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1979-1128_SECURITY PACIFIC NATIONAL BANK_Operating Agreement711IS :;C.PIiI "i .P is antared into this 28th(!ay of November 1979, San Juan Capistrano ti , `--:._-: r +� .-�-�O r c.� "e to is oca it hereiraiter referred to as "frank" the Locality is carrying out a Censer- vation as apart of the Locality's Coryrmity Icve]-opment Kock ^.-.u:t i'iudre wider the [hrited States Housing and Coir -comity herelor-r_nt Act of 1974 whicli was re -authorized by the 1977 Act; and the Locality and the B. I desire to mutually agree upon the methods and proccr]ures ir:der N,hich they will make loans for rehabili- tation and i:,prevement purposes. NOW, 'iTIRId=ORE, 11 -IE PARTIES ?,MUA LY AGREE AS FOLLOWS: 1. Loan Application Packa& Locality shall refer all persons desiring credit under this Agreement to the Bank by forwarding to the Bank a Loan Application Package consist- ing of at least the following documents and materials: A. Letter of Introduction from City; B. Loan Application; Application Supplement and State of California Fair Lending Notice; C. Construction Ccntract or Bids or Description of work with cost estimate; D. .Applicant Authorization of Confidential Disclosure. 2. Review of Loan Aoulications Within five (5) days of receipt of the Loan Application Package, Bank- shall ank shall review the Loan Application Package and forward to the Locality, in addition to the applicant, a written notice indicating either the Bank's approval or disapproval of the loan application. ire information contained in the Loan Package and in the Bank's written notice shall be held by the Locality as a priviledged and confidential document and not as a public record. Locality warrants that Bark shall be held harmless from any acts of locality's cr.ployees in the course of the loan process, that may be in violation of State rind/or Federal credit granting statutes and regula- tions. Locality efi:rloyees shall not express credit worthiness opinions to ahplic,,nts. 3. Lo:m Provisions A. Fank agrees to proml:tly make loans fcr the Nei<.,borhood Conservation Program in all cases where loan applications are approved by the Bank and the Locality. B. The Locality shall subsidize the loan by malting a single, "Lump Sum" interest subsidy payment to the Fank at the time of loan funding, so that the finance cF:n .e payablby the borrower shall be 3�% and 633%. C. Rates to be ci:arged as determined by Bank, prior to any interest subsidy, but not to exceed 13.00%Annual Percentage Rate. D. In cases ti l? ere a borrower prepays a loan, La ,l; shall r�fmid to the Locality the unused prepaid interest subsidy, providing that such refund exceeds $50.00. R.efLnd to be calculated bused on the Rule of 78ths method. 4. Loan Doctrentation � Disbursement A. Locality obtains a dated and signed rehabilitation contract. 'Me contract must specify the type of improvements and the itemized cost of those improvements. If the property owner performs the work him- self or herself, the locality roast certify the rehabilitation speci- fications and the itemized cost of each improvement. B. Locality forwards the executed contract or locality -certified speci- fications to Bank with a request for loan documents. C. Bank prepares and forwards loan documentation at the interest rate previously determined and advises locality of the interest subsidy due. Payments on the loan shall be equal monthly instalments. The first payment is due 30 days from Note date. D. Locality obtains borrower's signature on loan documentation, arranges for notarial acknowledgments and returns all documents to Bank. E. Bank forwards to the Locality loan proceeds in the form of one or more Casluer's.Checks payable to the borrower. If more than one check is necessary, the locality will inform the Bank of the number of checks to be issued. S. Completion Certificate A. Locality makes a final inspection. B. Locality executes the completion certification. (i) The certificate must be properly filled in and signed by both the customer and the contractors. It must be dated the day it is signed by the borrowers, and borrowers must sign it only AFITJ2 work has been completed. The completion certificate shall �e accocpanied by the necessary lien releases. 0 0 -3 (ii) Locality forrards the c,--npleted and signed completion certifi- cate to Bank. 6. Collection of Fu:ds The B�+nk collect all monthly on account of loans originated under this loan program. ;i:cre shall be no additional charge to the borrc::or or the Locality for s_rvicing of lc:r,s except charges to the borrower resulting from late payments,defaults and/or foreclosures. The Federal Goverr ont -,rd/or i -n}: or tLeir design: es are not barred by this provision from collecting -nia s from the bn rcwer which represent a loss of principal, interest and/or administrative or legal costs re- sulting from a foreclosed 1:�.n. 7. Delinquency and Foreclosure The Bank shall forward to the Locality a copy of defaults and fore- closure or proposed foreclosure proceedings. The locality shall have the option to cure any default of the borrower. The report by the Bank to the Locality of loan delinquencies shall be made at least once a month unless the Bank finds that the number of delinquent loans is to small to justify such reporting or the locality elects to waive such reporting. 8. Locality's Loan Liability Locality shall not be liable or responsible in any manner, in the event of borrower's default on the promissory rote with Bank, related to the !can. 9. Termination The term of this agreement shall be ongoing from the date of execution by the Locality and Bank. This agreement may be amended so long as such amend- ment is in writing and agreed u,on by both Locality and Bank. Termination of this agreement may be made by either Locality or Bank so long as written notice of intent to terminate is given by the other party at least 60 days prior to the termination date. Any termination of this agreement shall not affect the operation thereof as it relates to loans outstanding at the time of said termination. C F� — � � tip Al 1 L. �_ �V �- _, 1979 BT Lr Title_ Phil Long Pet',� 1979 By. Approved by: City Council November 28 ,1979 SH URITY PACIFIC "i^TIO`LAL F_A1 K ASO Fj ORM: Title BY If"NETH EI/ I. F ESS, MAYOR BYi_TY?cr.l _ ARV A 1 HA ER, CI C ERK