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HomeMy WebLinkAbout1996-06-25 - AGENDA REPORTS - MULTI FAMILY REHAB PGM (2)City Manager Approval• �� George A. Caravalho Item to be presented by; Sarona Becker CONSENT CALENDAR DATE: June 25, 1996 SUBJECT: PROFESSIONAL SERVICES - MULTI FAMILY .REHABILITATION PROGRAMS DEPARTMENT: Community Development The City's award of State HOME Program for Multi Family Rehabilitation funds was partly based upon the City's ability to administer this program. Since the City does not have this capability in house, the application for these funds stated that the City would enter into a contract with a specialist to administer the program. As a result, Requests for Proposals (RFP) were solicited from professionals with demonstrated experience in implementing multi family residential rehabilitation programs, specifically using HOME Program funds. The RFP sought a specialist with the ability to provide for immediate administration of the City's HOME Program for Multi Family Rehabilitation and the CDBG Supplemental Appropriation funded Multi Rehabilitation Loan Program. The RFP requested such services as general program administration, inspections, construction management, work write ups, loan application intake and processing, loan servicing, and disbursements. The announcement of the RFP was advertised in local papers, and mailed to a list of firms who have previously expressed an interest in working for the City. Eighteen firms received copies of the RFP. Of these firms, four submitted proposals, which were reviewed at the staff level. Each of the firms was asked to compete in the interview phase of the selection process. A panel was assembled to interview the firms. The panel consisted of Ken Pulskamp, Assistant City Manager; Jan Bear, Senior Building Engineer; and Sarona Becker, Administrative Analyst. Panelmembers were provided with copies of each proposal prior to the interviews, and were encouraged to ask questions regarding any part of the proposals or presentations. On May 6, 1996, the panel participated in a half-day interview process involving the following four firms: GRC Copenhaver, Inc. of Diamond Bar; Rehab Financial Corporation of Fountain Valley; United States Escrow Community Services Group of Downey; and Willdan Associated of Industry. These firms were interviewed based upon the informationcontained in their 10 � DEED Agenda Item: proposals describing their experience with similar housing rehabilitation projects. Due diligence was performed on each of the firms, with staff conducting reference checks on the qualifications of each. The firm of United States Escrow Community Services Group (USECSG) was selected by the panel based upon several factors. USECSG has considerable experience in the administration of HOME Program rehabilitation loan services to cities including Fontana, La Mirada, Ontario, Pomona, Thousand Oaks, Santa Ana, San Bernardino, and Ventura, and has administered contracts under the California Disaster Assistance Program following the Whittier Earthquake, the San Francisco Earthquake, and the Oakland Fire. United States Escrow Community Services Group offers all of the services needed to effectively administer this program including comprehensive monthly reporting, licensed personnel, and computerized records management. The superintendent assigned to this project is a City of Santa Clarita resident. Additionally, USECSG administers the City's HOME Program for Disaster Relief and Major Rehabilitation Loan Programs. Staff is recommending that the City Council authorize a contract for professional services with United States Escrow Community Services Group to implement both the HOME Program for Multi Family Rehabilitation and the Multi Family Rehabilitation Program. The source of funds for this contract will be the HOME Program for Multi Family Rehabilitation, a portion of which is allowed for administration expenses, and the CDBG Supplemental Appropriation. A proposed contract and scope of work which have been agreed upon by United States Escrow Community Services Group are available in the reading file in the City Clerk's office. The amount of compensation for the implementation of this program is based upon several factors, including the number of rental units in a given project and the title holder. There is no set fee available for this program, as the fees charged will depend upon property ownership and number of units. These fees will be rolled into the loans, and paid by the borrowers. The compensation of United States Escrow Community Services Group will be according to the following scheduler Loan Processing costs of projects less than 12 units: Properties owned by Individuals or Married Couples/Sole Proprietors - $1,955 per loan closed. Properties owned by Corporations - $2,055 per loan closed. Properties owned by Partnerships - $2,255 per loan closed. Properties owned by Limited Partnerships - $2,655 per loan closed. Loan Processing costs of projects more than 12 units: Projects of 12 units and more shall be compensated at the above schedule plus $30.00 per unit for loan processing.. Construction Management Costs Construction Management services will be compensated at a cost of 15% of the project amount for projects o 14 units, not to exceed $9,000 per project. Construction management services will be compensated at a cost of 10% of the project amount for projects of 5 or more units, not to exceed $15,000 per project. Staff recommends that the City Council: 1. Award a contract with United States Escrow Community Services Group in an amount not to exceed $82,000 dollars ($75,000 plus 10% contingency amount) to perform multi family rehabilitation services for the City funded by the HOME Program for Multi Family Rehabilitation and the CDBG Emergency Supplemental Appropriation, and: 2. Authorize the City Manager to sign all documents with reference to the execution and administration of this contract. ATTACHMENTS The proposed contract and scope of work for this project are available in the reading file in the City Clerk's