HomeMy WebLinkAboutAgenda - 12-05-2005-5iORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: December 5, 2005
Action Agenda
Item No. ~~
SUBJECT: Approval of Subordination Agreement Related to Hurricane Floyd Mitigation
Program
DEPARTMENT: County Attorney/Manager PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
10/30/03 County Attorney Letter Geof Gledhill, 919-732-2196
w/attachments Rod Visser, 919-245-2308
Exhibit from Register of Deeds Book 2407
Subordination Agreements
PURPOSE: To approve an agreement related to a bank loan against property acquired by
homeowners who participated in the federal Hazard Mitigation Grant Program (HMGP) following
damage to their property during Hurricane Floyd in 1999.
BACKGROUND: In November 2003, the Board of Commissioners approved a subordination
agreement that facilitated a refinancing on property owned by homeowners who had acquired
that property after selling their flood-damaged home to Orange County in 2001 using federal
Hazard Mitigation Grant Program funds. The homeowners are now seeking a home equity loan
on their property at 1907 White Plains Road in the Colony Woods subdivision. Because of the
County's involvement in the original grant-supported real estate acquisition loan, the lending
institution requires a subordination agreement in order to extend the equity line of credit to the
homeowners.
Orange County acquired the homeowners' property at 61 1 Yorktown Drive in the Heritage Hills
subdivision south of Chapel Hill through the Federal Emergency Management Agency's Hazard
Mitigation Grant Program following Hurricane Floyd. The homeowners participated in the
"buyout" aspect of that program and received fair market value for their property, title of which
passed to Orange County under the provisions of the HMGP, The homeowners also received
$17,070 in a deferred loan from the State Acquisition and Relocation Fund (BARE) to assist
them in finding a comparably situated replacement home when they vacated 611 Yorktown in
2001, (Incidentally, the Yorktown home was thoroughly repaired following the flood damage
and has since been moved to Little River Park, where it serves as the caretaker residence for
that new County park).
The implications of the SARF program loan and the County's financial interest in the property
are described in an October 2003 letter (which was included in the agenda item materials when
the BOCC approved the previous subordination agreement regarding this property in November
2003) from the County Attorney, and in the exhibit from the Register of Deeds' recording,
Because Orange County was the designated "grantee" for these funds and passed them along
to the homeowners, the County has a security interest in the property for 10 years after the new
home purchase. The homeowners previously refinanced the purchase of the replacement
home, thereby necessitating the preparation and approval of a subordination agreement. The
new subordination agreements will place the County's deed of trust in a "third" lien position
behind the homeowners' first mortgage and the equity line of credit. The County Attorney and
the attorney for the homeowners have collaborated to prepare and compile the accompanying
documents far the Board's review and approval,
FINANCIAL IMPACT: The County will experience no direct financial impact as a result of this
action.
Because the County is the "grantee' for the HMGP, SARF, and related grant funding programs,
the County is a party to the subordination agreement, If the homeowners were to sell their
replacement home before they have lived there ten years, they would repay to Orange County
all or some portion of the SARF funds, which might in turn then need to be repaid to the original
grantor, If the property were foreclosed, and there were insufficient sale proceeds to pay off the
first and second mortgages as well as any outstanding portion of the SARF loan (the $17,070
loan is proportionally forgiven between years 6 through 10 that the homeowners maintain
ownership of it), the County could conceivably be approached by the original grantor to satisfy
any unforgiven portion of the SARF loan,
Based on the attached subordination agreements that are the subject of this agenda item, the
first and second mortgages total $197,000 and $30,000 respectively. Combined with the SARF
loan balance of $17,070, the liens against the property total $244,070. The State Employees
Credit Union, which has offered the prospective equity line of credit to the homeowners, has
estimated the value of the property at $255,827.
