Agreement. 5 Reimbursement of the Commission bv the City 5.1 Requests to Cit;Y for Reimbursements. Within 30 days after the end of each calendar quarter, beginning with the first full calendar quarter 10/21l2009 City of Federal Way Page 6 of 33 FW Human Services Contract for 2009 NSP CDBG Funds following the Start Date, the Commission shall submit a request for reimbursement to the City in a form approved by the City covering all Second Mortgages purchased for the Loan Pool during the previous quarter. Subject to the terms and conditions herein, within 20 business days after the receipt of timely and complete request for reimbursement, the City shall disburse tol, the Commission a total loan amount approved by the City for each Second', Mortgage that is covered by the request for reimbursement and that Satisfies all of the requirements of this Agreement. With each Request for Rieimbursement, the Commission shall also submit to the City the documentation required in Section 13. 5.2 Limits on City's Oblig hereunder is limited to the event of any suspe� the City sha11 not be ot thereof. n. The City's obligation to disburse funds maximum amount stated in Section 2 above. In 1 or termination of this Agreement by the City, �ted to make such disbursement, or such portion 0 6.1 As the Commission recf determine the Commiss. Loan Receipts based on made by the Commissio �es Loan Receipts, the Commission shall n's and the City's Proportionate Share of the �e Proportionate Share of Loan Contributions and the City for each Loan. 6.2 The Commission shall deposit the City's Pro� Loan Receipt Account Account shall be an in the Commission. The reported quarterly. fitablish a City Loan Receipt Account and shall ttionate Share�of the Loan Receipts in the City ",ithin 10 days of receipt. The City Loan Receipt test-bearing account, separate from other funds of l lance of the City Loan Receipt Account shall be 7 7.1 City's Interest. The Ci shall hold an interest in each Second Mortgage for which the City has m�de full or partial reimbursement to the Commission hereunder. The City's interest shall be equal to its Proportionate Share. Th� City's interest includes in each case an interest in each Second Mortgage, v�vhich interest shall include: an interest in all Loan Documents delivered at alny time in connection with such Second Mortgage; all monies received pursuant to such Loan Documents; all funds or accounts maintained in connection with such Loan Documents; all security, claims, causes of action, rights arld remedies related to each Second Mortgage; and all substitutions, proceed�, replacements, renewals, extensions and amendments for and of a.�y of the foregoing. Any payment of principal and interest received from S�rvicer for the City's Proportionate Share of the Loan Receipts is consid�red NSP program income and must be paid to the City or deposited in the �ity Loan Receipt Account. 10/21/2009 City of Federal Way Page 7 0�33 FW Human Services Contract for 2009 NSP CDBG Funds 7.2 Assets Held in Trust. The Commission agrees that, pending disposition of fund amounts as authorized herein, the Commission shall hold in trust for the City, or shall cause its Servicer to hold in trust for the City, to the extent of the City's interest under Subsection 7.1 of this Section, the Loan Pool and all such property and rights therein or associated therewith. The Commission further agrees that pending disbursement of fund amounts as authorized herein, it shall hold in trust for City, or shall cause its Servicer or other financial institution to hold in trust for the City, to the extent of the City's respective interests as described herein, all rights in and to the City's Loan Receipts Account. No disbursements shall be made from the City Loan Receipt Account except as authorized in this Agreement. 7.3 Priori The City's interests in the Loan Pool and each Second Mortgage therein, shall be equal to the respective Proportionate Share and shall have priority. The City of Federal Way alone shall have an interest in the City Loan Receipts Account. 7.4 Financial Records. The Commission's financial records and reports shall appropriately reflect the Commission's and the City's Proportionate Share interest in the Loan Pool and the City's respective interest in the City' Loan Receipts Account. 7.5 I7�etermination of City Loan Amount. On an annual basis, Commission and City staff will meet and decide if any adjustments are needed to the maximum NSP loan amounts described in this Subsection for each Eligible Homebuyer's Second Mortgage loan amount to be made in the coming year. For each Second Mortgage, the NSP loan funds will be as follows: Phase 1: M�imum NSP funds $50,000 per qualified first-time homebuyer at or below 50% Area Median Income until twenTy-five percent (25%) of the available funds have been obligated, Phase 1 remains open and then, Phase 2: Maximum NSP funds $30,000 per qualified first-time homebuyer at or below 80% Area Median Income but above 50% Area Median Income until available funds have been obligated. In the event that all funds have not been designated to qualified first-time homebuyers that qualify for Phase 1 or Phase 2, written City approval must be received to open up Phase 3. Phase 3: Maximum NSP funds $20,000 per qualified first-time homebuyer at or below 100% Area Median Income but above 80% Area Median Income until all NSP funds have been obligated. For Eligible Households that qualify for City funds for a m�imum Second Mortgage loan of $50,000, up to $50,000 will be funded from City NSP funds. $10,000 will be available from the Commission based on a need as determined by the Mortgage 10/2i/2009 City of Federal Way Page 8 of 33 FW Human Services Contract for 2009 NSP CDBG Funds Subsidy Worksheet. The City funds and Commission funds, never to exceed $50,000 in City funds and $10,000 in Commission funds. 7.6 Use of Pavments on Second Mortga�es in City's Loan Receipts Account. Any loan receipts made on Second Mortgages that are deposited into the City's Loan Receipts Account will be credited toward the City. Unless otherwise directed by the City, the Commission shall use such funds to fund additional Second Mortgages to Eligible Households pursuant to the provisions of this Agreement. If the funds deposited into the City's Loan Receipts Account are not used by the Commission withiri three months of the deposit or if the City directs the Commission not to use Second Mortgage proceeds to fund new Second Mortgages, the City's portion of any Second Mortgage payments will be returned to the City, and the Commission is not obligated to retain its portion of any Second Mortgage payments with the Program. Any accumulated funds in the City's Loan Receipts Account must be used to originate Second Mortgages before the Commission requests reimbursement for NSP Funds. 7.7 Reversion of Assets. Upon expiration or termination of this Agreement, the Commission must transfer to the City any funds in the City's Loan Receipt Account, including interest earned on such funds and any NSP Funds due and receivable. 8 Payments to the Citv and the Commission 8.1 If the Commission and the City agree to no longer use loan repayments for generating new Second Mortgages, the Commission shall disburse, or cause the Servicer to disburse to the City, no later than 30 days after the end of each calendar quarter beginning with the quarter in which this Agreement is executed, the respective City's Share of Loan receipts actually received by the Commission, and any interest accrued thereon, for such quarter. 8.2 After payment to the City of the City's Proportionate Share plus any accrued interest for any calendar quarter, the Commission or Servicer may disburse or transfer for the Commission's own benefit, the Commission Proportionate Shaze plus any accrued interest for that quarter. a 9 Requirements for Second Mortga�es In order to qualify for financing by the City under this Agreement, each Second Mortgage loan shall be: 9.1 made only in the amount required by the Eligible Homebuyer to close the primary loan, in accordance with procedures set forth in the Program Manual; 9.2 for a principal amount not to exceed $50,000 and simple interest not to exceed 0%; 10/21/2004 City of Federal Way Page 9 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 9.3 made to an Eligible Homebuyer; 9.4 for the purchase of a home to serve as the Eligible Homebuyer's principal residence, for a total purchase price not to exceed the lesser of the m�imum determined pursuant to the Program Manua.l or the maximum permitted by HOME and/or NSP regulations for the type of properly; 9.5 used for (i) down-payment assistance, and (ii) closing costs with respect to the primary loan, and (iii) the cost of recording the Deed of Trust with respect to the Second Mortgage, in an aggregate amount that does not exceed applicable guidelines, if any, established with respect to the primary mortgage loan, all as permitted by Fannie Mae or FHA (HUD) guidelines, as applicable; 9.6 made in connection with the origination of a first lien mortgage consistent with the Program Manual, without any fees or charges by the Mortgage Lender to the Eligible Homebuyer for the Second Mortgage, and with no more than reasonable and customary fees and charges by the Mortgage Lender to the borrower for the first lien loan; 9.7 evidenced by a properly executed and delivered Promissory Note and secured by a second lien Deed of Trust, each in the form contained in the Program Manual; 9.8 for a principal amount reserved to the originating Mortgage Lender in accordance with procedures set forth in the Program Manual; 9.9 sold to the Commission at a price of par, at the same time that the related primary mortgage is purchased by the Commission, such sale to be completed and fully documented as specified in the Program Manual, including without limitation the delivery to the Commission of a11 required documentation; 9.10 made to an Eligible Homebuyer who has successfully completed, as certified by the provider, a Homebuyer Education Program that meets NSP requirements; 9.11 noted on the title policy with respect to the corresponding primary loan as a subordinate lien. 10 HomebuYer Education Requirements 10.1 Each homebuyer will attend a Commission-sponsored Homebuyer Education Seminar. The seminar is a minimum of 5 hours and the instructors must cover the 22 benchmarks set by the Commission. Each homebuyer will also attend an additional three hours of one-on-one counseling session with an approved service provider from the Commission's network of approved housing counselors. The homebuyer must receive and show a certificate of completion prior to approval to close on their mortgage. The service provider will be paid for the one-on- 10/21/2009 City of Federal Way Page 10 of 33 FW Human Services Contract for 2009 NSP CDBG Funds one counseling sessions conducted for homebuyers who are fully approved to close and have a reservation for mortgage funds. The counseling will address pre- and post- purchase issues, default/delinquency prevention, and home maintenance. 