BACKGROUND:
In 2005, the County provided a $53,210 no interest loan in CDBG funds through the Neighborhood Preservation Program to the owner of 1314 Chestnut Street, Martinez. At that time, the appraised value of the home was $400,000. In 2007, the County subordinated its loan to a new first mortgage loan in the amount of $337,000. The home value was then over $430,000. A Notice of Default was recorded June 29, 2009.
The owner of the property has a purchase offer of $250,000, which is substantially below the total outstanding loans of approximately $390,000. The first lender, Wachovia (now Bank of America) has agreed to a payoff of $220,000. The seller is requesting the County agree to a payoff of $10,000. The remaining proceeds from the sale will be used to pay property taxes, escrow fees, and Realtor commissions.
With the significant loss of home values in the County, staff expects that the County may be requested to consider additional requests for partial loan repayment. Staff will prepare a Board report and recommendation that would permit staff to handle such requests administratively subject to conformance to Board policy and direction. Staff will bring a recommendation forward in the first quarter of 2010.
CONSEQUENCE OF NEGATIVE ACTION:
If the Board of Supervisors does not approve this request, the buyer will not be able to purchase the home and the bank will foreclose on the property. If the bank does foreclose, the County will not receive any payment.
CHILDREN'S IMPACT STATEMENT:
CLERK'S ADDENDUM
ADOPTED the recommendations; and REQUESTED a report be prepared for the Board's consideration in January 2010 with an estimate of the number of CDBG property loans that may be subject to this type of in lieu settlement, the possible financial ramifications to the CDBG fund and the County, and an overview of options to manage these actions.