RECOMMENDATION(S): The Manager recommends that the Board approve the
subordination agreements in substantially the attached form, subject to final review by staff and
the County Attorney, and authorize the Chair to sign them,
~~
LAW OFFICES
COLEMAN, GLEDHILL, HARGRAVE & PEEK
A PROFESSIONAL CORPORATION
129 E. TRYON STREET
P O. DAAWER 1529
HII.LSEOROUGH, NORTH CAROLINA 27278
919-7374196
FAX 919.732.7997
www.cgandh.com
October 30, 2003
Mr. Rod Visser
Assistant Orange County Manager
Post Office Box 8181
Hillsborough, North Carolina 27278
EItOM THE DESK OF
GEOFFREY E. GLEDHILL
E.MAiL Cw18cy¢IedWil@c5~ndhmm
RE: Hazard Mitigation Grant Program - Hess Property
Dear Rod:
This letter confirms our conversations concerning the requests
made on behalf of Alex and Frances Hess for Orange County to
subordinate a deed of trust to a first mortgage resulting from the
refinancing by the Hesses of their home mortgage. The Hazard
Mitigation Grant paid for the purchase of the former home of Mr.
and Mrs. Hess that was flooded by Hurricane Floyd. The Grant also
provided additional money to enable the Hesses to relocate to a new
home. That additional money ($17,070.00) was provided to Mr. and
Mrs, Hess as a deferred loan secured by a deed of trust on their
new home, Orange County is the beneficiary of that deed of trust,
The bank lender of the new mortgage loan is requiring its security
for the loan to be in a first lien position, Therefore, in order
for' the Hesses to be able to secure their mortgage, they must
either pay back the $17,070.00 or the County must agree to
subordinate its deed of trust to the new mortgage.
The terms of the deferred loan to the Hesses do not require
them to repay the $17,070.00 if the Hesses own and live in their
new home for 10 years. If they cease living in or sell their home
within 5 years, they must repay the entire amount, If they cease
living in it or sell it after 5 years but less than 10 there is a
graduated amount of the loan which must be repaid.
Orange County has an interest in insuring that the amount of
its security in the property when added to the amount of a first
mortgage is less than the market value of the property. Linnie
Causey, a lawyer in Chapel Hill who has represented the Hesses in
these matters, has provided the value information that is enclosed
which indicates to me that the Hesses' home would sell for an
Mr. Rod Visser
Page 2
October 30, 2003
amount greater than the total of the new Hess bank loan of
$197,000.00 plus the deferred loan made possible by the Hazard
Mitigation Grant of $17,070.00. I therefore think it is acceptable
for Orange County to agree to subordinate its lien on the property
to the lien for the Hesses' home mortgage,
I have enclosed a copy of the subordination agreement which
will need to be completed. I recommend that this matter be placed
on the County Commissioners consent agenda for Board of
Commissioner consideration and for Board authorization for the
execution of the subordination agreement on behalf of Orange
Colmty,
Very truly yours,
COLEMAN, GLEDHILL, HARGRAVE & PEER, P.C.
GEG/lsg
Enclosures
xc: Linnie W
Causey, Esquire
1sg:letters\visserhesssubagmt.ltr
Uct-Y6-ZOaI O<:Zeam iron- ,••
~~ ~n1 ( `' ~ " ~aor,~407 rnc( 443
Poiicv Statement
The polity of the Orange County's Supplemental Relocation Assls[ence Grant Program will be to
provtde retoeatlon aseletance w homeowners whose primary zesidonoe has been destroyed es o
roaulC of Hurrioerto Floyd and whose destroyed home wns subsequently purchased In the Orange
Covnty Heard Mhiga[lon Orant Program (HMGP). The purpoeo of the progmm is to assist
homeowners In purohaeing eompera6le housing and to support other public Investment in
recovery mtd eedevelopmont programs to 6ene81 viedma of Hurtleam Ployd,
Orange Coanry eeknowledges that tho Supplemental Relocatlon Assistance grant Program does
not trigger Me Unlfarm Relocatlon Act, (URA) rogulatlona at 49 CFR 24~2(g)({v) ao ehia is e
voluntary program. Orange County will provide Supplemental Relocation Assistance to nil
eligible appl{oan[s per the programs Optional Reloeaton Pinn. This program is dcslgned to eaeint
families in affording comparable housing, Comparable housing Is generally deflued as limiter in
squaro footagq bedrooms, bathrooms and amenities, and within the corporate Itmita of Orange
Coanry. The Coanry w311 work to assist homeowners with tho purchase of comparablo housing
that lies ourelde oPthe 100•year floodplain and will provide advisory services to all applicants to
aid in their aeeroh ibr ee(E, comparable housing.
