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�� Request for Action <br /> Elk <br /> River <br /> To Item Number <br /> Housing and Redevelopment Authority 7.4 <br /> Agenda Section Meeting Date Prepared by <br /> General Business June 1, 2020 Amanda Othoudt,ED Director <br /> Item Description Reviewed by <br /> Subordination Request for 602 Gates Avenue NW Cal Portner, City Administrator <br /> Reviewed by <br /> Action Requested <br /> Approve,by motion,the Subordination Agreement between Northport Funding,LLC., and the Housing <br /> and Redevelopment Authority. <br /> Background/Discussion <br /> On March 20, 2015,Jayme Swenson received a loan from the HRA in the amount of$25,000 to make <br /> improvements to the property located at 602 Gates Avenue NW through the HRA's Rehabilitation Loan <br /> program. <br /> Ms. Swenson is in the process of refinancing a 30-year-fix-rate conventional mortgage with Northport <br /> Funding,LLC. Northport Funding,LLC will be taking a first lien position on the new loan. Northport <br /> Funding,LLC has requested that the Housing and Redevelopment Authority hold a subordinate position. <br /> CEE completed the review of the package and the information from both Jayme and her Loan Officer <br /> and recommend approval of the Subordination. <br /> • Their review shows a new appraised value of$240,000.00 and a new combined Loan to <br /> Value (CLTV) ratio of 67.23% for a new loan for$143,000.00. <br /> • Per the documentation, even though the refinance is classified as a Cash-Out Refinance, <br /> there is no actual cash going to the borrower and that it is classified as such per Fannie Mae <br /> guidelines because the closing fees are being financed. <br /> • The HRA's position on the lien is not compromised and will be raised from third to second <br /> as a result of the refinance. <br /> • Taxes are current and there are no delinquencies, therefore there is no risk of a potential <br /> foreclosure or action against the property by the first lien holder. <br /> • The terms of the new loan will extend the term of the current note on the first mortgage, but <br /> will reduce the interest rate and the monthly installment. <br /> • The terms of the new loan do not challenge or conflict the HRA's interest on the title. <br /> Based on those results, CEE is confident that the recommendation to approve the subordination is in the <br /> best interest of the HRA. <br /> The Elk River Vision <br /> A Y�elcoming community nvith revolutionary and spirited resourcefulness, exceptional p D W E H E D D Y <br /> service, and community engagement that encourages and inspires prosperity ,g /` UR <br />