Agenda 04/11/2017 Item #16D 504/11/2017
EXECUTIVE SUMMARY
Recommendation to amend the Board's State/Federal Subordination Loan Policy to expand the
parameters for subordination requests to aid in continued home affordability.
OBJECTIVE: To support the continued affordability of housing by allowing State/Federal housing
assistance program recipients the advantage of subordinating their liens with Collier County.
CONSIDERATIONS: For homeowners to refinance an existing first mortgage to a lower interest rate,
thereby reducing their monthly housing expense, subordinate lenders must either be repaid or agree to
remain in a subordinate position. On January 28, 2014, agenda item 16.D.9, the Board approved the
current State/Federal Subordination Loan Policy. Under the current Policy, State or Federal grant program
loans may only be subordinated to a new first mortgage that offers at least one percent interest rate
reduction from the existing first mortgage and does not allow for the inclusion of other existing home
financing mortgages/grants in the refinance. If a homeowner is unable to obtain a new loan as a result of
the current Subordination Policy, they may choose to sell their home or the home may be lost to
default/foreclosure, resulting in a loss to the primary lender and the State/Federal grant program.
However, there are a few scenarios where the savings to the homeowner would be equal to or greater than
the one percent interest rate reduction currently required. Recently, homeowners and lenders have
requested that Collier County review its Subordination Policy and make changes that will be of mutual
benefit to the borrower, lender and the County. Revision of the current Subordination Policy will allow
for a combination of reductions and alterations that result in significant savings to the homeowner and
remain beneficial to the primary lender and the County:
a) Currently the Subordination Policy does not include payoff of additional subsidies (USDA, VA,
et cetera). The proposed Subordination Policy adds them allowing for paid off as part of a
refinance of a first position mortgage.
b) Currently, the Subordination Policy does not allow Home Equity Loan or Line of Credits to be
paid off. The proposed Subordination Policy adds them. Since they are generally at higher
interest rates than first mortgages, the homeowner can achieve significant savings by refinancing
the existing first mortgage plus the Home Equity financing into a new first mortgage. However,
the Combined Loan to Value (CLTV) of the new financing plus the existing State/Federal
financing to be subordinated must be at or below 80% of the new appraised value of the property.
c) Currently, the Subordination Policy requires a one percent reduction in interest rate. The
proposed Subordination Policy does not limit the consideration to a reduction in interest but it
also considers the overall decrease in monthly payments even if the interest rate is not reduced.
Expansion of the Subordination Policy will allow more homeowners the opportunity to refinance their
existing financing, thereby aiding in continued affordability of their homes.
FISCAL IMPACT: The homeowner will bear the recording costs associated with the subordination
agreement. Therefore, there is no fiscal impact associated with this item.
LEGAL CONSIDERATIONS: This item has been approved for form and legality and requires a
majority vote for Board action. -JAB
GROWTH MANAGEMENT IMPACT: Approval of this item is consistent with the Growth
Management Comprehensive Plan.
16.D.5
Packet Pg. 836
04/11/2017
RECOMMENDATION: To approve the expansion of the Subordination Policy to include the above-
referenced recommendations to allow more homeowners the opportunity to refinance their existing loans,
thereby aiding in continued affordability of their homes.
Prepared By: Donald Luciano, Grant Support Specialist, Community & Human Services
ATTACHMENT(S)
1. Subordination Policy 2017 (PDF)
2. Proposed Subordination Policy 2017 (PDF)
16.D.5
Packet Pg. 837
04/11/2017
COLLIER COUNTY
Board of County Commissioners
Item Number: 16.D.5
Doc ID: 2896
Item Summary: Recommendation to amend the Board's State/Federal Subordination Loan Policy
to expand the parameters for subordination requests to aid in continued home affordability.