office. home\052596.agn AGREEMENT FOR HOUSING CONSULTING SERVICES between THE CITY OF SANTA CLARITA and UNITED STATES ESCROW COMMUNITY SERVICES GROUP THIS AGREEMENT is made and entered into this day of 1996, by and between the City of Santa Clarita (hereinafter called "Agency"), and United States Escrow Community Services Group, a California professional corporation (hereinafter called "Consultant"). RECITALS WHEREAS, Agency desires to undertake the Home Investment Partnerships (HOME) Program for Multi Family Rehabilitation and the Multi Family Rehabilitation Program, two programs that provide earthquake rehabilitation loans to owners of multi family property, and which services require a level of staff support presently unavailable to Agency; and WHEREAS, Consultant represents that it is qualified to perform the services contained, it is mutually agreed between the parties as follows: NOW, THEREFORE, and in consideration of mutual covenants hereinafter contained, it is mutually agreed between the parties as follows: COVENANTS ARTICLE I. SCOPE OF SERVICES Consultant shall perform professional services as are directed by the authorized Agency representatives, and as described in the attached Exhibit A. ARTICLE II. AMENDMENTS TO SCOPE OF SERVICES Agency may request changes in the Scope of Services to be performed hereunder. Such changes, including any increase or decrease in the rate of Consultant's compensation, shall be mutually agreed upon by and between Agency and Consultant and shall be incorporated in written amendments to this Agreement. ARTICLE III. CONSULTANT'S COMPENSATION AND METHOD OF PAYMENT For services provided pursuant to Article I, of this Agreement, Consultant shall be compensated at the following schedule, payable within thirty (30) days following receipt of Consultant's invoice. Loan Processing for Projects less than 12 Units: Properties owned by Individuals or Married Couples/Sole Proprietors - $1,955 per loan closed. Properties owned by Corporations - $2,055 per loan closed. Properties owned by Partnerships - $2,255 per loan closed.. Properties owned by Limited Partnerships - $2,655 per loan closed.. Loan Processing for Projects more than 12 Units: Projects of 12 units or more are to be compensated per the above schedule plus an additional $30.00 per unit. - Construction Management Construction Management services will be provided at a cost of 15% of the project amount for projects of 1 4 units, not to exceed $9,000 per project. Construction Management services will be provided at a cost of 10% of the project amount for projects of 5 -10 units, not to exceed $15,000 per project. Invoices will describe services provided and the time required for each service.. ARTICLE IV. TIME OF PERFORMANCE Consultant agrees that it will diligently and responsibly pursue the performance of the services required of him by this Agreement. If a delay beyond the control of Consultant is encountered, a time extension mutually agreed upon in writing by Agency and Consultant may be granted. Consultant shall present documentation satisfactory to Agency to substantiate any request for a time extension. ARTICLE V. COOPERATION BY AGENCY All information, data, reports, records, and maps that are existing, available and necessary for carrying out the work as outlined in the Scope of Services shall be furnished to Consultant without charge by Agency. Agency shall cooperate with Consultant in every way possible to facilitate, without undue delay, the work to be performed under this Agreement. ARTICLE VI. DESIGNATED REPRESENTATIVES The following individuals are hereby designated as representatives of Agency and Consultant respectively to act as liaison between the parties: Agenc Consultan City of Santa Clarita United States Escrow Community Services Group George A. Caravalho, City Manager Gary Parsons, President Any change in designated representatives shall be promptly reported to the other party in order to ensure proper coordination of the project. ARTICLE VII. STANDARDS OF PERFORMANCE Consultant shall comply with all applicable laws, ordinances, and codes of the federal, state, and local governments while performing the services described herein in a good, skillful, and professional manner. ARTICLE VIII, OWNERSHIP OF DOCUMENTS All reports, files, and other material prepared under this Agreement shall be and remain the property of the Agency. ARTICLE IX. AUTHORITY OF CONSULTANT Consultant shall be an independent contractor and shall not incur or have the power to incur any debt, obligation, or liability whatsoever against Agency. Consultant shall, as required, represent the Agency as its agent in contracts, solicitations, and negotiations concerning the implementation of the Santa Clarita HOME Program for Multi Family Rehabilitation and the Multi Family Rehabilitation Program, but Consultant shall be without authority to bind Agency in any way with respect to terms, conditions, sale prices, times of performance, or any other matter related to Agency's legal liability or performance with respect to the implementation of the Santa Clarita HOME Program HOME Program for Multi Family Rehabilitation and the Multi Family Rehabilitation Program for Multi :Family Rehabilitation and the Multi Family Rehabilitation Program. ARTICLE X. TERMINATION Either party may terminate this Agreement upon thirty (30) days' written notice to the other.. In the event of such termination, Consultant shall be compensated for all services performed and expenses incurred to the date of notice of termination as described in a written report to Agency prepared by Consultant, less any amounts previously paid by Agency. ARTICLE XI. NOTICES Notice by Agency to Consultant shall be deemed delivered if sent by certified mail, return receipt requested to United States Escrow, 8121 E. Florence Avenue, Downey, California 90240. Notice by Consultant to Agency shall be deemed delivered if sent by certified mail, return receipt requested to the Community Development Department, City of Santa Clarita, 23920 Valencia Boulevard, Suite 300, Santa Clarita, California 