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HomeMy WebLinkAbout5.865 Original Contract 5.2w5 CONSERVATION LOAN GUARANTY AGREEMENT This Conservation Loan Guaranty Agreement is made this ~ay of ~M . 200R, by and between First Federal Savings and Loan Association of Port Angeles (~ereinafter called "Lender") and the City of Port Angeles (hereinafter called "City"). Definitions: Authorized City representative is the Director of Public Works and Utilities or such officer as designated by the Director. City customer is an owner of an existing residential structure, or a business owner or tenant of an existing commercial structure who has an active account for electric or water utility services with the City. Eligible measures are cost-effective improvements which conserve energy or water utility services, meet City specifications, and are available through the City's energy or water conservation program. Loan fees are costs associated with preparing, underwriting, and closing a loan as determined by the Lender. If Lender revises any ofthe loan fees, it shall notify City ofthe proposed change and the effective date prior to implementing the revision. Loan guaranty is an agreement by the City to pay to Lender the remaining principal balance on an approved loan upon default by the City customer under certain conditions. Those conditions include: · City customer has failed to make payments to Lender on a loan for a period greater than 120 days; · Lender has made commercially reasonable efforts to collect, which efforts have been unsuccessful; · Lender has made written request to City which shall include evidence of: Lender's reasonable efforts to collect; and the remaining principal balance of the loan due; · Lender shall supply proof that it has not allowed the security to be subordinated, unless otherwise specifically approved by an authorized City representative in writing; · Lender will deliver, endorse and negotiate without recourse, any and all notes and documents to the City and transfer the security that it has associated with the loan to - I - the City within thirty days of payment of the remaining principal balance by City to Lender. Procedures: The parties to this Agreement will follow these procedures: 1. Lender shall supply the loan application form. Lender will disclose all loan fees and charges to each City customer. Lender will provide each City customer with assistance in completing the application. The City customer shall pay all loan fees charged by the Lender for processing the application. Loan fees may be paid in cash or included in the loan amount. Lender shall determine the credit-worthiness of each City customer in accordance with generally accepted standards in the lending industry. 2. Lender shall submit a written loan guaranty request to the City. 3. After review City shall either approve or deny Lender's loan guaranty request in writing. Criteria for approval are: a Borrower being a City customer. b. The improvements qualify as eligible measures. c. The proposed security is sufficient for the loan sought. d. The dollar amount of the loan guaranty is within the approved limits. e. The loan term is within the approved term limits. f. Borrower meets Lender's credit-worthiness standards. A loan guaranty shall only be approved in writing by an authorized City representative. 4. City, upon notice of project completion, will conduct an inspection. Once eligible measures have passed City inspection, the City will notify Lender that funds may be disbursed. 5. After Lender has received notice from City that eligible measures have passed City inspection, it shall disburse all funds under the loan in accordance with Lender's written agreement with the City customer. 6. Lender shall secure loans made to owners of residential structures in the same manner as it does home improvement loans which are not guaranteed under this agreement. Lender shall secure loans made to business owners and/or tenants of commercial structures in the same manner as it does commercial loans which are not guaranteed under this agreement. In all cases, Lender shall comply with residential and commercial underwriting guidelines, unless otherwise specifically approved by an authorized City representative in writing. All loan documents will specifically provide that the secured interest may be transferred/assigned to the City. - 2 - 7. Lender shall process the loans and collection on such loans in a manner in accordance with the standards of the lending industry. 8. Upon written request, Lender shall provide reports to the City specifying the remaining principal balance of each loan on which a loan guaranty is issued under this agreement. Loan Characteristics: The loan shall be repayable by the City customer to the Lender in equal monthly payments, including principal and interest. The loan term shall be: no more than 120 months for owners of residential structures; and no more than 60 months for owners or tenants of commercial structures, unless otherwise approved by an authorized City representative in writing. The loans guaranteed under this agreement shall be fixed interest rate loans. The fixed rate shall be determined by adding an amount not to exceed 2.0 percent to the federal discount rate for primary credit in effect at the time of loan application. At no time may the annual fixed interest rate under this agreement exceed the rate made available to any other utility customer under a similar program. Lender shall notify City of any proposed changes of the interest amount prior to the effective date of the change. Residential Underwriting Guidelines: 1. No mortgage payments greater than 30 days past due within the last year. 2. Credit score in accordance with Lender's home improvement loan requirements. 3. No liens or judgments outstanding. 4. Divorce proceedings must be final. 5. Title insurance (limited liability) request on loan amounts of$15,000 and above. Commercial Underwriting Guidelines: 1. No mortgage or lease payments greater than 30 days past due within the last year. 2. Cash flow and debt coverage ratio in accordance with the Lender's commercial loan requirements. 3. No liens or judgments outstanding. 4. All legal owners shall be a party to the loan. 5. Loan term shall not exceed the remaining lease term. 6. Title insurance (limited liability) request on loan amounts of $15,000 and above. - 3 - . Termination: Either party may terminate this agreement with 60 days written notice. Such termination shall not alter the obligation of the parties as to loans that have been previously committed. Notices: Each Lender loan guaranty request and each City loan guaranty approval shall be in writing and shall be deemed given when personally delivered, or if mailed by certified or registered mail, three (3) days following deposit in the United States mail, postage prepaid, or ifvia facsimile, when received, or if sent by courier service providing evidence of deliver, when actually delivered by such servIce. All Lender loan guaranty requests and other notices to the City shall be directed to the Director of Public Works and Utilities at City Hall, 321 East Fifth Street, P.O. Box 1150, Port Angeles, W A 98362, or to such officer as designated by the Director of Public Works & Utilities. All City loan guaranty approvals and other notices to the Lender shall be directed to the Director of Credit Administration at P.O. Box 351, Port Angeles, W A 98362, or to such officer as designated by the Lender. AGREED TO BETWEEN THE PARTIES on the date written below. FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF PORT ANGELES CITY OF PORT ANGELES ----A Q~~ , Mayor ~4 /el' Date ~-7-0'8. Date ATTEST: AP.PP..l..OVED A.~ s~ 11/ttjtr~/ ~ '-.-----.. City Attorney 00 ~J.pto~ City Clerk G: \Legal_ ~ac.kui1IAGREEMENTS&CONTRACTS\2007 Agrmts & ContractslConservationLoanAgreement -FirstFederal. wpd - 4 -