HomeMy WebLinkAbout13.F.1. Subordination Request for SCDP Loan Recipient
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City of Shakopee
Memorandum
TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Kris Wilson, Assistant to the City Administrator
SUBJECT: Subordination Request for SCDP Loan Recipient
DATE: March 16, 2006
Introduction
The City has received a request to wave its Subordination Policy relative to a Small Cities
Development Program (SCDP) loan made in 2003.
Background
In 2003, the applicant received a $9500 loanthrough Shakopee's Small Cities Development
Program, to make improvements to her home. She now wishes to refinance her mortgage and
take cash out in order to add an addition onto her home. According to the Subordination Policy
ofthe SCDP program, the City will not subordinate its loan on a refinancing if the property
owner is taking cash out ofthe transaction. She is asking that the City consider making an
exception to this policy for her.
A letter has been received from the applicant requesting that the City agree to continue to
subordinate her SCDP loan to her new mortgage, rather than requiring repayment of the loan at
this time. She feels that because of personal circumstances that this is a unique situation.
The SCDP is a deferred loan program, which means recipients do not have to repay any oftheir
loans if they continue to own the property for a certain number of years after receiving the loan.
A portion of the value of the loan is forgiven each year. Ifthe Council does not grant the
exception requested, she would be required to repay a portion of her original loan if she proceeds
with the cash-out refinancing.
Recommendation
Given her unique personal circumstances, staff recommends that the City Council grant the
applicant the requested exception and agree to subordinate the remaining amount of her SCDP
loan to her new mortgage.
Action Requested: If it concurs with the recommendation, the Council should offer and adopt a
motion to authorize appropriate staff and city representatives to accept a subordinate position for
the remaining value of the applicant's SCDP loan to a new mortgage.
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Memo from the:
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Carver County Housing Er
Redevelopment Authority
To: City of Shakopee Staff/Council
From: Darin Berger
Date: March 10, 2006
Re: Subordination Request
Hello. We've received the attached Request for Subordination from a
homeowner who received Small Cities Development Program Funds in June of
2003.
According to the Subordination Policy, the Carver County HRAlCity of Shakopee
will NOT subordinate to new financing if there is cash out of the transaction.
Cash out means that the applicant borrowed more than the amount needed to
payoff any existing mortgage balance(s). Cash o\Jt includes the paying off of
credit cards, other loans and funds for home improvements.
She's hoping the Shakopee City Council will allow her to go ahead with her plan
to build.an addition on the rear of her house without having to pay back the
money she received through the Small Cities Program.
See attached for her documentation.
Please let me know when/what you decide.
Feel free to call me with any questions, (952) 448-7715.
djb