Meeting Date: 04/11/2017
Prepared by:
Title: – Community & Human Services
Name: Donald Luciano
03/16/2017 8:53 AM
Submitted by:
Title: Division Director - Cmnty & Human Svc – Public Services Department
Name: Kimberley Grant
03/16/2017 8:53 AM
Approved By:
Review:
Community & Human Services Kristi Sonntag Additional Reviewer Completed 03/22/2017 2:56 PM
Community & Human Services Leslie Davis Additional Reviewer Completed 03/22/2017 3:33 PM
Public Services Department Kimberley Grant Additional Reviewer Completed 03/22/2017 5:59 PM
Public Services Department Joshua Hammond Additional Reviewer Completed 03/27/2017 2:06 PM
Public Services Department Sean Callahan Additional Reviewer Completed 03/27/2017 2:28 PM
Public Services Department Hailey Margarita Alonso Level 1 Division Reviewer Completed 03/28/2017 8:35 AM
Grants Erica Robinson Level 2 Grants Review Completed 03/28/2017 9:25 AM
Public Services Department Steve Carnell Level 2 Division Administrator Review Completed 03/28/2017 10:48 AM
County Attorney's Office Jennifer Belpedio Level 2 Attorney of Record Review Completed 03/28/2017 11:30 AM
Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 03/28/2017 2:33 PM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 03/29/2017 8:31 AM
Grants Therese Stanley Additional Reviewer Completed 03/30/2017 12:34 PM
County Manager's Office Nick Casalanguida Level 4 County Manager Review Completed 04/03/2017 9:13 AM
Board of County Commissioners MaryJo Brock Meeting Pending 04/11/2017 9:00 AM
16.D.5
Packet Pg. 838
Revised 03/2017
Collier County
Community and Human Services Department
STATE/FEDERAL LOAN
SUBORDINATION POLICY
Requests for subordination must be approved in advance by the Community and Human Services
Division (“Division”). We may consider subordinating our loan if the following factors are present:
The proposed transaction is a rate and term refinance (less than $500.00 to borrower at
closing); and
The new interest rate is a least one percent less than the current interest rate; or any
combination of Interest Rate reduction plus Mortgage Insurance reduction that would be the
equivalent of a one percent interest rate reduction; and
The new principal and interest payment is lower than the current total payment(s) as evidenced
by the Loan Application or Loan Estimate; or if the new monthly payment is increased due to a
reduction to the term of the loan, the Division will determine if the new payment is reasonable
and beneficial to the client; and
The proposed transaction may include the current first mortgage plus other purchase related
grants and/or financing (ie, USDA Subsidy, etc.) and
The proposed transaction may also include post-purchase Home Equity Loans or Home Equity
Lines of Credit, provided the Combined Loan-To-Value (CLTV) ratio of the new mortgage
plus the SHIP Second Mortgage does not exceed 80% of the current appraised value for the
subject property. In this instance, the one percent reduction in interest rate may be waived if
the reduction in total payments is beneficial to the client as determined by the Division; and
Closing costs are reasonable as determined by the Division; and
The proposed transaction does not include a prepayment penalty.
Property being refinanced must be the borrower’s principal residence.
The following documents must be submitted to our office in order to process a subordination request:
1. Subordination Request form (attached).
2. Signed and executed Loan Estimate; and
3. Signed and executed mortgage/loan application; and
4. Preliminary Closing Disclosures; and
5. Copy of title commitment
6. Copy of Appraisal (if applicable)
Please allow 20 business days for processing from the date the request is submitted to our office. If
approved, the Division will notify the lender and title company to prepare the Subordination
Agreement. If we are unable to approve the request, a payoff letter will be issued.
EMAIL THE SUBORDINATION REQUEST FORM ALONG WITH THE DOCUMENTS 2-6 TO:
CollierCountySHIP@colliergov.net
16.D.5.a
Packet Pg. 839 Attachment: Subordination Policy 2017 (2896 : SHIP Subordination Policy)
Revised 03/2017
For additional questions contact:
Donald Luciano, Grant Support Specialist
Phone: 239-252-2509
Email: DonaldLuciano@colliergov.net
16.D.5.a
Packet Pg. 840 Attachment: Subordination Policy 2017 (2896 : SHIP Subordination Policy)
Revised 03/2017
Subordination Request Form
To be completed by the Financial Institution processing refinance on behalf of clients listed below
Borrower (s) name: ______________________________________________________________
Borrower (s) address: ______________________________________________________________
Financial Institution: ________________________________________________________________________
Address: __________________________________________________________________________________
Email: _______________________________________________Phone: _______________________________
Current Mortgage Information
Principal Balance: ______________________ Interest Rate: ___________________
Monthly Payment (PITI): _______________________ Loan Term: ___________________
New Mortgage Information
Loan Amount: _____________________ Interest Rate: _____________________
Monthly Payment (PITI): _____________________ Loan Term: _____________________
Closing Agent/Title Company Information
Name: ____________________________________________ Contact Person: _________________________
Phone: _____________________ Email Address: _____________________________________
I certify that the above information is correct. I certify that there will be no cash out to the borrower,
and no other unsecured debt will be paid off (i.e., credit cards, automobile loans, etc.). I understand
that the subordination document prepared by Collier County will be invalid if that is the case.