10.2 The rates and fees for counseling will be set according to HUD standard and administered by Commission staff. The borrower will acknowledge payment for the counseling service is due at closing and can be paid using down payment assistance funds. 11 Public Information The Commission and the City shall cooperate in publicizing the Program as follows. The Commission shall prepare and distribute general information regarding the Program. Prior to distribution of any informational material, the Commission shall provide a draft to the City for review. Except as may be required pursuant to requests made under applicable law, the Commission shall not distribute printed materials regarding the Program that have not been approved by City staff. 12 Trainin� The Commission shall be responsible for training Mortgage Lenders with respect to the Program. Responsibility for the Homebuyer Education Program will be addressed in the Program Manual and through a separate Education Contract between the Commission and a nonprofit counseling agency that is a member of the Commission's network of approved housing counselors. 13 Reports and Records 13.1 The Commission shall provide quarterly reports to the City not later than 30 days after the end of each quarter setting forth the following information as of the last day of the prior quarter, substantially in the form of Exhibit B: 13.1.1 The principal amount of the Second Mortgages in the Loan Pool, and accrued and unpaid interest; 13.1.2 The number and amount(s) of Second Mortgages that have- been purchased by the Commission, and the intended allocation of those Second Mortgages to the City Contribution and the Commission Contribution, if applicable; 13.1.3 Geographic, economic, and demographic characteristics of the Eligible Homebuyers; 13.1.4 Price and structure characteristics of the houses financed; 13.1.5 Second Mortgage production of each Mortgage Lender; 10/21/2009 City of Federal Way Page 11 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 13.1.6 Delinquency rates on the Second Mortgages; and 13.1.7 Such other information as the City may reasonably request from time to time. 13.2 For Second Mortgages originated with NSP Funds, the Commission shall submit to the City copies of supporting loan documentation and reports for each Second Mortgage originated using NSP Funds, including the following: 13.2.1 the loan application; 13.2.2 the HUD-1 final closing statement stating the Second Mortgage loan amount; 13.2.3 the Promissory Note; 13.2.4 the recorded Deed of Trust along with a copy of the recorded instruments used to assure the continued affordability of the property; 13.2.5 the Addendum to Residential Loan Application; 13.2.6 the gross monthly income of the Eligible Homebuyer; 13.2.7 demographic information on the home purchase; including address (including zip code), purchase price of the home, number of bedrooms, monthly mortgage amount and interest rate on first, and, if applicable, second mortgage, number of persons in the household, and other demographic information (such as race, ethnicity, type of household, as required by the City for reporting to HUD) for Second Mortgages made during the quarter; 13.2.8 the property appraisal. A copy of the written purchase offer, along with a statement regarding just compensation of the property; 13.2.9 a copy of the purchase contract and a financial statement detailing the settlement costs; 13.2.10 a copy of any appeal or complaint concerning a payment, together with a copy of all pertinent determinations; and 13.2.11 the Housing Quality Standards (HQS) Inspection checklist. 13.2.12 A copy of the "NSP Voluntary Acquisition of Foreclosed Property" notice to Owner that includes a statement that the property will not be acquired through the jurisdiction's 10/21/2009 City of Federal Way Page 12 of 33 FW Human Services Contract for 2009 NSP CDBG Funds powers of eminent domain and statement acknowledging the Owner's right to not sell the property. 13.3 The Commission shall maintain complete and accurate records of all transactions and accounts related to the Program demonstrating that it is administering the project in accordance with federal and state requirements. They must document and keep a record for each property acquired using NSP funds, and they must retain these records for at least ten years. The Commission shall permit the City, HUD, and their respective agents and auditors, to inspect and copy all such records, including without limitation records maintained in electronic format, at such times as the City, or HUD may request. The Commission shall, upon request of the City or HUD, promptly provide access to any and all records, including without limitation records maintained in electronic format, related to the Program or any Second Mortgage that are or shall be maintained by any Servicer or Mortgage Lender. If so requested by the City, or HUD, the Commission shall promptly cause such records or copies thereof to be delivered to the offices of the City or HUD. 13.4 The Commission shall maintain a separate file for each Second Mortgage. The file shall contain the property address including zip code; number of bedrooms in unit; owner name; form of ownership; type of housing; number of units if not single family; and household characteristics including owner gross monthly income and percent of inedian income, household type, home purchase price, interest rate and mortgage amount for the First Mortgage and Second Mortgage, family size, racial and ethnic group of head of household and whether there is a single head of household (including gender thereo�, and a listing of all costs and sources of funds related to the purchase. 10/21/2009 City of Federal Way Page 13 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 14 Program Evaluation The City and the Commission will jointly analyze the Program for its efficiency and effectiveness no later than the first anniversary of the Start Date, unless such date is extended by mutual written consent. Upon analysis, the parties will mutually determine whether to continue the Program, at what funding levels, and whether repayments will be used to purchase new Second Mortgages. An extension of the Program may require revisions to the Program terms and conditions to simplify the Program, however the Program terms shall be consistent with federal HOME regulations. This section does not obligate any party to provide additional funding for the Program. 15 NSP/HOME/CDBG Requirements 15.1 The provisions in this section shall apply only to any Second Mortgages originated with the City's NSP Funds. The Commission agrees to administer the program within the requirements of the Neighborhood Stabilization Program in compliance with the regulations of the program as set out by HUD including applicable HOME and CDBG regulations. 15.1.1 Sub-recipient Status; Uniform Administrative Requirements. The Commission understands and agrees that for those Second Mortgages that include NSP Funds from the City, it is a"sub-recipient" of NSP Funds under this Agreement as to NSP Funds and shall comply with a11 requirements applicable to such sub-recipients. The Commission shall carry out the Program in compliance with all Federal laws and regulations described in subpart H of 24 CFR Part 92, except that the Commission does not assume the responsibilities for environmental review under 24 CFR Section 92.352, and the intergovernmental review process in 24 CFR Section 92.357 does not apply. Without limiting the foregoing, the Commission shall comply with applicable uniform administrative requirements as described in 24 CFR Section 92.505(b) for a sub-recipient of NSP Funds, and shall cause to be performed for each year while this Agreement is in effect, and timely provide to the City, an audit report in compliance with 24 CFR Section 92.506 15.1.2 Eli ig bilitv of Homes. The Commission shall ensure that all homes that are the subject of Second Mortgages included in the Loan Pool meet requirements of federal laws and regulations for the HOME Program, including 24 CFR Sections 92.217 and 92.254, and that all Second Mortgages purchased for the Loan Pool involve loans made to Eligible Homebuyers of foreclosed homes and other stipulations of the Neighborhood Stabilization Program and are consistent with a11 such laws and regulations. 10/21/2009 City of Federal Way Page 14 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 15.1.3 Review of Documentation Prior to Loan Ori ing ation. The Commission shall require, as a condition to purchase a Second Mortgage for the Loan Pool, that the Mortgage Lender provides to the Cotnmission prior to the closing of the Second Mortgage all information necessary for the Commission to verify the eligibility of the Second Mortgage for funding under this Agreement. The Commission shall review such information and advise the originating Mortgage Lender prior to the date set for such closing of any deficiencies in such information. 15.1.4 Pro�?�am Income. The City and the Commission acknowledge that the terms hereof, in particular the provisions for periodic remittance of the City Interest, are intended to conform to HIJD requirements by generally requiring a11 "program income" as defined under HOME regulations and all amounts that constitute recapture of NSP Funds under such regulations to be remitted to the City for deposit in the City's NSP account. HOME regulations, 24 CFR Section 92.2, provide in part that payments of principal and interest on loans made using NSP Funds are program income, and that when program income is generated by housing that is only partially assisted with NSP Funds or matching funds, the income shall be prorated to reflect the percentage of NSP Funds used. The parties acknowledge that the Commission's funds are not intended to be matching funds under HOME regulations. If HUD determines that the terms of this agreement are not sufficient to comply with HOME regulations with respect to program income or recaptured funds, the City and the Commission agree to execute and implement an amendment hereto satisfactory to HUD, including any retroactive adjustments that HUD shall deem necessary to conform to such regulations. 