91355. ARTICLE XIL CONFLICT OF INTEREST Consultant represents and agrees that Consultant has not employed any person to solicit or procure this Agreement, and has not made, and will not make, any payment of any agreement for the payment of any commission, percentage; brokerage, contingent fees, or other compensation in connection with the procurement of this Agreement. Consultant further represents and agrees that he has not now, and will not, acquire any interest, direct or indirect, present or prospective, in any of the property acquired by Agency, during the term of this Agreement. Consultant further represents that it has not employed, and will not employ in connection with work to be performed hereunder, any person having an interest, direct or indirect, in any of the property acquired by Agency during the term of this Agreement and Consultant will notify Agency of and will not work on any projects which may represent or appear to represent a conflict of interest with any other municipal client of Consultant. ARTICLE XIII, INSURANCE REQUIREMENTS Consultant shall obtain and maintain during the life of this Agreement automobile liability, including owned, hired, and non -owned vehicles, except as may be stricken out by Agency. Endorsement shall be obtained for the policies providing the above insurance for the following provisions; 1. Additional Insureds "The City of Santa Clarita, Santa Clarita, California, its elected and appointed boards, officers, agents, and employees are additional insureds with respect to this subject project and contract with Agency." 2. Notice "Said policy shall not terminate, nor shall it be canceled, nor the coverage reduced, until thirty (30) days after written notice is given to Agency." 3. Limits The policy limits shall have minimum coverage per occurrence as follows: $100,000 - Property Damage; $250,000 - Injury to One Person/Any Once Occurrence; and $500,000 - Injury to More Than One Person/Any One Occurrence 4. Errors and Omissions Insurance to protect up to $1,000,000 per occurrence of uninsured damage from fire and/or flood. This shall apply whether Consultant is impounding for insurance and neglects in the timely payment of hazards or if the borrower does not make payment and there is a resulting lapse of insurance on the property. 5. Comprehensive Business Liability Insurance to cover loss up to $1,000,000 per occurrence to protect City and related entities from damages arising from any actions of Consultant. In addition to the insurance coverage in the paragraphs above, Consultant shall obtain and maintain, during the life of this Agreement, Workers' Compensation Insurance in statutory amount. All of the endorsements which are required above shall be obtained for the policy of Workers' Compensation Insurance. Consultant shall provide to Agency certificates of insurance showing the insurance coverage described in the paragraphs above, in a form and content approved by Agency, prior to beginning work under this Agreement. ARTICLE XIV: INDEMNIFICATION CLAUSE The Consultant agrees to, and shall defend, indemnify, protect and hold harmless the City, its elective and appointive boards, officers, officials, employees, agents and volunteers from and against any and all claims, demands, losses, defense cost, fines, penalties, expenses, causes of action and judgments at law or in equity, or liability of any kind or nature which the City, its elective and appointive boards, officers, officials, employees, agents and volunteers may sustain or incur or which may be imposed upon them for injury to or death of persons, or damage to property arising out of Consultant's negligent or wrongful act or omission under the terms of this Agreement, excepting only liability arising out of the sole negligence of the City. ARTICLE XV. ENTIRE AGREEMENT This Agreement shall constitute the entire Agreement between the parties. Any amendments to or clarification necessary to this Agreement shall be in writing and acknowledged by both parties to the Agreement. ARTICLE XVI. MISCELLANEOUS If either party to this Agreement is required to initiate or defend or is made a party to any action or proceeding in any way connected with this Agreement, the prevailing party in such action or proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorneys' fees. Attorneys' fees shall include attorneys' fees on any appeal, and in addition, the party entitled to attorneys' fees shall be entitled to all other reasonable costs for investigating such action, taking depositions and discovery and all necessary costs the Court allows in such litigation. All such fees shall be deemed to have accrued on commencement of such action and shall be enforceable whether or not such action is prosecuted to judgment. Consultant agrees that each task as outlined in the work program shall be staffed by members of Consultant's team who are qualified and have the necessary experience to competently perform the task in a manner satisfactory to Agency. C. Subcontracts Consultant may employ subcontractors to perform tasks required in the work program with prior notification and approval by the City. No officer or employee of City shall be personally liable to the Consultant, or any successor in interest, in the event of any default or breach by the City for any amount which may become due to Consultant or its successor, or for breach of any obligation of the terms of this Agreement. This Agreement shall be construed and interpreted both as to validity and to performance under the laws of the State of California. Any and all legal actions concerning any dispute, claim, or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of Los Angeles, State of California, or any appropriate Court in such County. Consultant covenants and agrees to submit to the personal jurisdiction of such Court in the event of such action. F. Co=liance With Federal Reeulations. It is the responsibility of the Consultant to comply with all Federal overlay requirements, including Equal Opportunity and Fair Housing, Affirmative Marketing, Environmental Review, Lead -Based Paint, Lobbying, Drug -Free Workplace, Conflict of Interest, and Procurement. G. Compliance With Milestones. It is the responsibility of the Consultant to follow the timelines as illustrated in the Milestone Activity Chart, attached as Exhibit B. H. Compliance With Policies and Procedures Man ual. It is the responsibility of the Consultant to comply with all provisions of the City of Santa Clarita Home Investment Partnerships (HOME) Program for Multi Family Rehabilitation and Major Rehabilitation Program Policies and Procedures Handbook, attached as Exhibit C. IN WITNESS WHEREOF, Consultant and Agency have signed this Agreement on the date set forth hereinabove. CITY OF SANTA CLARITA George A. Caravalho City Manager Date ATTEST: City Clerk Approved as to form City Attorney UNITED STATES ESCROW Lo bome\mntracluse. Gary Parsons, President EXFIIBIT A SCOPE OF SERVICES AND FLOW OUTLINE LOAN PROCESSING/UNDERWRITING AND CONSTRUCTION MANAGEMENT INTRODUCTION AGENCY DIRECT DEFERRED LOANS In order to assist the needs of owners of rental property who sustained damage as a result of the Northridge Earthquake, the Agency will make available deferred loans to such owners where the tenants are of low and moderate income. The responsibility of making prudent loans, coupled with the Agency's objective to assist low and moderate income household whenever possible, must be balanced carefully in terms of an underwriting analysis. USE is very sensitive to the political issues the Agency faces and has customized its loan processing services to that end. APPLICATION INTAKE U.S.E. will determine initial eligibility of applicants in accordance with the HOME and CDBG Program regulations. USE shall obtain and document the following: • Income eligibility of rental units (rental receipts) • Property loan to value ration (appraisal) • Proof of Ownership (Deed of Trust) • Rehabilitation specifications for work covered under program (construction management) • Contractor bids/material cost estimates for work under program (lowest responsible bid, minimum of 3) • U.S.E.'s estimate of work • Preliminary documents for loan approval: Fair lending notices Title reports Appraisals PRELEMOINARY RISK ANALYSIS A preliminary risk analysis will be developed initially by ordering and reviewing Title Reports for clear title and liens, appraisals for determining values, and rental information including fair market rents and income of tenants for determining income. If applicant is not eligible for a deferred loan according to lending criteria, Agency will be notified by a Preliminary Risk Analysis. The decision will be turned over to the Agency whether to proceed (by exception) or cancel the transaction. INTRODUCTION With expanding regulatory requirements, shrinking budgets, and limited staffing, many agencies contract with construction management professionals to conduct the complex and demanding tasks inherent in the rehabilitation process. United States Escrow (USE) can provide professional construction rehabilitation services from initial inspection and work write up to contractor selection and final progress inspections. All phases of the rehabilitation process will occur in time frames consistent with the Agency's program design. INITIAL INSPECTION Upon receipt of a Request for Inspection from Agency, inspection personnel will contact the borrower and schedule an appointment to inspect the property according to Agency specifications and program criteria. Inspection personnel will note Health and Safety code violations and discuss general property improvements and program procedures with the borrower according to Agency program design to establish the scope of work. Inspection personnel will provide a written analysis and itemized cost estimate where damage to the unit appears to have affected the structural integrity of the unit. In addition, an inspection by a registered structural engineer will be arranged. CONTRACTOR SELECTION Inspection personnel will provide borrower with copies of the approved work write up to be used by the borrower to obtain three bids from qualified general contractors approved by the Agency. Inspection personnel will assist borrower within the scope of the program. The borrower will submit selected contractor bids and eligibility verifications (contractor licensing and insurance) to inspection personnel for review and approval of cost reasonableness. Upon inspection approval, the Agency will give final approval/denial of the bid selection and submit to intake personnel. The intake personnel will notify the contractor of the successful bid and coordinate with USE for completion of the final underwriting approval. PRECONSTRUCTION CONFERENCE Intake personnel will provide for the execution of all necessary loan document with homeowner. Inspection personnel will schedule a preconstruction conference with borrower and contractor During the preconstruction conference the borrower and contractor will sign the construction contract. The contractor will receive the Notice to Proceed and instructions on procedures for progress and final payments. Requirements for progress payments will include the submission of a Request for Inspection and Payment, Lien Releases, certificates, and permits. PROGRESS PAYMENT INSPECTIONS To receive a progress payment during construction, the contractor will submit to inspection personnel a Request for Inspection, Lien Releases, certificates, and permits. Inspection personnel will submit an Authorization for Payment to intake personnel for Agency approval signed by borrower and contractor (contractor signature optional). Upon final approval, intake personnel will forward Authorization for Payment to USE for disbursement of progress payment, or to Agency's Finance Department, whichever is applicable. All change orders must be approved by inspection personnel and Agency. Inspection personnel will provide before and after photographs to document completed work. In addition, inspection personnel will deal with borrower and contractor in the resolution of any construction disputes. FINAL