_________________________________ _________________________________ ____________
Lender/Broker Signature Lender/ Broker Name Printed Date
___________________________________________ _________________________________
Email address Phone
16.D.5.a
Packet Pg. 841 Attachment: Subordination Policy 2017 (2896 : SHIP Subordination Policy)
Revised 09/2016
Collier County
Community and Human Services Department
STATE/FEDERAL LOAN
SUBORDINATION POLICY
Requests for subordination must be approved in advance by the Community and Human Services
Division (“Division”). We may consider subordinating our loan if the following factors are present:
The proposed transaction is a rate and term refinance (less than $500.00 to borrower at
closing); and
The new interest rate is a least one percent less than the current interest rate; or any
combination of Interest Rate reduction plus Mortgage Insurance reduction that would be the
equivalent of a one percent interest rate reduction; and
The new principal and interest payment is lower than the current total payment(s) as evidenced
by the closing disclosure Loan Application or Loan Estimate; or if the new monthly payment is
increased due to a reduction to the term of the loan, the Division will determine if the new
payment is reasonable and beneficial to the client; and
The proposed transaction only includes the current first mortgage payoff and reasonable closing
costs; The proposed transaction may include the current first mortgage plus other purchase
related grants and/or financing (ie, USDA Subsidy, etc.) and
The proposed transaction may also include post-purchase Home Equity Loans or Home Equity
Lines of Credit, provided the Combined Loan-To-Value (CLTV) ratio of the new mortgage
plus the SHIP Second Mortgage does not exceed 80% of the current appraised value for the
subject property. In this instance, the one percent reduction in interest rate may be waived if
the reduction in total payments is beneficial to the client as determined by the Division; and
Closing costs are reasonable as determined by the Division; and
The proposed transaction does not include a prepayment penalty.
Property being refinanced must be the borrower’s principal residence.
The following documents must be submitted to our office in order to process a subordination request:
1. Subordination Request form (attached).
2. Signed and executed Loan Estimate and Truth in Lending statement; and
3. Signed and executed mortgage/loan application; and
4. Preliminary Closing Disclosures; and
5. Copy of title commitment
6. Copy of Appraisal (if applicable)
Please allow 20 business days for processing from the date the request is submitted to our office. If
approved, the Division will notify the lender and title company to prepare the Subordination
Agreement. If we are unable to approve the request, a payoff letter will be issued.
EMAIL THE SUBORDINATION REQUEST FORM ALONG WIT H THE DOCUMENTS 2-56 TO:
16.D.5.b
Packet Pg. 842 Attachment: Proposed Subordination Policy 2017 (2896 : SHIP Subordination Policy)
Revised 09/2016
CollierCountySHIP@colliergov.net
For additional questions contact:
Donald Luciano, Grant Support Specialist
Phone: 239-252-2509
Email: DonaldLuciano@colliergov.net
16.D.5.b
Packet Pg. 843 Attachment: Proposed Subordination Policy 2017 (2896 : SHIP Subordination Policy)
Revised 09/2016
Subordination Request Form
To be completed by the Financial Institution processing refinance on behalf of clients listed below
Borrower (s) name: ______________________________________________________________
Borrower (s) address: ______________________________________________________________
Financial Institution: ________________________________________________________________________
Address: __________________________________________________________________________________
Email: _______________________________________________Phone: _______________________________
Current Mortgage Information
Principal Balance: ______________________ Interest Rate: ___________________
Monthly Payment (PITI): _______________________ Loan Term: ___________________
New Mortgage Information
Loan Amount: _____________________ Interest Rate: _____________________
Monthly Payment (PITI): _____________________ Loan Term: _____________________
Closing Agent/Title Company Information
Name: ____________________________________________ Contact Person: _________________________
Phone: _____________________ Email Address: _____________________________________
I certify that the above information is correct. I certify that there will be no cash out to the borrower,
and no other unsecured debt will be paid off (i.e., credit cards, automobile loans, etc.). I understand
that the subordination document prepared by Collier County will be invalid if that is the case.
_________________________________ _________________________________ ____________
Lender/Broker Signature Lender/ Broker Name Printed Date
___________________________________________ _________________________________
Email address Phone
16.D.5.b
Packet Pg. 844 Attachment: Proposed Subordination Policy 2017 (2896 : SHIP Subordination Policy)