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)
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COMMITTEE APPROVAL DATE:
PAID BY: � CONTRACTOR ❑ CITY
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I1�iITIAL / DATE APPROVED
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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/
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AG# (� -�
DATE SENT:
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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
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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
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3
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Gene3'al Legend:
Fed�ral 1EVay Gi:y Lim3ts
�, - ff,, ::r:. { Potant�alRnnexat�orsArea
�:xrf,:;:::<:
;; Census Tracts
... . . � Cens�s Block Groups
� : $E3lf2C+B VYat�1'
Source: Hiid: 2i}Qi3 Census
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Th�s t»m� ia accomgar;icd �t no warran+.ies,
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(11/30/09) 14HKFEDERALWAY.9
Exhibit A
HOUSE KEY FEDERAL WAY
PROGRAM FORMS
ORIGINATION AND LOAN PRE-CLOSING
Name of Form, Date of Form, Page Number
Disclosure of HOME Program Requirements (11/30/09) (14HKFEDERALWAY.10.1)
Estimated Fair Market Value Notice (11/30/09) (14HKFEDERALWAY.10.2)
NSP Voluntary Acquisition of Foreclosed Property -Eminent Domain (11/30/09)
{ 14HKFEDERALWAY.10.7)
Federal Way Subsidy Worksheet (03/24/10) (14HKFEDERALWAY.10.3.1-2)
Federal Way Buyer Notification Form (11/30/09) (14HKFEDERALWAY.10.4).
HLTD's Lead Paint Safety Field Guide (6/1999) (HCTD #1779-LHC).
HUD's Housing Choice Voucher Program Inspection Checklist (9/00) (HLJD-52580-A).
LOAN CLOSING
Name of Form, Date of Form, Page Number
House Key Federal Way Note, (11/30/09) (14HKFEDERALWAY.10.5.1-5)
House Key Federal Way Deed of Trust, (11/30/09) (14HKFEDERALWAY.10.6.1-16)
(03/24/10) 14HKFEDERALWAY.10
RETURN TO:
CITY OF FEDERAL WAY LAW DEPARTMENT
REQUEST FOR CONTRACT PREPARATION/DOCUMENT REVIEW/SIGNATURE ROUTING SLIP
1. ORIGINATING DEPT./DIV: C �j��
2. ORIGINATING STAFF PERSON: ��� ��� wYt�C� EXT: G�� 3. DATE REQ. BY:
4. TYPE OF DOCiJMENT REQUESTED (CHECK ONE)
❑ CONTRACTOR SELECTION DOCUMENT (E. Cz, RFB, RFP, RFQ)
❑ PUBLIC WORKS CONTRACT ❑ SMALL PUBLIC WORKS CONTRACT
❑ PROFESSIONAL SERVICEAGREEMENT ❑ MAIN'TENANCEAGREEMENT
� GOODS AND SERVICE AGREEMENT � HUMAN SERVICES / CDBG
❑ REAL ESTATE DOCUMENT ❑ SECURITY DOCU1v1ENT ($.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
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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 -,
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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
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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
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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%;
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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-
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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;
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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
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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.
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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.
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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
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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
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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
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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.
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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
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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
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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.
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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
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(Address)
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(Phone)
STATE OF WASHINGTON
ss.
COUNTY OF
ATTEST:
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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.
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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
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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
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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�
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TOTALS 5250.000•00
AVERAGE $250,000.00
AS OF 10101109
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