PAYMENT, RETENTION, AND NOTICE OF COMPLETION Upon request for final inspection from contractor, inspection personnel will schedule appointment with borrower for final inspection and creation of punch list. The punch list will contain any items that need correction prior to the issuance of the final payment. Once all items have been properly completed to the satisfaction of the borrower and inspector and Authorization for Payment will be submitted to intake personnel for approval by Agency and transmittal to USE. Inspection personnel will submit a Notice of Completion to the borrower for signature and submit to intake personnel. The intake personnel will cause the recordation of the Notice of Completion through USE. Thirty five (35) days after the Notice of Completion has been recorded, intake personnel will cause the issuance of and Authorization of Payment to be submitted and signed by all parties for the release of retention to the contractor. LOAN DOCUMENT PREPARATION INTRODUCTION Many agencies have chosen to make direct amortized or deferred construction loans to the citizens of their communitites. The decision to staff lend has created the need for staff expertise commensurate with positions such as bank loan officer and title officer. United States Escrow (USE) personnel has been a part of many Agencies' team in putting the loans on the books. During the applicant qualifying stage, our staff will order outside services - credit reports, title reports - and deliver the reports and documents to the Agency (eventually, fees for these services will wrap into the loan and be paid from the loan proceeds in escrow). Upon loan approval, our staff will prepare the required documents and, upon execution with the borrower, will record appropriate documents with your County Recorder. This service was developed at the request of several local Agencies. In acting as a clearinghouse for the more routine tasks facing the sophisticated Agency staffperson, we have freed up administrative time and dollars for more important tasks. Because we have a standard fee for the service, our fee becomes an eligible soft cost which can be paid from loan proceeds. FORMS Request for Loan Documents This form is used by Agency staff to request that loan documents be prepared. It asks for information needed to fill out the documents correctly. The request may be faxed to our office to speed up the process. We guarantee a five day turnaround on preparation of documents. (Sample at end of this section). CUSTOMARY LOAN DOCUMENTS Deed of Trust A written instrument by which a borrower (trustor) conveys title to real property to a neutral third party (trustee) for the purpose of securing an obligation to a lender (beneficiary). (Sample at end of this section). Promissory Note A written promise to pay or repay a specified sum of money at a stated time or on demand to a named person. In addition to the payment of principal, a promissory note usually provides for the payment of interest. (Sample at end of this section). Truth in Lending Disclosure Statement Reveals to the borrower the actual cost of repaying principal and interest over the term of a loan. Also includes a breakdown of all costs associated with originating the loan. (Sample at end of this section). Request for Notice of Default Notice recorded by the holder of a junior lien requesting notification if a Notice of Default is recorded under a prior Deed of Trust. (Sample at end of this section). Notice of Right to Cancel Gives consumer notice of his/her legal right to cancel loan transaction within three (3) days of executing the Promissory Note. Must specify the maximum date and time up to which cancellation will be accepted. (Sample at end of this section). Control instructions Governs the disbursement of funds held by the Fund Control Holder between two parties to an Agreement (borrower and general contractor). Funds are disbursed, without delay, upon receipt of an Authorization for Payment. (Sample at end of this section). FLOW OUTLINE Once a loan has been approved, we will prepare the following documents for execution: * Deed of Trust * Promissory Note * Truth in Lending Disclosure Statement * Request for Notice * Notice of Right to Cancel * Control Instructions * Any other documentation required by the Agency Once the documents are executed by the borrower, the Deed of Trust and Request for Notice is returned to us for recordation with the County Recorder. Following the recording of the Deed of Trust, we will confirm that the Agency's lien position is secure by updating title. CONSTRUCTION FUNDS DISBURSEMENT INTRODUCTION Many local agencies, in keeping with national objectives, have also developed commercial and economic development programs. Those programs are, in many cases, dedicated to the rehabilitation of commercial or industrial space, or to facade improvement. In California, particularly, seismic retrofitting is of primary concern to City governments. Disaster relief programs are necessary to provide relief for communities that have been tragically struck by different types of disasters. Critical to the success of any Agency's rehabilitation efforts is the timely turnaround of progress payments to Contractors. Many small, women, and minority contractors cannot wait for the bureaucratic wheels to turn out a payment. United States Escrow (USE) built its reputation on timely progress payments to Contractors. Construction Funds Disbursement was the first service we developed for local government agencies. During our twenty year history, we have assisted over one hundred agencies, enabling them to pay their contractors in as little as 24 hours. FORMS Control Instructions Control Instructions govern the payment of the borrowers' loan or grant funds to the general contractor and other payees. The instructions allow for immediate payout of Payment of Demands. Payment of Demands include recording fees, credit reports, termite reports, fund control fees, etc. No Authorization for Payment is required to pay out demands. The Agency may choose to have these checks mailed directly to the