15.1.5 Relocation and Acquisition. For Second Mortgages originated with NSP Funds pursuant to this Agreement, the Commission represents, warrants and agrees that it has taken and shall take all reasonable steps to minimize the displacement of persons (families, individuals, businesses, nonprofit organizations, and farms) in connection with the Program. The Commission represents and warrants that, in connection with each Second Mortgage, the Commission shall ensure that prior to the execution of a purchase and sale agreement, the borrower clearly advises the owner in writing that it lacks the power of eminent domain and therefore is unable to acquire the property in the event negotiations fail to reach an amicable agreement, and informs the owner in writing of what the borrower believes to be the fair mazket value of the property. If any transaction financed by a 10/21/2009 City of Federal Way Page 15 of 33 FW Human Services Contract for 2009 NSP CDBG Funds Second Mortgage involves the temporary and/or permanent displacement of persons, the Commission represents, warrants and agrees that the Commission shall provide; at a minimum, a11 relocation assistance required by 24 CFR Section 42; the federal Uniform Relocation Act and regulations thereunder, 49 CFR Part 24; 24 CFR Section 92.353 and any other applicable federal laws or regulations, and shall maintain complete and accurate records demonstrating such compliance. The Commission agrees that any determination by City of the amount of relocation assistance due to any person shall be final and binding upon the Commission, unless a different determination is made by HUD at the request of such person, in which case the HUD determination shall be final and binding on the Commission. The Commission represents, warrants and agrees that no Second Mortgage will involve the purchase of any property if, in connection with such purchase and the financing thereof with NSP Funds, any tenant or former tenant would be considered a"displaced person" within the meaning of applicable federal regulations or guidelines. If the City or HUD determines that with respect to any Second Mortgage any person reasonably may be considered a displaced person, then the City may, at its option, provide relocation assistance directly to such person, and such amount shall be immediately due and payable by the Commission to City, at City's demand, in additio� to a11 other amounts to which the City is entitled hereunder. The Commission sha11 maintain and provide to City on request data indicating the race and ethnicity of households (and gender of single heads of households} displaced in connection with the Program and the address and census tract of the housing to which each displaced household relocated. Such information sha11 be used only as a basis for further investigation as to compliance with nondiscrimination requirements. 15.1.6 Lead-Based Paint. The Commission shall comply with all applicable requirements of federal, state, and local laws and regulations regarding lead-based paint, including without limitation 24 CFR Part 35, and 24 CFR Sections 92.355 and 982.401(j), to the extent applicable. The Commission shall be responsible for ensuring that a11 required testing and abatement activities are performed, and all disclosures aze made and acknowledged, as required by such regulations or other applicable laws. The Commission shall require, in connection with any Second Mortgage to be acquired for the Loan Pool, if any part of the home being purchased was constructed prior to 1978, that any defective lead-based paint 10/21/2009 City of Federal.Way Page 16 of 33 FW Human Services Contract for 2009 NSP CDBG Funds surfaces are abated in full compliance with all applicable laws, regulations, HUD guidelines and prudent practices. 15.1.7 Lobb�. The Commission hereby certifies and agrees as follows, in accordance with 31 U.S.C. Section 1352, to the best of its knowledge and belief: 15.1.7.1 No Federal appropriated funds have been paid or will be paid, by or on behalf of the Commission, to any person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement; 15.1.7.2 If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, it will complete and submit Standazd Form- LLL, "Disclosure Form to Report Lobbying," in accordance with; its instructions; and 15.1.7.3 It will require that the language of this subsection 14.1.7 be included in the award documents for sub-awards at all tiers (including subcontracts, sub-grants, and contracts under grants, loans and cooperative agreements) and that all sub-recipients sha11 certify and disclose accordingly. 15.1.7.4 This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, title 31, U. S. Code. Any person who fails to file the required certification shall be subject to a civil 10/21/2009 City of Federal Way Page 17 of 33 FW Human Services Contract for 2009 NSP CDBG Funds penalty of not less than $10,000 and not more than $100,000 for each such failure. 15.2 Conflict of Interest 15.3 Compliance with Regulations. the Commission agrees to comply with all federal, state, and City regulations regarding NSP funds. Should any of these regulations conflict, the order of priority shall be federal, state, and then City regulations. 10/21/2009 City of Federal Way Page 18 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 15.2.1 No officer, agent, employee, consultant or elected or appointed official of the City, or of any sub-recipient (as defined in 24 CFR Part 92) receiving NSP Funds who exercises or has exercised any functions or responsibilities with respect to activities assisted by NSP Funds or who is in a position to participate in a decision-making process or gain inside information with respect to these activities, shall obtain any financial interest or benefit, for himself or herself or those with whom he or she has family or business ties, in the activity funded under this Agreement or in any contract or subcontract or agreement with respect thereto or the proceeds thereof; nor shall (s)he for one year after completion of his or her tenure with the City or such sub- recipient obtain any such financial interest or benefit. The Commission shall incorporate in a11 such contracts or subcontracts a provision prohibiting any such interest. In addition, no owner, developer or sponsor of a project assisted with NSP Funds (or officer, employee, agent, elected or appointed official or consultant of the owner, developer or sponsor) may occupy a HOME-assisted housing unit. No person providing consultant services in an employer-employee type relationship shall receive more than a reasonable rate of compensation for personal services paid with NSP Funds, and in no event shall such compensation exceed the limits in effect under any applicable law. All such consultant services shall be evidenced by written agreements that detail the responsibilities, standards and compensation {24 C.F.R. Sections 92.356, 92.358}. 15.2.2 In the procurement of supplies, equipment, construction or rehabilitation and services the Commission shall ensure compliance with the provisions of 24 CFR Section 84.42. The Commission shall incorporate in all contracts or subcontracts using NSP Funds a provision prohibiting any conflict of interest prohibited by this subsection. 15.2.3 No NSP Funds shall be lent to any officer, director, or person serving in a similar capacity for the City or Commission, or to any member of the immediate family of any such person, nor shall any loan of NSP Funds be made for the purchase of any property, or of a loan secured by any property, in which any such person or family member has (or had, prior the purchase of such property with the proceeds of such loan) an interest, or in any transa.ction in which any such person acts as a real estate broker or agent, mortgage broker, or in any similar capacity. 15.3 Reversion of NSP Assets. Upon termination or expiration of this Agreement, the Commission must transfer to the City any NSP 10/21/2009 City of Federal Way Page 19 of 33 FW Human Services Contract for 2009 NSP CDBG Funds Funds in the City's Loan Receipts Account, including interest earned on such funds and any NSP Funds due and receivable.. 15.4 Agreements with Others. If the Commission provides NSP Funds to for- profit owners or developers, nonprofit owners or developers, sub- recipients, homeowners, homebuyers, tenants receiving tenant- based rental assistance, or contractors, the Commission must have a written agreement that meets the requirements of 24 CFR Section 92.504. 15.5 Flood Insurance Protection. If any property for which a Second Mortgage is purchased is in a special flood hazard area as identified by the Federal Emergency Management Agency, then the Commission shall ensure that flood insurance is and shall remain in effect, in accordance with Section 102(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C. Section 4001, et seq.). 15.6 Targeted Outreach. The Commission and the City are responsible for conducting targeted outreach of the Program to residents and tenants of public and manufactured housing and to other families assisted by public liousing agencies per 24 CFR section 91.220. 16 Commission's Ri t to Rel��ram Manuals 16.1 House Key Federal Wa ��gram Manual. For purposes of its duty to comply with HOME regulations related to Second Mortgages using NSP Funds, the Commission shall have the right to rely on the Program Manual (updated as provided in Exhibit A) and this Agreement as incorporating or describing both the HUD conditions and requirements made applicable by reason of the use of NSP Funds and to rely: 16.1.1 on income limits and property purchase price limits set forth in the Program Manual, until the Commission receives notice that an amendment to the Program Manual revising such limits is required; and 16.1.2 on information set forth in the forms contained in the Program Manual, as now or hereafter revised, when properly and timely completed, signed and delivered. Unless the Commission has knowledge or notice contrary to the information stated therein, such information shall satisfy the requirements for documentation of compliance with the particular regulations or requirements for which the forms are designed, provided that the forms used are a11 of the forms applicable to the facts of the particular Second Mortgage pursuant to the terms of the Program Manual. 