4-Attachment C - Scope of Work.docx

ATTACHMENT C

SCOPE OF WORK

Subordinate Shared Appreciation Loan Program

I. Purpose/Background In the 2025 General Session, the Legislature created the Subordinate Shared Appreciation Loan Program (Program) in SB 262, administered through the Olene Walker Housing Loan Fund (OWHLF). This Program is intended for Borrowers and Qualified Applicants to share in the appreciation in the Home Equity Amount of a Qualifying Residential Unit through utilization of a Subordinate Loan. This Program may also be used for the purpose of assisting Qualifying Borrowers in the purchase of construction liability insurance for a condominium project, in accordance with Utah Code 63H-8-502.

The Utah Department of Workforce Services (DWS) is seeking a Contractor to administer the Subordinate Shared Appreciation Loan Program. The selected Contractor will receive Program funds from DWS and will be responsible for issuing or purchasing loans that meet the requirements of a Qualifying Loan or Subordinate Loan.

II. Contractor Responsibilities A. Program Services

1. OWHLF will provide Program funds to Contractor and Contractor shall ensure that Program funds are used only for the following purposes:

a. Providing a Subordinate Loan to a Borrower(s) or Qualifying Borrower(s).

b. Subordinate Loans must be matched with private funds at a 3:1 ratio to Program funds.

c. Purposes described in Section 63H-8-502.

2. Contractor may collaborate with the Utah Housing Corporation’s First Time Homebuyer Program.

B. Eligibility Requirements

1. A Subordinate Loan must be a loan that:

a. Is provided to a Borrower whose household income is equal to or less than 140% AMI established under §26 U.S. Code 143(f).

b. Is secured by real property, occupied as a primary residence, where the Borrower agrees to repay the principal balance borrowed plus a proportionate share of the home price appreciation during the term of the Subordinate Loan.

c. Has flexible repayment terms in accordance with applicable state and federal laws.

d. Is non-interest bearing and has no set monthly payment obligation.

e. Does not impose a Shared Appreciation repayment percentage obligation that exceeds the percentage of the home value represented by the amount borrowed at origination.

f. Does not have a combined loan-to-value ratio that exceeds 105%.

g. Does not impose a prepayment fee or penalty.

h. Does not exceed $150,000 per Subordinate Loan.

i. Is subordinate to a first mortgage Qualifying Loan.

j. Includes a loan to a Qualifying Borrower.

2. Shared Appreciation - A proportionate share of the Qualifying Residential Unit’s increase in Home Equity Amount from the date of purchase to the date of sale or refinance.

3. Qualifying Loan is a loan that:

a. A mortgage loan that is originated, purchased, or serviced by a private financial institution or sold to a government-sponsored enterprise, if:

i. The Qualifying Loan conforms to the Borrower’s income, property eligibility, and credit standards;

ii. The Qualifying Loan is secured by a recorded Deed of Trust or other instrument securing a mortgage loan and constituting a lien on real property in the county in which the Qualifying Residential Unit is located; and

iii. The Qualifying Loan is an amortizing first-mortgage loan.

4. Qualifying Residential Unit - As defined in Utah Code 63H-8-501.

5. Borrower must:

a. Be approved for a Qualifying Loan at the terms set by the primary mortgage lender.

b. Hold a vested legal or equitable interest in the Qualifying Residential Unit secured by both the Qualifying Loan and Subordinate Loan.

c. Occupy the Qualifying Residential Unit as their Primary Residence, defined as more than 183 days per calendar year, throughout the term of the Subordinate Loan.

i. The Borrower(s) may be absent for up to twelve (12) months for any of the following reasons:

1. Serious health conditions of the Borrower(s), the spouse, child, or parent of the Borrower(s).

2. Divorce of the Borrower.

3. The Borrower(s) or Borrower’s child is the victim of domestic violence.

4. Military service requiring relocation.

6. Qualifying Borrower(s) must:

a. Provide a Letter of Intent or Letter of Commitment in partnership with a Qualifying Applicant towards utilizing a Subordinate Loan for purchasing construction liability insurance for a condominium project, in accordance with Utah Code 63H-8-502.