payees. The Contractor progress payments are made on an as requested basis and upon receipt of an Authorization for Payment. (Sample at end of this section). Authorization for Payment An Authorization for Payment directs the fund control holder to make a" payment to the contractor or other payee. When work is satisfactorily completed by the Contractor, the Agency will forward an authorization to pay a certain amount for the completion of specific work items. Generally, the property owner and the Contractor, as well as an Agency representative, sign the Authorization for Payment. (Sample at end of this section). Checks may be two party or one party. Checks may be mailed directly to payees or returned to the Agency. FLOW OUTLINE Account Activation To open an individual borrower account, the Agency forwards to USE the following: * Completed Control Instructions * Project proceeds The account is formally opened with the following information: * Borrower's name and address * Account identification * General Contractor's name * Initial balance * Agency funding source The Agency receives back a receipt for funds placed in the account. Authorized Sienatures If U.S.E. disburses funds, the Agency provides USE with original signature samples of personnel authorized to request disbursement of funds. The signatures are kept on file for verification of disbursement requests. Individual borrower signatures are compared with the original signature on the Control Instructions. Funds Disbursement The Agency authorizes a disbursement by submitting an Authorization for Payment which shows: * Payee(s) and amount(s) to be paid * Original signature of borrower and authorized Agency Representative Guidelines for disbursements are set by the Agency. Upon receipt of the Authorization for Payment, USE will: * Verify receipt of proper authorization to disburse * Verify amounts as correct and in agreement with Control Instructions Checks will be issued payable to contractor, borrower, and/or other payees. If Agency disburses funds, documentation is forwarded back to USE for proper tracking of disbursements. Change Orders A Change Order is used by the Agency to make a change in the project amount, payment schedule, contractor's payable, etc. A Change Order may occur at any time during a project. We will revise Control Instructions upon receipt of the Agency's written Change Order. Contingency The Agency may choose to add additional funds to a project in case there are unforeseen construction needs. We will hold contingency at the Agency's request and will release contingency upon receipt of an Authorization for Payment. Retention Generally, retention of at least ten percent is withheld from each Contractor progress payment. The retention is then paid out a specified number of days after project completion. We will pay out retention upon receipt of an Authorization for Payment. Recording the Notice of Completion When the Agency has completed a final inspection on a project, a Notice of Completion is executed. When forwarded to USE, we will have it immediately recorded with the County Recorder. Account Close Out Procedure After payout of funds for work performed, excess funds in the account will be disbursed at Agency's direction. When the account is zeroed out, we will forward a closing statement to the Agency. The closing statement is a complete record of all transactions. REPORTS Account Status Report Regardless of disbursing entity, an account status report will be issued. This report provides the Agency with a review of all activity on all open accounts. All disbursements made to date and remaining loan balances are shown. We also provide an alpha index. (Sample at end of section). Frequency: Two bound reports forwarded to the Agency monthly. Final Closing Statement The final statement provides the Agency with a complete record of all transactions on a project. Signature lines allow for Agency and borrower sign -off and acceptance of the final report. (Sample at end of section). Frequency: Two copies forwarded to the Agency upon close of an individual account. Activity Recap Report This report is a monthly summary of escrow's opened and closed, fundings and disbursements. Monthly figures are carried forward to reflect a full fiscal year's activity. Data is jumped on June 30 each year to.begin again with the Agency's new program year. (Sample at end of section). Frequency: One copy bound into the Account Status Report forwarded to the Agency monthly. LOAN PORTFOLIO MANAGEMENT AND FORECLOSURE INTRODUCTION United States Escrow (USE) currently provides loan collection and forbearance/foreclosure services to over '100 government agencies throughout the United States. Our clients include the cities of Sacramento, California; Riverside, California; Cincinnati, Ohio; City of La Mirada, California; New Orleans, Louisiana; Glendale, Arizona; San Jose', California; and the City of Los Angeles Community Redevelopment Agency. The portfolio is over 16,000 loans in size with a balance of over $260,000,000. Our staff of customer service representatives are continually available for both client agency and borrower inquiries. USE personnel keep informed of all State and Federal tax and other regulatory activity that may impact our clients. Because we maintain an in-house data processing staff, we can easily adapt to new regulations. We provide collection services for amortized (monthly payment) loans and for deferred loans. Through a sophisticated tickler system, we also provide pre -planned tickler notification to client agencies and borrowers. To enhance the management of loan portfolios, we offer the impounding of taxes and insurance or the monitoring of taxes and insurance. We also offer the monitoring of title status for the life of the loan. The political reality of a government agency become lender is such that it is virtually impossible for such an entity to foreclose on delinquent borrowers. We have developed a unique foreclosure service where USE will buy the delinquent note for $1.00 and, under the Agency's direction, go through the steps of foreclosure. In conjunction with our foreclosure service, we provide a delinquency/default follow-up and forbearance service designed to avoid foreclosure and at the same time minimize financial loss to the Agency. FLOW OUTLINE DEFERRED LOAN COLLECTIONS: 1. USE will set up each deferred collection account with documented information from each case file including loan terms, Borrower's name, copy of Promissory Note and Deed of Trust, and Loan Servicing Set-up Sheet. A separate collection file will be maintained for each case. 2. Upon assumption of servicing, we will send to each borrower our a welcome letter and instructions should they choose to make payments (Exhibit 3). 