16.2 Revision Followin� Notice from the City. The Commission shall revise the Program Manual (including any forms attached thereto) and provide 10/21/2009 City of Federal Way Page 20 of 33 FW Human Services Contract for 2009 NSP CDBG Funds such revisions to Mortgage Lenders promptly following written notice from the City of any required changes. 16.3 General House Kev Program Manual. The parties acknowledge that some requirements of the HOME Program are intended to be satisfied by compliance with the terms of the more general House Key Manual of the Commission as now in effect, as incorporated by reference in the Program Manual (to the extent not inconsistent therewith), and are therefore not described specifically herein or in the House Key Federal Way Program Manual. The City shall review and approve the Program Manual and forms contained therein prior to use by the Commission. 17 Second Mortga�e Servicing and Administration 17.1 Direct Servicing or Servicin�greement. So long as this Agreement remains in effect and for additional periods specified in Section 21, the Commission shall either: (a) maintain in effect a servicing agreement with a Servicer, consistent with the terms of this Agreement and without cost to the City, for the servicing and administration of all Second Mortgages in the Loan Pool; or (b) directly administer and service such Second Mortgages consistent with the terms hereof. If there are any assets in the Loan Pool other than Second Mortgages, the Commission shall have the responsibility to service and administer such assets. In any agreement with a Servicer, the Commission shall ensure that the obligations and authority of the Servicer are consistent with those of the Commission under this Section 16, and that the Servicer performs and observes such provisions. The Commission may delegate any of its authority under this Section 16 to the Servicer, and may satisfy any obligation under this Section 16 by causing the Servicer to perform, unless otherwise expressly stated herein or in the Program Manual. The Commission shall provide any proposed contract with a Servicer and any proposed amendment thereto to the City at least ten (10) days prior to execution. The Commission shall not enter into a contract or contract amendment with a Servicer if the City reasonably objects to the qualifications or record of the Servicer, .or to any terms of the proposed contract or amendment. 17.2 Fees or Compensation 17.2.1 The Commission may charge Eligible Homebuyers a one-time Program application fee not to exceed $40.00. The Commission sha11 not be entitled to any fee for acting as Servicer. All costs and expenses incurred by the Commission in performing its obligations pursuant to this Agreement shall be at the Commission's sole cost and expense, except and to the extent otherwise provided in this Agreement. No costs or fees of a Servicer shall be deducted from any payments on Second Mortgages, except late charges if so provided in the servicing agreement with the Servicer. 17.2.2 For Second Mortgages originated with NSP Funds, the Commission shall ensure that Mortgage Lenders do not charge Eligible Homebuyers a fee for originating, monitoring or servicing the Second Mortgages. 10/21/2009 City of Federal Way Page 21 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 17.3 General Duty to Service; Acceleration on Certain Events. The Commission shall be generally responsible for loan administration and servicing for the life of each Second Mortgage. The Commission shall administer and service the Second Mortgages in accordance with all applicable laws and regulations and in a manner consistent with prudent loan servicing practices for similar loans. Without limiting the foregoing, (a) the Commission shall proceed diligently to collect all payments due under the terms of each Second Mortgage as they become due, and shall perform such other customary duties, furnish such other reports and information and execute such other documents in connection with its duties under this Agreement as the City may from time to time reasonably require; and (b) to the full extent permitted by applicable law, upon any event described in the Loan Documents for any Second Mortgage upon which the principal balance may be declared due and payable when the property or an interest therein is transferred or the property is no longer the principal residence of the family of the Eligible Homebuyer to whom the Second Mortgage was made, the Commission sha11 promptly declare the principal balance due and payable in full and shall diligently seek to collect all amounts owing on the Second Mortgage. 17.4 Records and Files. The Commission shall maintain, or cause the Servicer to maintain and shall deliver to the City within ten business days of a request all records necessary to satisfy the requirements of 24 CFR Section 92.254 and 24 CFR Section 92.508 with respect to the Second Mortgages and the activities conducted under this Agreement. Without limiting the foregoing, the Commission shall maintain or cause the Servicer to maintain a separate file for each Second Mortgage. The file must contain the property address and census tract number; number of bedrooms in unit; owner name, address, and phone number; form of ownership; type of project; number of units if not single family; and household characteristics including income, family size, racial and ethnic group of household members and whether there is a single head of household (including sex thereo�, disability if information is volunteered by an applicant; and a listing of all costs and sources of funds related to the purchase. Each file must contain all of the following except as specifically noted below: 17.4.1 Loan Application (which shall include information showing first-time homebuyer status); 17.4.2 Income and family size certification and supporting documents; 17.4.3 Copy of purchase agreement; 17.4.4 Copy of Promissory Note (original shall be kept in a fireproof safe); 10/21/2009 City of Federal Way Page 22 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 17.4.5 17.4.6 Recorded Deed of Trust (or other appropriate security instruments in the case of any manufactured home that is not real property); Accurate Truth-in-Lending Sta�ements with acknowledgements of receipt by all borrowers; 17.4.7 Appraisal of home purchased and evidence of borrower's receipt of a copy thereof; 17.4.8 Documents showing compliance with the property value requirements for affordable housing, including the initial purchase price and appraised value after rehabilitation, if applicable; 17.4.9 17.4.10 Credit report; Closing statement for purchase of home (HUD-1 form); 17.4.11 Title insurance policy in favor of the Commission or Mortgage Lender in the principal amount of the Second Mortgage (Lender's Extended Coverage, showing no liens for money owing, except governmental charges and the first lien mortgage, prior to the Deed of Trust except as permitted under this Agreement); 17.4.12 Lead paint report for the home as required by HIJD (if any portion was built before 1978); 17.4.13 Disclosure statement signed by the home buyer concerning lead-based paint poisoning if the building in which the purchased unit is located was constructed wholly or in part prior to 1978; 17.4.14 Records demonstrating that the purchased unit meets applicable housing code and housing quality standards; 17.4.15 Documents showing that the combination of federal assistance and any other subsidy is not any more than is necessary to provide affordable housing; 17.4.16 Documents demonstrating compliance with federal displacement, relocation, and acquisition requirements; and 17.4.17 Verification of continued occupancy of the property by the Eligible Homebuyer in accordance with the Commission's agreement with the Servicer. 10/21/2009 City of Federal Way Page 23 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 17.5 Transfer of Second Mortga�es. The Commission shall not, without the express written consent of the City, sell, assign, or encumber any Second Mortgage or any interest therein. 17.6 Notices of Foreclosures or Le�al Actions and Right to Cure. If the Commission provides any statutory notice to commence foreclosure proceedings or any notice of trustee's sale, or if the Commission commences any legal action against a borrower or for foreclosure, or if the Commission receives any notice of such action by any other holder of a lien on the property subject to any Second Mortgage in the Loan Pool, the Commission sha11 provide a copy of such notice or complaint in case of any legal action to the City at the same time as it is first provided or sent to the borrower or property owner, recorded, or filed with a court, whichever is earliest. If the Commission receives notice from any other holder of a lien on any home for which a Second Mortgage loan is made, of any intent to foreclose, trustee's sa1e, or legal action to foreclose such lien, the Commission shall promptly provide a copy of such notice to the City. If so requested by the City, the Commission shall provide copies to the City of further documents in any proceeding of the type referred to in this subsection, promptly upon the Commission's receipt or delivery thereof, as applicable. The Commission may, but is not required, to make additional payment(s) to protect the security of the Second Mortgage after default by the borrower, including but not limited to payrnents for unpaid rea1 estate taxes, insurance premiums or liens. If the Commission opts not to make such additional payments, then the Commission shall give written notice to the City of the condition of default and the amount required to cure, and the City may, at its respective sole option and discretion, make such payrnents, but is not required to do so. Additional payments made by the Commission or the City pursuant to this subsection sha11 increase the paying entity's Proportionate Share of Loan Contributions used to determine the respective interests described in Section 7. 