GenoreT Elieibllity and Program Information
,APAlicant 8daibillfv
• Homeowner moat be a participant iu Otnngo County's Hazard Mlilgation Cram Program
(HMGP) 6uyotn and complete the buyout transaction
• Homeowner must have been the owner of the damaged home on the date of flooding in
geptcmber 1999. Htmtea purchased attar the flood aro eligible fbr the buyout but will not be
eilglbla for Shia program
• Maximum aupplemene cannot exceed funds needod to purcltesa now home
• Families are roqutred to occupy fire rcplaeemeni home For at least frn years to avoid
repayment
• Maximum defierrod loan cnn noc exceed tho comparable haleing coc[, unless a apeeifio eppeoi
hex bean approved. Appeals will be excepted only if no comparable housing een be
IdonNfied.
• If homeowner has already pvroheaed n roplacement home and masts all program
nquiramente, aesiseanoe will be provided based on oomparabiliry determination end NOT
necessarily an the price oP the actual roplaeemant home,
Any homeowner whose damaged residence is ficluded In the prenge County HMGP meeting the
oiigtbilitY erimris defltted above shall be eilglbla to apply Cor aeaiatenee through thin program- No
ibnda will be disbursed prior to eloaing on a replaeemant Uome.
5
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act-26-tuU~ Ua:zaam rram- ~ooR+2407 PAGE 444'•• •'• ••'
E[igi6la Replacement Property
• Appifoams Dan purchase any oliglbla proporty within rho Orange County corporate limits.
• The repleeemenc property must be located oatslde of the floodplaln.
• The roploeemens home must meet minimum Itouslug Dodo standards.
Login Tezms
All supplements shall be in the Corm of a dofoned loan. All Deferred Loans ehali be secured by n
Deed of?rasa The Deterred Loon will bo secrared against the property for a period of ten years,
As Long es the homeowner does not sell the property end continues to occupy [Ile property ns the
primary residence within the [en-year period, lire Iten will be automoticelly released. After the
Fifth yeor, the loan will ba forglvon nt a rem of 20% per year 1br the five-year period. In the event
the homeownsr sells, transfers or no longer occupies the property as their primary residence
withSit the ten•yeer period, the loan wiii become due and payable.
6 d 8480 ~N 6=u~o}}y '6asne0 aiuuil WdLO Z SOOZ tZ A0N
DRAFT
Prepared by and RETURN to:
LINNIE W. CAUSEY, ATTORNL^Y.
5102 Durham Chapel Hill Blvd., Ste. 300
Durham, North Carolina 27707
STATE 01+ NORTH CAROLINA
COUNTY 01+ ORANGE
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT, made this the day of , 2005,
by and between ,ORANGE COUNTY (HEREINAFTER "COUNTY") and LINNIE W. CAUSEY,
(HEREINAFTER "CAUSEY") Trustee for ORANGE COUNTY, parties of the first part, and ALEX L,.
HESS, III AND FRANCES B. HESS (HEREINAFTER "BORROWER"), and STATE EMPLOYEES'
CREDIT UNION (HEREINAFTER "SECU") its successors and/or assigrs, parties of the second part;
WITNESSETH:
WHEREAS, SECU has agreed to make a loan to BORROWER in the amount of $197,000.00, and
secured by a deed of trust to SECU on the property described as
BEING AL,L OF LOT NO. 176, SECTION III, COLONY WOODS SUBDNISION,
ACCORDING TO PLAT BOOK 17, AT PAGE 98, ORANGE COUNTY REGISTRY, TO WHICH
REFERENCE IS HEREBY MADE FOR A MORE PARTICULAR DESCRIl'TION OF SAME.
PIN: 9799-84-5412
TM: 7.52E.C.5;
which has an address of 1907 WHITE PLAINS ROAD, CHAPEL HILL, ORANGE COUNTY,
NC.
