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CONTRACT NO. K-1213-35: A CONTRACT BY AND BETWEEN THE CITY OF NORMAN, OKLAHOMA, AND MCCLAIN BANK TO SUBORDINATE A LIEN REGARDING FUNDS FROM THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM FOR PROPERTY LOCATED AT 1213 ERIE AVENUE.
ACTION NEEDED: Motion to approve or reject Contract No. K-1213-35 with McClain Bank; and, if approved, authorize the execution of the contract.
ACTION TAKEN: _________________________________________
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BACKGROUND: In September 2009 the City of Norman Community Development Block Grant Program provided a loan to Florence M. Mailu for an emergency repair to her home at 1213 Erie Avenue. As a condition of funding, a lien was placed on the property and was filed as a subordinate mortgage to the primary mortgage on the property. Any modification of the primary mortgage requires resubordination of the lien. The program does not require repayment of the loan as long as the applicant maintains their home as their primary residence for four years; and at the end of four years the subordinate mortgage is released.
DISCUSSION: Approval of the request for subordination of the lien on 1213 Erie Avenue would allow the owner to secure a loan to refinance the primary mortgage that will provide a significantly lower interest rate to reduce the house payment by $198.46 per month. Documentation from McClain Bank including a Certification of Mortgage Loan Refinancing, Good Faith Estimate, and a Truth in Lending Disclosure Statement were provided. The Subordination Agreement that will be filed with the new primary loan is attached. In accord with the adopted City of Norman Housing Handbook, these documents prove that all funds will be used for the refinancing of the home, with no funds going toward payment of debt.
Subordination of the lien would assist in making more money available for the upkeep of the property. The City would maintain a second position on the property. Additionally, the request meets the requirements of ou...
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