17.7 Monitorin�, Enforcement, Modifications and Forbearance. The Commission shall monitor compliance with and enforce, as permitted by applicable law and in accordance with reasonable policies of loan administration generally prevailing in the single family mortgage industry, the terms of the Second Mortgages in the Loan Pool. Except as expressly authorized herein or in the Program Manual, the Commission shall not, without the written consent of the City: 17.7.1 agree to the modification, waiver, or release of any provisions of a Second Mortgage; 17.7.2 take or omit to take any action that would release any obligor or any other person from any liability for the payment of money or the performance of any material obligation under any Loan Document, other than waiver of late charges and/or default interest; 17.7.3 release or subordinate any security securing any of the obligations of any obligor under a Second Mortgage, except for release upon full payment, or payment of an amount determined by the Commission or Servicer in good faith to be at least as much as 10/21/2009 City of Federal Way Page 24 of 33 FW Human Services Contract for2009 NSP CDBG Funds could reasonably be collected from enforcing its rights in such security for the Second Mortgage; 17.7.4 finally settle, compromise, or adjust any insurance claim that is more than the unpaid balance of the Second Mortgage; 17.7.5 bid for, purchase, or acquire any property subject to any Second Mortgage, whether by conveyance in lieu of foreclosure, by purchase at foreclosure or creditor's sale, or otherwise; or 17.7.6 consent to or approve any sale, transfer, or conveyance of a11 or any part of the real property subject to a Second Mortgage, or any assumption of any Second Mortgage. The Commission shall have the right, without notice to or consent from the City, to grant to any Eligible Homebuyer, in the exercise of the Commission's reasonable judgment, any extension of time or forbearance for the performance of any obligation or condition under a Second Mortgage, and to allow any reinstatement or plan of cure, to the extent consistent with the Program Manual; provided that, without the written consent of the City, the Commission shall not waive, release, or fail to enforce within a reasonable time provisions for acceleration of a Second Mortgage if the home ceases to be the principal residence of the Eligible Homebuyer's family. The Commission may waive late charges or default interest or both on condition that some or all past due installments be paid. 17.8 Propertv Insurance. The Commission sha11 ensure that the property subject to each Second Mortgage is at all times insured by a property insurance policy providing coverage in an amount not less than required by the Loan Documents, in which the Commission is named a loss payee pursuant to a standard mortgage clause or its equivalent. If the borrower fails to maintain such insurance, then unless the first lien lender sha11 promptly "force place" replacement property insurance, the Commission shall or sha11 cause the Servicer to "force place" replacement property insurance at the borrower's expense. 17.9 Compliance with Statutes and Re�ulations. The Commission shall obey all laws of the United States, the State of Washington and the ordinances, regulations, and codes of the applicable City and County. 18 Nondiscrimination 18.1 Federal Requirements. No person shall on the grounds of race, color, national origin, religion or sex be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with NSP Funds. The Commission sha11 comply fully with the requirements of the Fair Housing Act (42 U.S.C. Sections 3601-20) and implementing regulations at 24 CFR Part 100; Executive Order 11063, as amended by Executive Order 12259 (3 CFR, 1958-1963 Comp., p. 652 and 3 CFR, 1980 Comp., p. 307) (Equal Opportunity in Housing) and implementing regulations at 24 CFR Part 107. The Commission shall comply fully with all requirements of Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et s�., 10/21/2009 City of Federal Way Page 25 of 33 FW Human Services Contract for 2009 NSP CDBG Funds which provides that no person in the United States shall on the ground of race, color or national origin, be excluded from participation in, denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance; and with HUD regulations implementing such requirements, 24 C.F.R. Part 1. {24 C.F.R. Section 92.350(a)}. 18.1.1 The Commission shall ensure compliance with Executive Order 11246, entitled "Equal Opportunity" (3 CFR, 1958-1963 Comp., p.339), as amended, and the regulations issued pursuant thereto, 41 C.F.R. Part 60, which provide that no person shall be discriminated against because of race, color, religion; sex or national origin in all phases of employment during the performance of federal contracts and subcontracts, and the Commission shall take affirmative action to ensure fair treatment in employment, upgrading, demotion or transfer, recruitment or recruitment advertising, layoff or termination, rates of pay, or other forms of compensation and selection for training or apprenticeship. 18.1.2 The Commission shall comply fully with all of the requirements and prohibitions of the Age Discrimination Act of 1975 (42 U.S.C. Sections 6101-07) and implementing regulations at 24 C.F.R. Part 146 and those of Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. Section 794), and implementing regulations at 24 C.F.R. Part 8. 18.1.3 The Commission shall further comply fully with Section 109 of the HCD Act of 1974, as amended (42 USC 5301); and with The Americans with Disabilities Act (42 USC 1213; 47 USC 155, 201, 218 and 225). 18.2 State Rec�uirements. The Commission shall comply, and shall require all Mortgage Lenders, contractors and subcontractors to comply, with all applicable equal employment opportunity and nondiscrimination laws of the State of Washington, including but not limited to RCW Chapter 49.60. 19 Indemni 19.1 Bv the Commission. The Commission agrees to indemnify and hold harmless the City, and its officers, employees and assigns, against any and all claims, costs, liability or damage arising from the negligent or otherwise wrongful acts, or from omissions to perform acts required of the Commission by this Agreement, by the Commission and its contractors and subcontractors, and their respective officers or employees, in connection with the Program or with the Second Mortgages. The Commission waives, solely with respect to the City, its immunity under RCW Title 51, Industrial Insurance. The Commission and the City acknowledge that this waiver has been specifically negotiated and the City would not enter into this Agreement absent this waiver. This indemnity provision shall survive any termination or expiration of this Agreement. 19.2 Bv the City. The City agrees to indemnify and hold harmless the Commission and its officers, employees, and assigns against any and all claims, costs, liability or damage arising from their respective negligent or otherwise wrongful acts or omissions to perform required acts under this Agreement. The City waives, solely 10/21/2009 City of Federal Way Page 26 of 33 FW Human Services Contract for 2009 NSP CDBG Funds with respect to the Commission, its immunity under RCW Title 51, Industrial Insurance. The Commission and City acknowledge that this waiver has been specifically negotiated and that the Commission would not enter into this Agreement absent this waiver. This indemnity provision shall survive any termination or expiration of this Agreement. 20 Remedies If any party fails to comply with any of its obligations under this Agreement, then such party shall be in default. If such default is not cured within thirty (30) days after written notice to the party, then the other party shall have the right to enforce the terms of this Agreement by any remedies available at law or in equity. In addition to any other rights and remedies, any party may suspend or terminate this Agreement upon providing thirty (30) days written notice to the other party, if the other party materially fails to comply with any term of the Agreement. 21 The Commission's Purchase Obligation for Ineli�ible Loans or Failure to Enforce Recanture 21.1 If either (a) the City, for loans that include City NSP Funds, or HUD determines that a Second Mortgage was not eligible for use of NSP Funds; or (b) the Commission defaults on any of its obligations with respect to the administration or servicing of a Second Mortgage and as a result of such default the principal balance of a Second Mortgage cannot be declared due, or cannot be collected within one year after default; except as otherwise provided below, upon thirty (30) days' notice from the City, the Commission shall purchase from the City the City's entire interest in such Second Mortgage. The interest shall be based upon the City's Proportionate Share plus the City's respective share of accrued interest on such Second Mortgage in proportion to the City's Proportionate Share. On the date such amount becomes payable, such Second Mortgage shall be removed from the Loan Pool. 21.2 Ineligible Loans Where the Commission Not at Fault. Notwithstanding the foregoing portion of this Section, if, within 15 days after notice to the Commission of a determination of ineligibility, the Commission gives written notice to the City that the Second Mortgage was determined to be eligible by the Commission based upon false information provided by the borrower or the originating Mortgage Lender, and if the Commission was not negligent in purchasing the Second Mortgage for the Program, the Commission sha11 not be obligated to purchase the City's interest from its own funds so long as the Commission agrees to diligently pursue remedies against the originating Mortgage Lender andlor the borrower. If in such case, the originating Mortgage Lender repurchases the Second Mortgage, then the Commission shall use the proceeds to purchase the City's interest as otherwise set forth above in Section. 