WHEREAS, there is a prior deed of trust on said premises bearing date of OCTOBER 29, 2001,
executed by BORROWER, to CAUSEY, Trustee for COUNTY, recorded in Boolc 2407, Page 440
ORANGE County Registry, which insh°ument secures an original indebtedness therein described of
$17,070.00 evidenced by a promissory note, whose terms and conditions are refereneerl herein and are
incorporated and made a part of this Agreement,; and
DRAFT
WHEREAS, the aforesaid borrower can procure said loan from LENDER only upon condition
that the aforesaid existing deed of trust to CAUSEY, TRUSTEE FOR COUNTY be subordinated to the
lien of said proposed deed of trust to ,Trustee for LENDER; and
WHEREAS, the aforesaid borrowers have requested the party of the first part to execute this
subordination agreement and the patty of the first part bas agreed Yo such subordination; and
WHEREAS, the party of the first part represents that the aforesaid promissory note fiom
BORROWER, and the aforesaid deed of trust to CAUSEY, Trustee, are in the possession of COUNTY,
and is controlled by it to such extent as to absolutely bind all assignees, transferees and grantees to the
terms of this subordination agreement;
NOW THEREFORE, in consideration of the aforesaid premises and of LENDER making a loan to
ALEX L,. HESS, III AND FRANCES B. HESS, the party of the 5rst part, binding its successors and
assigns, do by the execution of this instrument, subordinate the aforesaid deed of trust dated OCTOBER
29, 2001 to CAUSEY Trustee for ORANGE COUNTY, recorded in Book 2407, Page 440 of the
ORANGE County Registry, to the lien, operation and effect of that certain deed of trust to be executed by
the aforesaid borrower to ,Trustee for LENDER securing an
indebtedness of $197,000.00 so that the aforesaid deed of trust shall be a Lien and charge superior to the
lien and charge of that certain deed of trust to CAUSEY Trustee for COUNTY, recorded in Boolc 2407
Page 440 of the ORANGE County Registry, and for no other purpose.
That except for the terms of this subordination agreement, the rights of the parties of the first part
in and to the aforesaid recorded. deed of trust in Book 2407 Page 440 the ORANGE County Registry and
the note evidenced thereby are and shall be in full force and effect,
IN TESTIMONY WHEREOF, L,INNIE W. CAUSEY Trustee, bas caused this instrument to be
executed in its name, and ORANGE COUNTY, bas caused tlris instrument to be executed in its name by
RODERTCK VISSER, Assistant County Manager, all by authority duly given this the day and year first
above written. RODERICIC VISSER'S authority to execute this document is indicated in Orange County
Board of Commissioners Resolution attached hereto as Exhibit "A".
LINNIE W. CAUSEY
TRUSTEE
DRAFT t~
oRANGE roUNTY
By: RODERICI{ VISSER
ASSISTANT COUNTY MANGER
STATE OF NORTH CAROLINA
COUNTY OF
I, , a Notary Public of the County and State aforesaid, do hereby
certify thaC LINNIE W. CAUSEY personally appeared before me flris day and acknowledged the
execution of the foregoing instrument,.
Witness my hand and official stamp and seal, this day of , 2005.
Notary Public
My Commission Expires:
STATE OF NORTH CAROLINA, COUNTY OF
I ,Notary Public for said County and State,
certify that RODERICI{ VISSER personally came before me this day and acknowledged that he is
Assistant County Manager of ORANGE COUNTY, urd that he as Assistant County Manager, being duly
authorized to do so, executed the foregoing on behalf of ORANGE COUNTY..
Witness my hand and official seal, this the day of , 2005.
Notary Public
My Commission Expires:
DRAFT
Prepared by and RETURN to:
L,INNIE W. CAUSEY, ATTORNEY.
5102 Durham Chapel Hill Blvd., Ste.. 300
Durham, North Carolina 27707
STATE OF NORTH CAROLINA
COUNTY OF ORANGE
SUBORDINATION AGREEMENT
~o
THIS SUBORDINATION AGREEMENT, made this the day of , 2005,
by and between ,ORANGE COUNTY (HEREINAFTER "COUNTY") and LINNIE W. CAUSEY,
(HEREINAFTER "CAUSEY") Trustee for ORANGE COUNTY, parties of the first part, and ALEX L
HESS, III AND FRANCES B. HESS (HEREINAFTER "BORROWER"), and STATE EMPLOYEES'
CREDIT UNION (HEREINAFTER "SECU") its successors and/or assigns, parties of the second part;
WITNESSETH:
WHEREAS, SECU has agreed to make a loan to BORROWER in the amount of $30,000.00, and
secured by a second Equity Line deed of bust to SECU on the property described as
BEING ALL OF L,OT N0. 176, SECTION III, COLONY WOODS SUBDIVISION,
ACCORDING TO PLAT BOOI{ 17, AT PAGE 98, 012ANGE COUNTY REGISTRY, TO WFIICH
REFERENCE IS HEREBY MADE FOR A MORE PARTICULAR DESCRIPTION OF SAME,.