C. Repayment

1. Repayment of the Subordinate Loan to the Qualifying Applicant shall occur in the following circumstances:

a. If a Subordinate Loan on the Qualifying Residential Unit is refinanced or sold, Program funds, including associated fees, used to secure the Subordinate Loan.

b. The Borrower(s) no longer occupy the Qualifying Residential Unit as their Primary Residence.

c. Program funds received by the Qualifying Borrower resultant of an incomplete project in which the Subordinate Loan was utilized for the purposes of construction liability insurance for a condominium project.

D. The Contractor shall provide or purchase Subordinate Loans in accordance with this Agreement. When Program funds are repaid, the Contractor shall use that program income in the following priority:

1. Costs associated with the administration of this Program.

2. Costs associated with the monitoring of this Program.

3. Any remaining funds shall be utilized for issuing or purchasing Subordinate Loans in accordance with this Program.

E. Should the Qualifying Applicant cease to operate as a non-profit, offer and purchase subordinate loans, or meet the requirements of this Agreement the $250,000 in program funds shall be transferred to DWS.

III. Outcomes/Deliverables The Contractor will provide at least two (2) Subordinate Loans by 6/30/2026.

IV. Reporting Contractor shall provide the following to DWS on an annual basis:

A. Number of Subordinate Loans approved under the Program.

B. Total dollar amount of Program funds used for approved Subordinate Loans as well as total dollar amount of matching private funds utilized with Subordinate Loans.

C. Total dollar amount of funds reinvested into the Program.

D. Total dollar amount of paid off Subordinate Loans and, if applicable, default of active Subordinate Loans.

E. Approximate dollar value of the total number of Subordinate Loans provided under the Program based upon the current home price index.

V. DWS Monitoring The Contractor shall permit DWS the right of compliance reviews which may include, but is not limited to desk reviews, site visits, technical assistance, and expenditure reviews.

VI. Monitoring The Contractor shall ensure monitoring is completed at least once annually by an independent third party to ensure compliance with the use of Program funds and the terms of this agreement. Monitoring will take place by an independent third party.

A. Monitoring will be preceded by a notification no less than two (2) weeks in advance of the monitoring.

B. Monitoring will consist of:

1. A thorough review of 100% of the approved eligible Borrowers and Qualified Borrowers funded under this Agreement within the previous twelve (12) months including:

a. A review of all required eligibility materials.

b. A review of the organizational review and approval process.

c. An examination of all signed forms and documents required.

D. Monitoring results will be submitted to DWS annually.

VII. Contractor Experience Contractor must have demonstrated previous professional experience providing or purchasing loans that meet the requirements for a Qualifying Loan or a Subordinate Loan.

VIII. Budget A. This will be a firm fixed total cost contract.

B. Under this Agreement, the Contractor will be awarded $250,000 of which $25,000 shall be solely for the following:

1. Costs associated with administration of this Program.

2. Costs associated with monitoring of this Program.

C. The remaining $225,000 shall be used exclusively for awarding Subordinate Loan(s) to Borrowers and Qualified Borrowers.

D. Eligible and budgeted administrative costs will be reimbursed upon timely submission of expense documents according to the terms of the contract. Expense documents must include, but are not limited to, general ledger, payroll ledger (if applicable), detailed timesheets listing hours worked and tasks accomplished (if applicable), and invoices.

1. Timesheets must be rounded to 15-minute increments. DWS may request, and Contractor shall provide, any additional documentation deemed necessary by DWS to justify a request for reimbursement.

IX. Invoicing A. Requests for reimbursement must be submitted a minimum of quarterly, but no more than monthly.

1. Backup documentation supporting the request is required.

a. Requests for reimbursement, along with supporting documentation, must be submitted using WebGrants3.

B. Expense reimbursement is dependent upon timely submission of deliverables and program compliance.