22 Term of Agreement; Survival 22.1 Unless terminated earlier upon mutual agreement, upon material noncompliance pursuant to Section 20, or upon 180 days advance notice pursuant to this Section 10/21/2009 City of Federal Way Page 27 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 22, this Agreement shall remain in effect until ninety days after all of the following have occurred: 22.1.1 all Second Mortgages have been paid in full or otherwise satisfied; 22.1.2 all money to which the holder of any Second Mortgage is or may become entitled has been collected by the Commission; 22.1.3 any property, other than money that the Commission has received or may be entitled, in respect of any obligations or assets in the Loan Pool or the security therefore, has been sold or otherwise disposed of, and the proceeds thereof have been received by the Commission; 22.1.4 the City has been paid the City's Share for all periods in which any Loan Receipts have been collected; and 22.1.5 the Commission has delivered to the City a final accounting thereof. Any party may terminate this Agreement with or without cause upon providing 180 days advance written notice to the other parties. 22.2 Upon termination of the Agreement, the Commission sha11 return any unexpended funds to the parties in accordance with their respective interests therein according to the terms set form in Section 7.7, and shall either direct the Servicer to authorize the City to service outstanding Second Mortgages or otherwise address the City's respective interests in outstanding Second Mortgages. 22.3 Notwithstanding expiration or other termination of this Agreement, all provisions hereof required by NSP, HOME, and/or CDBG regulations shall survive and remain in effect to the extent required by such regulations; all provisions requiring the maintenance of and access to records shall remain in effect for seven years after expiration or termination; and the Commission shall maintain, cause its Servicer to maintain, or reach agreement with the City to otherwise maintain accounts needed to a11ow for continued receipt and distribution of the City's and Commission's respective Proportionate Shares of Loan Receipts. 23 No Partnership or Joint Venture 23.1 Nothing herein is intended to create any partnership or joint venture, or to authorize either party to bind the other to any obligation in favor of any third P�3'• 23.2 No officer, employee, agent or representative of the Commission sha11 represent himself or herself to be an officer or employee of the City, nor as authorized to bind the City in any way. No such person shall make any claim, demand, or application to or for any right or privilege applicable to any officer or employee of the City, including but not limited to Worker's Compensation coverage, Unemployment Insurance Benefits, Social Security Benefits or retirement membership or credit. The Commission sha11 indemnify and hold the City harmless from any such claim or demand. 10/21/2009 City of Federal Way Page 28 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 23.3 No officer, employee, agent or representative of the City shall represent himself or herself to be an officer or employee of the Commission, nor as authorized to bind the Commission. No such person shall make any claim, demand, or application to or for any right or privilege applicable to any officer or employee of the Commission, including but not limited to Worker's Compensation coverage, Unemployment Insurance Benefits, Social Security Benefits or retirement membership or credit. The City shall indemnify and hold the Commission harmless from any such claim or demand. 24 No Third Partv Beneficiaries The rights and privileges granted or created by this Agreement are for the sole and exclusive benefit of the City and the Commission. This Agreement is not intended to create, nor does it create or confer any benefit upon any third party, except to the extent that the United States may have rights or remedies related to the obligations of the Commission to comply with provisions, laws and regulations applicable because of the use of NSP Funds. 25 Entire Agreement, Amendments; No Waiver This Agreement, including the attachments hereto and documents incorporated by reference as provided herein, constitutes the entire agreement of the parties with respect to the subject matter hereof. The parties hereto may amend or modify the terms of this Agreement only by a written document signed by all parties affected by such amendment. No course of dealing shall be construed to alter any obligations, rights or remedies hereunder. No waiver of any rights or remedies under this Agreement shall be valid unless in writing and signed by an authorized officer of the party granting such waiver, and any such waiver that may be granted as to any particular breach hereof shall not constitute a waiver as to any other breach. No consent to, approval of, or failure to object to, any agreement or document with terms or conditions contrary to the terms of this Agreement shall constitute, or be construed as, a modification or waiver of any terms of this Agreement. No delay in taking any action or giving any notice shall in any way impair any rights or remedies of the parties. 26 Notices; Desi�,nated Representatives 26.1 The City and the Commission designate the following as their primary representatives and contacts with respect to the administration of this Agreement and the Program. 26.2 These designees may be substituted for by written notice to the addresses below. Any notice under this Agreement shall be given to a party at the respective address or facsimile number below, or at such other address or number as shail have been provided by notice in accordance with this Section. 26.3 Notice shall be effective two working days after mailing, postage prepaid, or when received by facsimile during normal working hours. 10/21/2009 City of Federal Way Page 29 of 33 FW Human Services Contract for 2009 NSP CDBG Funds c 26.3.1 Commission: Dee Taylor, Director Representative: Homeownership Division 1000 Second Ave, Suite 2700 Seattle, WA 98104-1046 Telephone: 206-287-4414 Fax: 206-287-4456 e-mail: dee.tavlor(�a,wshfc.or� City: Brian J. Wilson Interim City Manager City of Federal Way 26.3.2 Brian J. Wilson, Interim City Manager Representatives: City of Federal Way 33325 8�' Ave S PO Box 9718 Federal Way, WA 98063-9718 Attn: Lynnette Hynden, Human Services Manager Human Services Division 33325 8 Ave S PO Box 9718 Federal Way, WA 98063-9718 Telephone: 253-83 5-2650 Fax: 253-835-2609 e-mail: Lynnette.Hynden@cityoffederalway.com 27 Construction; Governin� Law; Venue This Agreement is the product of negotiation and shall not be construed against any party as the drafter of any provision hereof. This Agreement shall be construed, interpreted, and enforced in accordance with the laws of the State of Washington and, to the extent applicable, federal law. If any provision hereof or of any attachment hereto shall be determined to be invalid or unenforceable, the remainder of this Agreement and any such attachment shall not be affected by such determination. In the event of any irreconcilable conflict between or among the following, this Agreement shall be interpreted to give priority in the following order: 27.1 Applicable federal laws and regulations; 27.2 Applicable State laws and regulations; 27.3 Applicable County ordinances; 27.4 Applicable City ordinances; 27.5 This Agreement, as it may be amended in writing; 27.6 The Program Manual, as it may be amended with written approval of the City and the Commission; 10/21/2009 City of Federal Way Page 30 of 33 FW Human Services Contract for 2009 NSP CDBG Funds .1 27.7 Other documents that receive the written consent or written approval of the parties pursuant to this Agreement; 27.8 Venue for any action arising out of this Agreement shall be exclusively in King County, Washington. 28 Time is of the Essence Time is of the essence of all of the terms and conditions of the Agreement. Notwithstanding the foregoing or any other provision hereof, no time limit for any response, approval, or other action required or permitted after notice from one party to the other under the Agreement shall be deemed of the essence unless the first page of any required prior notice states the relevant time period and specifies that such time is of the essence. 29 Insurance Requirements The City acknowledges, agrees, and understands that the Commission (T'he State of Washington) is self-insured for all of its liability exposures. The Commission agrees, at its own expense, to maintain through its self-insurance program coverage for its liability exposures for the duration of this Agreement. The Commission agrees to provide the City with at least 30 days prior written notice of any change in the Commission's self-insured status and to provide the City with the letter of self-insurance as adequate proof of insurance. 30 Use of Recycled Products The Commission will endeavor whenever practical to use recycled paper for the production of a11 printed and photocopied documents that are related to the fulfillment of this Contract with the City and shall ensure that, whenever practical, the cover page of each document printed on recycled paper bears an imprint identifying it as recycled paper. If the cost of recycled paper is more than fifteen percent (15%) higher than the cost of non-recycled paper, the Commission may notify the City, which may waive the recycled paper requirement. Whenever practical, the Commission shall use both sides of paper sheets for copying and printing. AGREEMENT REGARDING DOWNPAYMENT ASSISTANCE HOUSE KEY FEDERAL WAY PROGRAM Executed this day of 2009. WASHINGTON STATE G FINANCE COMMISSION an, Executive Director 10/21/2009 City of Federal Way Page 31 of 33 FW Human Services Contract for 2009 NSP CDBG Funds el� CITY OF FEDERAL WAY By: i `r Brian J. Wilson. Interim City Manager APPROVED AS TO FORM: DATE: CITY OF FEDERAL WAY i Printed Name: Q,4�1 u� I� ���11�'�► i �vZ�L 1 1 (Address) Q l� �J�4- q�3 9 2�3 3� ?�-1 O (Phone) STATE OF WASHINGTON ss. COUNTY OF ATTEST: �d`' City Clerk, Carol McNei y, CMC �%�y,"° City Attorney, Patricia A Richardson On this day personally appeared before me �f� ��.tQ me known to be the �Y1�Q,VI�IY1 ��'�I ��a�''Y�� of l� that executed the foregoing in ent, an acknowledged the id instrument to be the e and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he/she was authorized to execute said instrument and that the seal affixed, if any, is the corporate seal of said corporation. ����a•.. a a���ni�� i s G_ ��qNN�k��ir /�1�/ �'V o� y y�� �E o�� r 1 r�� A-� O� 6 %i��� waa �u. hand and official seal this day of ����t C�_v� h. 20� Notary's signature Notary's printed name 1�. Notary Pu ic in and for the tate of Washington. My commission expires 0 1 D City of Federal Way Page 32 of 33 FW Human Services Contract for 2009 NSP CDBG Funds �i• a r''�:; y# �-�)1�t .,::r,,,.:,..,,_.,, y O a,t y 3 N c o o. z`1 Cp ,�tc!', ,�y °5"�"'`'>:.,,,,,:��' K� ��'���'<..