3. Upon Agency request, we will monitor the timely payment of property taxes and insurance premiums. Tax service will be ordered to monitor property tax for the life of the loan. We will notify the insurance agent in writing that premium payments are being monitored by USE and that we are to be made aware of delinquencies or cancellations. 4. If the Agency chooses, USE will establish an impound account for any borrower for payment of taxes and insurance. Many borrowers find it easier to pay into an impound on a monthly basis rather than making large semi-annual or annual tax and insurance payments. If an impound account is established, we will issue an annual coupon book, will collect the monthly impounds from the borrower, and will make the tax and insurance payments on the borrower's behalf. 5. At the Agency's request, we will monitor the status of title for the life of the loan, notifying the Agency of any unreported title transference. At the Agency's request, we will notify the borrower that the loan is immediately due based on the unreported transference and will take sufficient steps necessary, up to and including foreclosure, to activate payoff. ACCOUNT INQUIRIES 1. The Agency and borrowers will have continuous access to all loan account information during normal work hours through our customer service phone line. In addition, we will provide instant hard copy account payment histories or other information through facsimile transmission. 2. Whenever requested by a borrower, USE will provide, without charge, a detailed statement of all transactions relating to the borrower's payments and/or impound account. ADDITIONAL DEFERRED LOAN PORTFOLIO Along with its standard warehousing and monitoring services, USE proposes to provide the following scope of services: Income Reverification * In keeping with the provisions of the borrower's promissory note, USE will forward an income reverifcation packet to each borrower. The packet will contain instructions and forms needed to complete the reverification. A reminder letter will be sent in two weeks if the required information has not been received. * Upon receipt of the completed packet, USE will perform the following tasks: 1) verify that forms are complete and documenting proof of income has been received; 2) calculate the borrower's debt to income ratio to determine if borrower has present capacity to make monthly loan repayments; 3) forward an Income Reverification Report to the Agency, recommending: a) continued deferral or b) amortization; and 4) if recommendation is to amortize the loan, upon Agency approval USE will prepare necessary loan documents and will forward the documents to the Agency for borrower and Agency . signature. USE will record necessary documents and will begin collecting under the new payment schedule. **This service, if requested, will be provided at an additional fee outside of the base rate. Property Conditions Profile * USE will perform a site visit to each owner's property to determine the outer condition of the dwelling and the condition of any detached structures and the grounds. Two photos will be taken to document the condition of the property. NOTE: USE will not, at any time, enter upon the owner's private property. * Property profiles will rate (good, fair, poor) the condition of each of the following: roof, windows, doors, siding, foundation, porches, garage, other detached buildings, yard, walkways, driveway, landscaping, trees, fences, and visible refuse containers. If the dwelling appears vacant or abandoned, the report will so note. * Property profiles may be ordered by the Agency with any frequency desired, e.g., once every two years, once every three years, etc. This service, if requested, will be provided at an additional fee outside of base rate. Affidavit of Owner * USE will forward an instructional letter and Affidavit of Owner to each borrower. The Affidavit requires the owner to swear to continued compliance with all provisions of the promissory, note and/or rehabilitation agreement. Such provisions may Include, but are not limited to, the following: 1) continued residence 2) timely payment of property taxes 3) ongoing hazard and flood insurance coverage 4) timely payment of all sums due superior lienholders 5) proper maintenance of the property 6) non -subordination If no response is received within two weeks, USE will send a second letter again requesting owner to sign and return affidavit. * USE will compile responses and will forward original affidavits to Agency. Some of the above services related to Deferred Loan Portfolio Management overlap. The Agency may be interested in utilizing a variety of monitoring methods. USE will assist Agency in establishing a Schedule of Monitoring Activities. Please note that this service can also be provided for amortized loans. OTHER ADDITIONAL SERVICES 1. USE will provide loan payoff quotations and will perform reconveyances or Satisfaction of Mortgage at the borrower's expense for any loan at the Agency's request. 