4.5. HRSR 09-08-2020 - Laserfiche WebLink

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�J etyof ElkRequest for Action River To Item Number Housing and Redevelopment Authoritv 4.5 Agenda Section Meeting Date Prepared by General Business September 8, 2020 Colleen Eddy, Economic Development Specialist Item Description Reviewed by Cunningham Subordination Request Amanda Othoudt,ED Director Reviewed by Cal Portner, City Administrator Action Requested Approve,by motion,the subordination agreement between The Bank of Elk River, and the Housing and Redevelopment Authority. Background/Discussion On January 25, 2017,Tracy Cunningham received a loan from the HRA in the amount of$22,069.00 to make improvements to the property located at 1420 5d' Street NW through the HRA's Rehabilitation Loan program. Tracy and Erin Cunningham are in the process of a no cash-out refinance with The Bank of Elk River. The Bank of Elk River will be taking a first lien position on the new loan. The Bank of Elk River has requested that the Housing and Redevelopment Authority hold a Yd subordinate position. Borrower: Tracy and Erin Cunningham Address: 1420 5th St NW, Elk River, MN 55330 Closing Date: 1/25/2017 Original Loan Amount: $22,069.00 Current Balance: $14,910.78 • Our review shows a new Appraised Value of$227,500.00 • New Loan amount is $136,000.00 • Per the documentation, this is a rate and term refinance with a limited cash-out to finance the closing fees per Fannie Mae guidelines. • New CLTV is 66.33%; there is an open Line of Credit for$30,000.00 with a current balance of$0.00 that,if used to the max,will bring the CLTV to 79.5%, still below the recommended CLTV of 100%. • The new CLTV combined with a lower interest rate (new interest rate is 2.875% down from 4.250/o), and the fact that the line of credit (second Lien) is at$0.00 balance suggests a strong income position and the possibility of improvements to the property that will increase its base value in the short term. • The city is currently in third position and will keep its position after the new lien is in place. • Taxes are current and there are no delinquencies, therefore there is no risk of a potential foreclosure or action against the property by the county or the first lien holder. The Elk River Vision A Y�elcoming community nvith revolutionary and spirited resourcefulness, exceptional p D W E H E D D Y service, and community engagement that encourages and inspires prosperity ,g /` UR