�m. t!+»� �j ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A_ DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW Exhibit A: Program Manual Exhibit B: Quarterly Report Form (reference Section 13.1.1 to 13.1.7) 10/21/2009 City of Federal Way Page 33 of 33 FW Human Services Contract for 2009 NSP CDBG Funds 14 SPECIAL PROGRAMS c�rY oF Federai Vllay HOUSE KEY FEDERAL WAY DOWNPAYMENT ASSISTANCE PROGRAM PROGRAMDESCRIPTION House Key Federal Way is a down payment assistance program offered with House Key loan products. House Key Federal Way was created from a partnership between the Commission and Federal Way. Because Neighborhood Stabilization (NSP) CDBG Investment Partnership Program funds are being used in this program, Mortgage Lenders are encouraged to target outreach to residents and tenants of public housing, trailer parks, and manufactured housing, and to other families assisted by public housing agencies, for the purpose of ensuring that program funds are used for downpayment assistance for such residents, tenants and families. PROGRAM ELIGIBILITY 3 First Mortgage must be a Fixed MyCommunityMortgage, House Key Teacher, Freddie Mac Home Possible, FHA 203(b), 203 (k) Streamline, 234 (c) House Key Loan. Interest Only loans are not available with this program. The Borrower must not have owned a home at any time in the three years preceding the closing of the Second Mortgage. The Borrower's income must not exceed the House Key Federal Way requirements (see Income Limits in this Section). The Borrower must demonstrate a need for assistance (see Calculating House Key Federal Way Loan Amount in this Section). 5. The downpa.yment assistance may not exceed twenty percent (20%) of the total purchase price of the property. This calculation includes subsidizing interest rate (points), mortgage insurance, and closing costs. 7. The property must be located in Federal Way and in one of the eligible census tracts per NSP guidelines (see map in Eligible Areas in this section). The property must be Foreclosed, Bank-Owned or abandoned property per NSP guidelines. (10/02/09) 14HKKINGCOLJNTY.1 8. The property must be discounted by at least 1% from the value established by an appraisal that has been completed within 60 days of the final offer and meet the URA appraisal definition along with 49 CFR 24.103 9(a)(2) standard appraisal requirements. 9. Prior to closing the loan, the Borrower must attend a one-on-one pre-purchase counseling session. Please see our Website for a complete list of housing counselors to schedule an appointment. The borrower will sign an"acknowledgement of fee" form provided by the service provider and the counseling fee will be paid at closing. Down Payment Assistance funds can be used to pay counseling fee as an allowable closing cost. A certificate of completion will be provided by the housing counseling prior to closing. 10. T'he Seller must sign the "Disclosure of HOME Program Requirements" 14FEDERALWAY.10.1 (NOTE: See House Key Federal Way "Program Forms" at the end of this Section for all Program forms 11. The Seller must sign the "Estimated Fair Market Value Notice 14FEDERALWAY.10.2. 12. The property must comply with the U.S. Department of Housing and Urban Development's (HUD) Lead Paint Safety Requirements and HUD Housing Quality Standards. (See Property in this Section for additional information.) 13. The property must comply with HUD's requirements for properties located within an FAA-designated civilian airport Runway Clear Zone or a Runway Protection Zone, or within the military Airfield Clear Zone or Accident Potential Zone/Approach Protection Zone, based upon information from the airport or military ai�eld administrator identifying the boundaries of such zones. (See Property in this Section for additional information.) 14. The Seller will sign a copy of the "NSP Voluntary Acquisition of Foreclosed Property" notice to Owner that includes a statement that the property will not be acquired through the jurisdiction's powers of eminent domain and statement acknowledging the Owner's right to not sell the property. 14FEDERALWAY.10.5 MORTGAGE DETAILS Interest Rate 0% interest, payment deferred for 15 years Loan Term 15 years Maximum Program Loan Amount $50,000 Minimum Program Loan Amount $1,000 Repayment Due at the time of sale, transfer, refinance within first 15 years. Loan is forgiven in full at end of 15 year affordability period. Loan payoff is not pro-rated prior to 15 year period. Assumptions House Key Federal Way loans are NOT assumable (10/02/09) 14HKKINGCOLTNTY.2 CALCULATING HOUSE KEY FEDERAL WAYLOANAMOUNT The House Key Federal Way Second Mortgage loan amount is the lesser of: A) Amount of need as established by the Mortgage Subsidy Worksheet calculated by the underwriter; or B) $50,000 for families at 50% or less of area median income On the Mortgage Subsidy Worksheet, if the borrower's front-end ratio (PITI/Income) is less than 25% based on household compliance income, the underwriter will decrease amount of subsidy to bring up the front-end ratio to acceptable assistance base levels for gap financing. If the borrower fails to meet the ratio test, then the underwriter can proceed using the House Key Plus Needs Assessment Form (15.30.1-2). The underwriter will calculate the House Key Federal Way Second Mortgage Subsidy Worksheet located in the Forms section of this Program Manual at underwriting approval to determine the exact amount of funds needed, 14HKFEDERALWAY.10.3.1-2. The forms should be completed using a current VOD or bank statements and should be adjusted as the borrower's situation changes. The underwriter determines the amount of cash required by the Borrower to close the transaction. Stocks, bonds, IRA's, 401(k)s, mutual funds, life insurance policies and annuities are not included in the calculation. The Borrower(s) may keep but is not required to have $5,000 or three month's payment for Principal, Interest, Taxes and Insurance (PITI) in reserves left after closing. Subtract the proposed reserve amount from the total amount of verified assets available at underwriting approval. If the amount is less than or equal to 0 enter "0" on the appropriate form. House Key Federal Way funds are to be used for down payment, closing costs, and pre-paids. House Key Federal Way funds cannot be used to buy either the first or second mortgage down. House Key Federal Way funds cannot be used to pay off bills or liens of the Borrower. If the Borrower is required by underwriting to pay off these items, these items must be satisfied prior to closing and verification of the Borrower's funds for the Subsidy Worksheet form should be determined after the funds have cleared the Borrower's accounts. House Key Federal Way funds cannot be used to replenish the Borrower's bank account if they do not have reserves in the bank after closing. House Key Federal Way funds cannot be used to pay for repairs to the property. Furthermore, if the Borrower chooses to pay for repairs from their own funds, escrow holdbacks must be for an exact bid from contractor. In order to avoid cash back, escrow cannot over collect Borrower funds (i.e., 1%2 times). Please refer to Page 2.5 (Escrow Holdbacks) and Page 4.2 (Acquisition Cost) of the House Key Manual. (10/02/09) 14HKKINGCOLTNTY.3 In order to avoid cash back issues at closing, the Mortgage Lender should re-calculate the need after receiving an estimated HUD 1 closing statement from the Escrow Company. Adjustments should be made to the loan amount if necessary prior to releasing loan documents. If in doubt, it is always a good idea to reduce the loan amount slightly than risk the chance of the borrower receiving cash back. COMBINED LOAN TO VALUE (CLTi� FHA, FHA 203(k) Streamline Cannot exceed 100% of FHA's Acquisition Cost. FHA's Acquisition Cost does not include 2" mortgage fees. MyCommunityMortgage CLTV of 105%. Freddie Mac Home Possible TLTV of 105% BORROWER'S CASH TO CLOSE The Borrower's minimum downpayment requirement is 1% of the purchase price. Up to'/2 of the 1% can be from gift funds. BUYDOWNS Buydowns are not allowed for House Key Federal Way. Furthermore, if the Borrower's first mortgage is an FHA or MyCommunityMortgage temporary buydown, the buydown cannot be paid by Borrower's assets and must be paid for by Seller or Mortgage Lender with documentation in file. First mortgage temporary buydown funds paid by Seller or Mortgage Lender are not included in the needs assessment. CASH BACK In no event will House Key Federal Way funds result in cash back to the Borrower. Please refer to Page 13.3 of House Key Manual for further information. CALCULATING INCOME The calculation used by underwriters to determine compliance income for the House Key Federal Way Second Mortgage is the same as the calculation used to determine compliance income for the House Key first mortgage as shown in Section 3 of the House Key Manual. Please contact the Commission if you need assistance calculating compliance income. After the applicant's income for the Second Mortgage has been calculated, refer to the Maa�imum Income Limits chart in this Section to determine if the applicant is at or below 50% of area median income. (10/02/09) 14HKKINGCOLJNTY.4 MAXIMUM INCOME LIMITS Households earning 50% or less of the King County area median income as reported annually by HUD, adjusted for household size, may qualify for a maximum loan amount of up to $50,000. To be eligible for the program, an applicant's Annualized Gross Household Income (as of the date of signing the purchase agreement or as of the date of purchase in the case of an existing home) must not exceed: 1 Person $29,500 5 Person $45,500 2 Person 3 Person 4 Person $33,700 $37,950 $42,150 6 Person 7 Person 8 Person $48,900 $52,250 $55,650 Please note: House Key Federal Way will be introduced in 2 Phases (possible 3 Phases) Phase 1: Maximum NSP funds $50,000 per qualified first-time homebuyer at or below SO% Area Median Income until twenty-five percent (25%) of the available funds have been obligated, Phase 1 remains open and then, Phase 2: Maximum NSP funds $30, 000 per qualified first-time homebuyer at or bedow 80% Area Median Income but