2. Per IRS regulations, USE will submit each year on behalf of the Agency, required 1098 tax information returns for any borrower paying interest on any Agency loan. Such informational returns will be issued on conforming magnetic tape as required by IRS. 3. USE will supply a year end account summary statement to each borrower if there has been interest or impound activity on their account. The report will indicate .principal and interest paid, the amount of payments we made on the borrower's behalf for taxes and insurance, and any remaining impound balance. COMPUTER LINKAGE PACKAGE A key component to managing any large portfolio is the ease of accessibility to loan profile and payment history information. Having this critical loan information provided to you through computer link provides your Agency with the most efficient method of accessing your portfolio. USE has developed a computer linkage package designed to make available to your Agency, electronically, loan status information that is normally received via hardcopy reports or phone inquiries. Your Agency's portfolio database is made available (on a read only basis) directly through modem communication to your system's terminal. With our computer linkage, you and other Agency staff can avoid phone inquiries and receive loan information instantly. Our computer linkage package is compatible with most IBM -based machines and features report printing capabilities on most laser or inkjet type printers. Some of the reports currently available for viewing and printing include the Account Master File Information and the Account History Ledger. This service, if requested, will be provided at an additional fee outside of base rate. To secure your portfolio's data base, your Agency will be issued a unique password code to access your records. USE is currently developing a second level of computer linkage usage that provides a unique report generation capability. Using the complete loan database as its information source, the report generator will allow your Agency freedom to develop unlimited reporting information through sorting, filtering, and formatting changes. The report generator will allow your Agency to create virtually any report you may need. FORECLOSURE If a senior lienholder forecloses on property in which the Agency is a junior lienholder, the Agency may choose to advance funds to bring the senior Tien current, and then foreclose on that advance. At the Agency's request, USE will conduct foreclosure proceedings. If an unreported transfer of title takes place on a property upon which the Agency has a lien, the Agency may choose to foreclose if demand for payoff is disregarded. If a borrower has been non-responsive to USE and/or Agency attempts to provide forbearance, or the borrower's explanation is evaluated as non-responsive, USE will begin foreclosure proceedings. USE may foreclose on behalf of the Agency or under its own name. To foreclose under its own name, promissory note ownership will be transferred from the Agency to USE for $1.00. Reinstatement of the loan by the borrower will require all fees, plus all foreclosure costs incurred by USE, to be reimbursed. If reinstated, USE will sell back to the Agency the loan plus payments received. If the loan is not reinstated or paid off, USE will continue the foreclosure up to and including the Trustee's sale of the property. Upon sale of the property, USE will return all proceeds of the sale to the Agency less foreclosure fees and any other outside costs incurred. USE will not sell any note and associated Trust Deed or Mortgage originally owned by the Agency to any other third party. For those loans that are reinstated by the borrower, USE will resume normal collection services. REPORTS Portfolio Status Report The report provides a complete accounting per loan of the total portfolio. The report identifies annual payments made, remaining balances, borrower's name and account number, original loan balance, interest rate, and loan term. For those deferred loans accruing interest, the report shows ongoing interest accrued and the resulting increase in loan balance. (Sample at end of section). Freouencv: One report forwarded monthly to Agency. Current Month's Reconciliation Report This report serves as a reconciliation for the loan payments remitted by the borrowers: Many borrowers who are not required to make regular payments choose to do so. USE collects all payments and remits the total amount collected to the Agency. (Sample at end of section). Frequency: Report, along with remittance check, forwarded to the Agency within ten working days of the close of the month. Loan Payoff Quotation A Payoff Quotation indicates the amount required to fully satisfy the balance owed on the loan as of the date of the quotation. The payoff figure is automatically calculated by adding the prorated interest, plus borrower's demand and Reconveyance fees. An interest per diem amount is also indicated to facilitate payoffs. (Sample at end of section). Frequency: Available to the Agency or payoff agent upon request. Escrow Analysis Report For loans requiring monthly impound payments for taxes and/or insurance, USE has the ability to conduct an escrow analysis to determine the proper monthly payment a given borrower needs to make in order to cover future tax and insurance payments. This report is especially useful when impound requirements significantly change. Example: a marked increase in property tax due to a reassessment or supplemental tax assessment. (Sample at end of section). Frequency: Available to the Agency upon request. EXHIBIT B HOME Activity: RENTAL REHABILITATION/RECONSTRUCTION MILESTONES First* Second Third Fourth Fifth Sixth Seventh Eighth Quarter Quarter Quarter. Quarter Quarter Quarter Quarter Quarter Administrative Begin RFP Finalize programin place process'to procedure (e.g., all staff "elect nual hired, staff consultant trained, procedures in place, etc.) MOU executed with Execute subcontractor(s) Hoo Project(s) 40 indivi- 40 individual identified dual unit: units Environmental 26 units 27 units 27 units process completed Project cost 20 units 20 units 20 units 20 units estimates completed Contractor selected 20 units 20 units 20 units 20 units Project Set-up in C/MI 26 units 27 units 27 units Construction be ins 26 units 27 units 27 units Project completed/occupied 40 units 40 units Submit completion 40 report 40 reports report(s) First quarter is January, February, March 1996