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