above 50% Area Median Income until available funds have been obligated. In the event that all funds have not been designated to qualified first-time homebuyers that qualify for Phase 1 or Phase 2, written City approval must be received to open up Phase 3. Phase 3: Maximum NSP funds $20, 000 per qualified first-time homebuyer at or below 100% Area Median Income but above 80% Area Median Income until all NSP funds have been obligated. PROPERTY Lead-Based Paint and Housing Quality Standards Mortgage Lenders must provide a copy of HUD's "Lead Paint Safety" Field Guide (6/1999) (HLTD #1779-LHC) to appraisers and instruct them to specifically address the condition of the paint and note any areas of deterioration. Mortgage Lenders are also required to have the appraiser complete HUD's Housing Choice Voucher Program Inspection Checklist form HtJD- 52580 (3/2001) to ensure the property meets HUD's Housing Quality Standards. If the appraiser identifies areas of deteriorated paint, the Mortgage Lender must provide a written letter to the Seller, notifying them that the paint deterioration must be corrected in a lead paint-safe manner. (10/02/09) 14HKKINGCOIINTY.S Once the paint condition has been corrected, the appraiser must re-certify the painted surfaces of the home. Property Occupancy Properties that are currently occupied by a tenant, other than the House Key Federal Way Borrower, are NOT eligible properties. The Seller must sign the "Disclosure of HOME Program Requirements" form 14FEDERALWAY.10.1 stating that the property is not tenant occupied (other than by the Program borrower) and that no displacement of an individual(s) has occurred or shall occur. Seller Notices Because federal funds are used in House Key Federal Way, the Seller must be informed that 1) the Borrower does not have the power of eminent domain or condemnation to use to acquire the property if negotiations between the Seller and the Borrower fail to result in an amicable agreement and 2) prior to the closing of the sale, the Mortgage Lender must provide the Seller with a written estimate of the fair market value of the property. The "Disclosure of HOME Program Requirements" form 14FEDERALWAY.10.1 is used to provide notice to the Seller of these requirements. Once the Mortgage Lender has the appraised value and before the loan closes, the Seller must be notified using the "Estimated Fair Market Va1ue Notice" form 14FEDERALWAY.10.2. If the estimated fair market value of the property is in excess of the contract price, the Seller may withdraw from the selling agreement. Property Located Around Civil Airports and Military Airfields Because federal funds from the HOME Program are used in the House Key Federal Way Downpayment Assistance Program, Borrowers purchasing properties located around civil airports and military airfields must be notified of potential circumstances. If the property being acquired is located within 3,000 feet of a civil airport or 2 and '/2 half miles of a military airfield and within an FAA-designated civilian airport Runway Clear Zone or a Runway Protection Zone, or within the military Airfield Clear Zone or Accident Potential Zone/Approach Protection Zone, the Buyer Notification Form 14KINGCOLJNTY.10.4) must be used to provide the required Borrower notification required by HUD. INSURANCE REQUIREMENTS Hazard Insurance. Hazard insurance is required sufficient to cover both the first and second mortgages, or the maximum insurable value of the property whichever is less. The policy must contain a guaxanteed replacement cost endorsement. Binder must indicate the first loan be payable to Bank of America, N.A. using the standard Mortgagee clause as written as shown on Page 2.5. (10/02/09) 14HKKINGCOLTNTY.6 Please refer to Page 2.4 for more information. Binder must indicate the second loan be payable to the Washington State Housing Finance Commission, its successors and/or assigns, c/o Bank of America, N.A., P.O. Box 961206, FTWX-22, Fort Worth, TX 76161 (use Bank of America, N.A., TPRP-220PS, P.O. Box 2962, Phoenix AZ, 85062-2962 if the insurance carrier is Farmers, Safeco, State Farm, and Metlife). Title Insurance Title insurance coverage is required for the first mortgage only. The Second Mortgage appears as a lien of record in second position when the policy is issued. As title insurance is not required for House Key Federal Way, the Mortgage Lender is not allowed to charge a.title fee on the 2na mortgage. RESERVATIONS Reservations for House Key Federal Way Second Mortgage loans are made at the same time as the House Key first mortgage loan reservation. Funds are reserved on a first-come, first-served basis. Loan originators may reserve the maximum allowable House Key Federal Way funds for their borrower since cash to close cannot be exactly determined at loan reservation. The underwriter will complete the House Key Federal Way Subsidy Worksheet form at underwriting approval to determine the exact amount of funds needed. Increases in the reservation amount are subject to the availability of funds. NOTE: House Key Federal Way Second Mortgage loans may be combined with the Commission's House Key Plus or HomeChoice downpayment assistance funds. However, HomeChoice Program underwriting guidelines may be used for eligible HomeChoice first mort�age borrowers. The Commission's House Key Plus or HomeChoice DPA programs will be in 2" lien position with House Key Federal Way in 3 position. PRE-CLOSING COMPLIANC� REVIEW Documents submitted to the Commission with the Pre-closing Compliance Review file: 1) Original "Disclosure of HOME Program Requirements" (14FEDERALWAY.10.1). 2) Original "Estimated Fair Market Value Notice" (14FEDERALWAY.10.2). 3) Copy of "Subsidy Worksheet (14FEDERALWAY.10.3.1-2). 4) Original "of "Buyer Notification Form (14FEDERALWAY.10.4) 5) All pages of the property appraisal 6) Copy of completed HL1D's Housing Choice Voucher Program Inspection Checklist (3/2001) (HUD-52580). CLOSING AND DELIVERING THE LOAN Program Application Fee (10/02/09) 14HKKINGCOLJNTY.7 There is a$40.00 fee for House Key Federal Way loans. This amount will be subtracted from the amount reimbursed to the Mortgage Lender. This fee must be disclosed on the Second Mortgage Truth-in-Lending and the HUD-1 Settlement Statement. Housing Counseling One-on-one pre-purchase counseling is required in addition to Commission approved Homebuyer Education Seminar. A counseling certificate must be provided in the post-closing package to Commission. Refer to page 14.2 above. Funding and Delivery Participating Mortgage Lenders fund the Second Mortgage at loan closing. The funding and delivery procedures are as follows: 1) House Key Federal Way Second Mortgage notes are originated under the Commission's name; 2) The Master Servicer will purchase loans with a copy of the Deed of Trust with the original recorded copies to follow. Please indicate marital status of Borrower(s) on House Key Federal Way Deed of Trust. Please see Appendix II (18.2) for Fannie Mae's Catastrophic Language policy for loans at 100.01 to 105% CLTV from the House Key Program Manual. (10/02/09) 14HKKINGCOIJNTY.8 E�timated Forectosure Abatem�ent Risk C�11SUS B�OCI'C GCOU�S (Sca/e of 1 �aj �>ga��i 3 ����r�� e Y ti j e Y p. 5 i �a 75� �r ,.._;�iYa, m� 5 ��1 �'�yr'�; wC�� Est. Abatement Risk 9 Low Risk 2 3 '4 6 7 Mediusr� High Risk Genera{ Legend: Q Federal Way City Lirnits Potentiai Mnexation Rrea Gensu� Tra�is Gensus Biack Groups �Uff8C2 �atEf Source: HUD; 20Q0 Census 0 0.� 1 N Mi�s CRY OF Fe�leral Way Tlvs map accampanied by rro wartarMies, and is sin�py a�aphic representabon. (04/24/09) 14HKKINGCOLJNTY.9 ELIGIBLE AREAS House Key Federal Way is available for properties being purchased in census tracts: 300.02, 302.01, 302.02, 303.03, and 303.11 as shown on map. HOUSE KEY FEDERAL WAY PROGRAM FORMS ORIGINATION AND LOAN PRE-CLOSING Name of Form, Date of Form, Page Number Disclosure of HOME Program Requirements (08/01/09) (14HKFEDERALWAY.10.1) Estimated Fair Market Value Notice (08/O1/09) (14HKFEDERALWAY.10.2) Federal Way Subsidy Worksheet (08/O1/09) (14HKFEDERALWAY.10.3.1-2) Federal Way Buyer Notification Form (08/Ol/09) (14HKKINGCOLJNTY.10.4). HUD's Lead Paint Safety Field Guide (6l1999) (HUD #1779-LHC). HLJD's Housing Choice Voucher Program Inspection Checklist (3/2001) (HUD-52580). LOAN CLOSING Name of Form, Date of Form, Page Number House Key Federal Way Note, (08/O1/09) (14HKFEDERALWAY.10.5.1-5) House Key Federal Way Deed of Trust, (08/Ol/09) (14HKFEDERALWAY.10.6.1-16) (04/24l09) 14HKKINGCOi1NTY.10 10/21 /2009 iiowe Key Federal Way D�►w�aphic �d ReNnbusarNrd D�a Exhibit 8 -Aitadwnent Oise Appraised on HK FW 2nd Houss Key PISI Total Closing Purehas� 1 st Loan 2nd Loan i� Laat Nartw Purchas� Prlcs Valw Valw FW NSP Funds Mort 1st Mort HK IM Rab P a 1 Py P ymt Date Dab Lender Nam� Loan Olne�r Monehiy �ncom� Mnual Incoms 1 55555555 55555556 BORROWER i250.000.00 i2�.000.00 3.90% 35�.00Q.00 550,000.00 E200,000.00 5.50 5851.88 51.�3.35 9/30/2009 70/30/'2009 Hortie Mortgage Compeny Loan O(ficer 53,500.00 5�2,000.00 TOTALS 5250.000•00 AVERAGE $250,000.00 AS OF 10101109 550.000.00 550.000.00 5200.000.00 Z50,000.00 550�000.00 5200�000.00 pate Allocadon Bal ot Funds 8N@009 18,104.00 5819,104.00 •w�. coa. 2-Bleck/PJriun Amerfean &ASien #Amet.InAiaNAlaskan Nativa 'SNatNS HawaiiaNPxiHC IalanAer 6Amet.IntlisNAlaskan Na1Fte d W�ib 7-ASian 8 While s.euca�v�cm a�r��, a wnxe e-a� xw�nvaas.aatwe a �aa�x �10�Otlror mWlFncial 0 otlro �':�t t-ASiaNPa�11e Ialandsr a -ryp. a �..naa -N�M &ElOSdy ,3RehtaA Sinpb Pamit 4-ReHtad Two ParoMa S Olhx •MnuN Income as %M Arq MMian Meoma 1- 0 -30% 31-50% 3 51-80% 87-80% S Over 80% CapltaNzation �s a ,��it Front End Ciosing RaUo Date Head of 24.43 24.43 MaN HOH Marrkd House Key Fsderel Way DertwyraplNe and Re� Da(a F�mah H�1 Ethnk F�mak ny �a or a ot (NH or •Rx� NH (Y o► 'ryp� of HH Prlmary ParoM SI N MarrNd E Parent Head oi HsH HH SW •AMI Cods BDRAA Fq Cods N) Cod� Bortrn�rer x x Lorene 4 2 3 NH 1 Y 3 38 4.00 4.00 E�fii�l 8 -Attadwnenl I:^'?' 1�21/2003 Rp Dsiault Rsimbun� Reeelpt of Status Census Tnct Zip Code Dats Reimburss Houss Key Federal Way Danograplpc and Reimbusemork Constru Hmt Other Typs Aqu�tion Cost Cash irom FManolny Finanelrp Pa�d bY OMer ot Primary ryp (From HUD 1) Bortower /Grant (SNIer,Ayent) 6diibit B -Attadvnxk Pn- P�rcMs� Servk�r Losn TYPS neED Dw 10/21/2009 Mouse Key Fedsrel Way Dsrno9rapMe and Re�busanent Data E�ibit B -Attachm�t