Accessory Dwelling Unit (ADU) Loan Fulfillment & Servicing -

Project Objectives

The Trust intends to outsource the fulfillment and servicing responsibilities of the Program to an experienced firm, aiming to achieve efficient, cost-contained, and legally compliant loan administration. While the firm will handle the administration of the loans, the Trust will retain responsibilities for promoting and disseminating information on the Program. Additionally, the Trust will manage and select potential applicants from the interest list on the Trust website. Furthermore, the Trust will review and provide final approval based on the firm's underwriting, ensuring compliance of the participating homeowner with the Program terms. All proposals must demonstrate an understanding of and account for the unique design of the Program which is detailed in the supporting Program documents and includes: - Construction-to-permanent loan - Secured on primary residence as a 2nd or 3rd position lien dependent on other financing of the remaining construction costs - 20 years deferred - Partially forgivable, applied halfway through the loan period - Due at Maturity - Interest rate adjustments based on borrower performance - Three distinct interest periods, one period with three possible interest rates that change intermittently - Last-in funding, possibly necessitating a dry-close of the loan - Minimal underwriting standards - No escrow (can ride along another loan that uses an escrow account) Technical Assistance - Validate that the Program and Trust meet all legal and regulatory requirements for any applicable state or federal laws or regulations and provide guidance if any adjustments are needed to be in legal compliance. - Advise the Trust on lender policies, including loss mitigation, bankruptcy, and refinancing. - Alert the Trust and make necessary adjustments to loan fulfillment and servicing due to future regulatory and legal changes that impact the program. Loan Fulfillment - Create and collect loan applications and make determinations on eligibility per terms of the program (not required to brand fulfillment and servicing in Trust's name). o Construction: the applicant has submitted evidence that: ▪ Collecting a loan condition document verifying the general contractor/ADU professional has provided a statement that the proposed ADU meets the standards of the city, has mobility accessibility, and provides a detailed, line-item budget. ▪ Receive an acknowledgment letter from the borrower that the ADU has not been completed already with a certificate of occupancy. o Borrower: verify the property is owned by the applicant and occupied by the same. o Finances: ▪ Confirm with title information that the Trust loan will be no lower than 3rd lien, ▪ 90% CLTV, ▪ Loan company to verify sufficient source of funds for the completion of the ADU budget, ▪ Total debt for build is less than 120% of construction costs. - Generate and provide all required and applicable disclosures to applicants. The contracted company will be liable for any errors in the disclosures. - Assess the feasibility of the project and contractor experience. - Coordinate with other lenders to minimize closing costs to the borrower. - Validate the financial contingencies prior to loan closing. - Coordinate loan closings including signing of documents and working with the Trust's preferred title company to record documents. - NOTE: There is no need to monitor the construction process or approve construction draws. The Trust has already created a Loan Agreement, Regulatory Agreement, Promissory Note, and Deed of Trust for use in this Program. - Provide customer service for applicants throughout the loan application and closing process and maintain an electronic file and where required a paper file, for each borrower. Loan Servicing - Provide diligent and customary loan servicing functions, including set-up of new loans, modifications, payoffs, collections, loss mitigation, defaults, foreclosures, and bankruptcy. - Apply interest rate changes throughout the life of the loan per Program guidelines. - Verify income qualification of tenants using HUD-adjusted income standards. - While the Program allows borrowers to defer all their payments, the company will provide a borrower online account that is secure and allows automatic or occasional payment options. - Provide online, secure portfolio access to accounts for the Trust, with an option to customize portfolio and individual loan reports - Annual loan statements to borrowers and applicable tax forms. - Escrow accounts for property taxes and insurance, if necessary (e.g. borrower does not have a loan on their home). - Transfer of payments to the Trust. - Assist in regulatory and financial audits, as necessary. - Portfolio transfer if required. - Spanish and Vietnamese language staffing is preferred, but not required