PIN: 9799-84-5412
TM: 7.52E.C.5;
which has an address of 1907 WHITE PLAINS ROAD, CHAPEL HIL,L,, ORANGE COUNTY,
NC.
WHEREAS, there is a prior deed of trust on said premises bearing date of OCTOBER 29, 2001,
executed by BORROWER, to CAUSEY, Trustee for COUNTY, recorded in Book 2407, Page 440
ORANGE County Registry, which inshtunent seatu-es an original indebtedness therein described of
$17,070.00 evidenced by a promissory note, whose terms and conditions are referenced herein and are
incorporated and made a part of'this Agreement,; and
DRAFT ~ ~
WHEREAS, the aforesaid borrower can procure said loan fi°om LENDER only upon condition
that the aforesaid existing deed of trust to CAi1SEY, TRUSTEE FOR COUNTY be subordinated to the
lien of said proposed deed of trust to ,Trustee for LENDER; and
WHEREAS, the aforesaid borrowers have requested the party of the first part to execute this
subordination agreement and the party of the first part has agreed to such subordination; and
WHEREAS, the party of the first part represents that the aforesaid promissory note from
BORROWER, and the aforesaid deed of trust to CAUSEY, Trustee, are in the possession of COUNTY,
and is controlled by it to such extent as to absolutely bind all assignees, transferees and grantees to the
terms of this subordination agreement;
NOW THEREFORE, in consideration of the aforesaid premises and of LENDER making a loan to
ALEX L. HESS, III AND FRANCES B. HESS, the party of the first part, binding its successors and
assigns, do by the execution of this instrument, subordinate the aforesaid deed of trust dated OCTOBER
29, 2001 to CAUSEY Trustee for ORANGE COUNTY, recorded in Boolc 2407, Page 440 of the
ORANGE County Registry, to the lien, operation and effect of that certain deed of trust to be executed by
the aforesaid borrower to ,Trustee for LENDER securing an
indebtedness of $197,000.00 so that the aforesaid deed of trust shall be a Lien and charge superior to the
lien and charge of that certain deed of trust to CAUSEY Trustee for COUNTY, recorded in Book 2407
Page 440 of the ORANGE County Registry, and for no other purpose-
That except for the terms of this subordination agreement, the rights of the parties of the first part
in and to the aforesaid recorded deed of trust in Book 2407 Page 440 the ORANGE County Registry and
the note evidenced thereby are and shall be in frill force and effect.
IN TESTIMONY WHEREOF, LINNIE W. CAUSEY Trustee, has caused this instrument to be
executed in its name, and ORANGE COUNTY, bas caused this instrument to be executed in its name by
RODERICK VISSER, Assistant County Manager, all by authority duly given this the day and year first
above written. RODERICK VISSER'S authority to execute this document is indicated in Orange County
Board of Commissioners Resolution attached hereto as Exhibit "A".
L,INNIE W. CAUSEY
TRUSTEE
DRAFT
ORANGE COUNTY
By: RODERICIC VISSER
ASSISTANT COUNTY MANGER
l
STATE OF NORTH CAROLINA
COUNTY OF
I, , a Notary Public of the County and State aforesaid, do hereby
certify that LINNIE W. GAUSEY personally appeared before me this day and aelrnowledged the
execution of the foregoing instrurnent.
Witness my hand and official stamp and seal, this day of , 2005.
Notary Public
My Conunissimr Expires:
STATE OF NORTH CAROLINA, COUNTY OF
T ,Notary Public for said County and State,
certify that RODERICK VISSER personally came before me this day and acloiowledged that he is
Assistant County Manager of ORANGE COUNTY, and that be as Assistant County Manager, being duly
authorized to do so, executed the foregoing on behalf of ORANGE COUNTY.
Witness my hand and official seal, this the day of , 2005.
Notary Public
My Commission Expires: