Loading...
HomeMy WebLinkAbout07 Res 2021-67 SelfHelp Homebuyer AssistanceMEETING DATE: PREPARED BY: REQUEST: Recommendation STAFF REPORT CITY OF PALM DESERT Development Services Department November 18, 2021 Jessica Gonzales, Senior Management Analyst Consideration for approval of actions related to homebuyer assistance from the Housing Mitigation Fund in an amount necessary to secure an affordable housing cost associated with the conveyance of fourteen (14) vacant parcels to Coachella Valley Housing Coalition for the purpose of constructing single-family homes to be made available through the self-help program to qualified very low and low income households That the City Council: 1. Approve City Resolution No. 2021-67 approving homebuyer assistance loans from the Housing Mitigation Fund in an amount necessary to secure an affordable housing cost pursuant to California Health and Safety Code Section 50052.5 associated with the conveyance of fourteen (14) vacant parcels to The Coachella Valley Housing Coalition ("CVHC") as described in the Disposition and Development Agreement, Contract No. C36510 (the "Agreement"), for the purpose of constructing single-family homes to be made available through the self-help program to qualified very low and low income households (the "Project"), and in an aggregate amount not to exceed $355,000; 2. Authorize legal counsel to finalize the associated loan documents for a loan to be secured by a fourth lien trust deed, to be forgivable after fifteen (15) years and with terms consistent with the program funding requirements of the homebuyer assistance Housing Mitigation Fund; 3. Authorize the Finance Director to draw monies not to exceed $355,000 from the Housing Mitigation Fund and approve the transfer of funds to facilitate the forgivable homebuyer assistance loans; 4. Authorize the Mayor and/or the City Manager or their respective designee to approve and execute the loan documents and any ancillary documents necessary to effectuate the actions taken herewith; and 5. Appropriate $355,000 to account number 2144490-4390100 from unobligated Housing Mitigation Fund Balance. -1- P6401-0001\2592945v2.doc November 18, 2021 - STAFF REPORT City - Self -Help Homebuyer Assistance Page 2 Strategic Plan Objective One of the priorities of the City of Palm Desert's (the "City") Envision Palm Desert Strategic Plan, as part of Land, Use, Housing and Open Space, is to facilitate development of high - quality housing for people of all income levels. This request meets that objective by diversifying the City's housing stock for lower income households. Executive Summary On May 2020, the City Council authorized the Agreement with CVHC for the conveyance of vacant land for the purpose of development of fourteen (14) single-family detached homes to be made available through the Self -Help program and for sale at an affordable housing cost to qualified very low or low income first-time homebuyer households which include a member who is employed within the City's jurisdictional boundaries. Concurrently, the City will retain restrictions on each of the fourteen (14) lots in order to ensure compliance and continued affordability. CVHC has notified staff that the originally estimated amount of the construction loan will not be sufficient to construct the single-family homes as contemplated by the Agreement. After several reviews, discussion, and evaluation of the feasibility analysis provided by CVHC, City Staff has determined that an increase in the amount of the construction loan to fund the increased construction cost of the homes will result in the inability of the homebuyers to acquire their lots at an affordable housing cost. Approval of homebuyer assistance loans in an aggregate amount not to exceed $355,000.00 in Housing Mitigation Funds will allow the City to provide assistance through loans secured by fourth lien trust deeds to qualifying very low and lower income first-time homebuyers, in an amount necessary to secure an affordable housing cost. Background Analysis The Agreement provides for the City to convey the Property by grant deed to CVHC for $560,000.00 (the "Purchase Price") and for the City to loan the Purchase Price to CVHC on the terms set forth in the form of a promissory note, secured by a deed of trust on the Property ($40,000.00 per lot). Concurrently, the City Council approved $350,000.00 in Housing Mitigation Funds for homebuyer assistance allowing the City, in its sole discretion, to provide assistance in the form of loans secured by third lien trust deeds to qualifying very low and lower income first-time homebuyers, not to exceed $25,000.00 per homebuyer. On March 18, 2021, the City received a written notification from CVHC that the construction costs for the Project had increased and the construction loan amount had to increase in order to fund the increased construction costs. In order to ensure an affordable housing cost pursuant to California Health and Safety Code Section 50052.5 as prescribed by the conditions of the DDA, CVHC requested that the City make additional homebuyer assistance loans to assist the fourteen (14) prospective homebuyers. After extensive reviews, discussion, and evaluation of the CVHC feasibility analysis inclusive of sources and uses, the City staff has determined that additional homebuyer assistance -2- P6401-0001\2592945v2.doc November 18, 2021 - STAFF REPORT City - Self -Help Homebuyer Assistance Page 3 loans in an aggregate amount not to exceed $355,000.00 are necessary for the Project to be successful. Monies are available in the Housing Mitigation Fund for this purpose. The additional homebuyer assistance will be provided by the City, in the form of an additional deferred and forgivable down -payment assistance loan to the qualifying homebuyers. The loan will be secured by a fourth lien trust deed to be reduced each year equitably over fifteen (15) years at which time the loan converts to a grant and is forgivable at the fifteen (15) year anniversary. The actual amount of the additional assistance loan provided to each qualifying homebuyer will vary and will depend on the qualifying income and homebuyer criteria necessary to secure an affordable housing cost but will not exceed $75,000.00 for any qualified homebuyer. The combined homeowner assistance loans will not exceed 45% of the sales price per household. City Staff has determined that this request will further the production and occupancy of the fourteen (14) single-family homes by very low and low income households. Staff requests approval of the actions described herein. Fiscal Analysis The proposed additional homebuyer assistance loans will be paid entirely from the Housing Mitigation Fund and there will be no impact on the City's General Fund. Estimated costs of the entire Project are illustrated below: Max Amount City's Total Loan Repayment Terms Available per Financial Homebuyer Participation Purchase Price of the $40,000 Property $560,000 City homebuyer assistance $25,000* $350,000 loans City homebuyer assistance $75,000* Loan subsidies would be repaid and reused at either the transfer of property, or end of affordability covenants, whichever occurs first Loan subsidies would be repaid and reused at either upon the transfer of property, or end of affordability covenants, whichever occurs first $355,000 Loan subsidies would be forgiven loans after fifteen (15) years /lax Potential Total $1,265,000 -3- *Actual may vary depending on homeowner incomes P6401-0001\2592945v2.doc November 18, 2021 - STAFF REPORT City - Self -Help Homebuyer Assistance Page 4 LEGAL REVIEW JG Jim Grayson Special Counsel DEPT. REVIEW Mors'ALvare z Martin Alvarez Director of Development Services Department City Manager, L. Todd Hileman: L. MOW FINANCIAL REVIEW Janet M. Moore Director of Finance h-f%Lewta ►n ATTACHMENTS: 1. City Resolution 2021- 67 2. Draft Housing Mitigation Fund Loan Documents 3. Project Site Map ASSISTANT CITY MANAGER Andy Firestine Andy Firestine Assistant City Manager CITY COUNCILACTION APPROVED V DENIED RECEIVED OTHER 6dopi-ea Res . No . 2021 — (orl MEETING DATE t 1 • I IP) 202 t AYES:-Wtrni<-,ZOnOliWinNes tltcle Qtmntanttla 14Kea/ NOES• ___,_110e ABSENT: N drve ABSTAIN: NDne VERIFIED BY. N l l I Sr 5 Original on File with City Clerk's Office -4- P6401-0001\2592945v2 doc Resolution No. 2021-67 RESOLUTION NO. 2021-67 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT APPROVING ACTIONS RELATED TO HOMEBUYER ASSISTANCE FROM THE HOUSING MITIGATION FUND IN AN AMOUNT NECESSARY TO SECURE AN AFFORDABLE HOUSING COST ASSOCIATED WITH THE DONATION OF FOURTEEN (14) VACANT PARCELS TO COACHELLA VALLEY HOUSING COALITION FOR THE PURPOSE OF CONSTRUCTING SINGLE-FAMILY HOMES TO BE MADE AVAILABLE THROUGH THE SELF-HELP PROGRAM TO QUALIFIED VERY LOW AND LOW INCOME HOUSEHOLDS WHEREAS, the City of Palm Desert owns the real property located in the City of Palm Desert, County of Riverside, State of California, described on Exhibit "A", attached hereto and incorporated herein (the "Property"); and WHEREAS, on May 28, 2020, the City entered into a Disposition and Development Agreement (the "DDA") with Coachella Valley Housing Coalition, a California non-profit public benefit corporation ("CVHC") to complete a self-help housing project on the Property consisting of 14 detached single family homes that will be restricted for sale to qualified very low and low income households (the "Project") pursuant to Resolution No. HA-57; and WHEREAS, the DDA provides for the City to convey the Property by grant deed to CVHC for $560,000 ("Purchase Price") and for the City to loan the Purchase Price to CVHC on the terms set forth in the form of promissory note attached to the DDA, which loan will be secured by a deed of trust on the Property in the form attached to the DDA; and WHEREAS, the DDA requires CVHC to timely construct, or cause to be constructed, the 14 single-family homes on the Property, including public infrastructure improvements associated with the homes, and timely sell the single-family homes to qualified very low and low income households which re first time homebuyers and which include a member who is employed within the City's jurisdictional boundaries, at a price that does not exceed an affordable housing cost in accordance with the terms of the affordable housing restriction agreement attached to the DDA; and WHEREAS, CVHC has notified staff that the originally estimated amount of the construction loan from FIRST BANK as described in the DDA (the "Construction Loan") will not be sufficient to construct the single-family homes as contemplated by the DDA. After several reviews, discussions and evaluations of the feasibility analysis provided by CVHC, City Staff has also determined that that an increase in the amount of the Construction Loan to finance the short -fall in the construction cost will result in the inability of the homebuyers, and primarily the very low income households, to acquire their lots at an affordable cost. -1- P6401-0001\2592188v3.doc Resolution No. 2021-67 WHEREAS, in order to ensure an affordable housing cost pursuant to California Health and Safety Code Section 50052.5 as prescribed by the conditions of the DDA, CVHC requested additional financing to assist the fourteen (14) prospective homebuyers in the payment of the purchase price of their lots. WHEREAS, CVHC has provided documentation to the City demonstrating that the homebuyers will need additional financial support from the City in the form of the loan described below to partially fund the purchase price of their lots; and WHEREAS, The City proposes to make available homebuyer assistance in the form of a loan/grant (using Housing Mitigation Funds in an aggregate amount not to exceed $355,000.00) to each qualifying homebuyer (collectively, "Loans") in a principal amount necessary to assure that the homes will be available to the purchaser at an affordable housing cost (as defined in California Health and Safety Code Section 50052.5, as amended from time to time). WHEREAS, the Loans will be secured through a soft fourth lien trust deed to be reduced each year equitably over fifteen (15) years at which time the Loan will be deemed a grant and will be forgiven. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT HEREBY RESOLVES: Section 1. The above recitals are true and correct and a substantive part of this Resolution. Section 2. The Mayor and/or City Manager, or their respective designee (each, an "Authorized Officer"), is hereby authorized to make the Loans from the Housing Mitigation Fund, in an aggregate amount not to exceed $355,000.00 and to execute and deliver, for and in the name of the City, a Loan and Grant Agreement with each of the 14 homebuyers and in substantially the form attached hereto at Exhibit "B", and incorporated herein, with such additions or changes as the Authorized Officer executing the same may approve (such approval to be conclusively evidenced by such Authorized Officer's execution and delivery thereof). Section 3. The Finance Director of the City is hereby authorized to draw monies from the Housing Mitigation Fund in an amount not to exceed $355,000.00, and transfer such monies to facilitate the Loans. Section 4. The sum of $355,000.00 is hereby appropriated to account number 2144490-04390100 from the unobligated balance of the Housing Mitigation Fund. Section 5. The officers and staff of the City are hereby authorized, jointly and severally, to do all things which they may deem necessary or proper to effectuate the purposes of this Resolution, including the execution and recordation of agreements and documents required or contemplated by the Loan and Grant Agreement, and any such actions previously taken are hereby ratified and confirmed. -2- P6401-0001\2592188v3.doc Resolution No. 2021-67 APPROVED at a regular meeting of the Palm Desert City Council held on this 18th day of November, 2021, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: KATHLEEN KELLY, MAYOR ATTEST: NORMA I. ALLEY, MMC, CITY CLERK -3- P6401-0001\2592188v3.doc Resolution No. 2021-67 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY That certain real property situated in the City of Palm Desert, County of Riverside, State of California, described as follows: LOTS 95 THROUGH 108 OF TRACT 30795, AS PER MAP FILED IN BOOK 406, PAGES 73 THROUGH 80 OF PARCEL MAPS, ALL IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY OF RIVERSIDE. ASSESSOR PARCEL NUMBERS 624-440-032, 624-440-034, 624-440-035, 624-440- 036, 624-441-014, 624-441-015, 624-441-016, 624-441-017, 624-441-018, 624-441-019, 624-441-020, 624-441-021, 624-441-022 A-1- P6401-0001\2592188v3.doc Resolution No. 2021-67 EXHIBIT "B" FORM OF LOAN AND GRANT AGREEMENT B-1- P6401-0001\2592188v3.doc LOAN AND GRANT AGREEMENT This Loan and Grant Agreement ("Agreement") is made and entered into as of the day of , , by and between the CITY OF PALM DESERT, a California municipal corporation (the "City") and (the "Owner(s)"). RECITALS A. The City and the Coachella Valley Housing Corporation ("CVHC") are parties to that certain Disposition and Development Agreement dated as of December 16, 2020 (as amended, the "DDA"). B. Pursuant to the DDA, CVHC will acquire certain property owned by the City and upon such property complete a self-help project consisting of fourteen (14) detached single-family homes (the "Project") that will be conveyed and restricted to very low and low income households. C. The Project is a self-help housing project in which no fewer than five hundred (500) hours of construction work associated with the homes are to be performed by the homeowner. D. The cost of construction of the fourteen (14) single-family homes will be provided in the form of a construction loan provided to each homeowner by FIRST BANK (the "Bank") in the amount of ($ ) (the "Construction Loan"). E. On May 28, [2021], the City Council authorized the set -aside of three hundred fifty thousand dollars ($350,000.00) for homebuyer assistance loans secured by third lien trust deeds to qualifying very low and lower income first-time homebuyers, not to exceed twenty-five thousand dollars ($25,000.00) per homebuyer, and these monies have already been allocated. F. City staff has determined, following discussions with the Bank, CVHC and , that the originally estimated amount of the Construction Loan will not be sufficient to construct the single-family homes as contemplated by the DDA. G. City staff has determined, based upon a feasibility analysis provided by CVHC and evaluated by staff that the increase in the amount of the Construction Loan to finance the short fall in the construction costs will result in the inability of the homeowners to acquire the homes at an affordable housing cost. H. City staff has determined that it will further the production and occupancy of the fourteen (14) single-family homes by very low and low income households if the City makes an additional homebuyer assistance loan/grant to each of the fourteen (14) homeowners to fund, in part, the price to be paid by each homebuyer for their lot. -1- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc NOW, THEREFORE, the parties in consideration of the mutual covenants below agree as follows: AGREEMENT 1. Loan Agreement; Forgiveness. (a) The City agrees to lend to the Owner(s), and Owner(s) agree to borrow from the City, on the terms and conditions set forth herein, and No/100ths Dollars ($ ) (the "Loan"). Concurrently with, and as a condition to, the making of the Loan, the Owner(s) shall execute and deliver to the City (i) the Note in favor of the City, in the form of Appendix 1 attached hereto and incorporated herein by this reference; (ii) the Deed of Trust (or other security instrument approved by the City) which shall secure the Note and the Owner's performance hereunder, in the form of Appendix 2 attached hereto and incorporated herein by this reference; and (iii) the Disclosure Statement, in the form of Appendix 3 attached hereto and incorporated herein by this reference. This Agreement, together with the Note, Deed of Trust, and Disclosure Statement are collectively referred to herein as the "Loan Documents." (b) The term of the Loan and this Agreement shall be fifteen (15) years, and the terms of repayment of the Loan are set forth in the Note. (c) On each anniversary of the first day of the first full calendar month following disbursement of the Loan by the City (the "Loan Disbursement Date"), if the Owner(s) have not defaulted in performing the terms and conditions of this Agreement (as "default" is defined in Section 12 below) at any time during the preceding year, then the outstanding amount of principal due under the Note shall be reduced by 6.67% of the total Loan proceeds disbursed prior to such anniversary date. If, on the 15th anniversary of the Loan Disbursement Date, the Owner(s) have not defaulted in performing its obligations under this Agreement, the entire amount of principal shall be forgiven, the Loan shall be deemed to have been a grant, all interest, if any, due under the Note shall be forgiven by the City, this Agreement shall terminate and the City shall reconvey the lien of the Deed of Trust. 2. Use of Proceeds. All Loan proceeds shall be used by Owner(s) for the sole purpose of paying a portion of the purchase price of Owner's lot pursuant to the DDA. 3. Disbursement Procedures. The City shall disburse the Loan proceeds subject to the conditions set forth below: (a) Prior to the sale of each lot upon which a home will be constructed, CVHC shall comply with all requirements of the City related to qualifying buyers, including verifying the buyer's income and obtaining certifications that the buyer continues to be a Qualified Household (as defined in the DDA), and shall submit the information verifying the buyer's income and the certifications to the City; -2- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc (b) If this Loan is being made in conjunction with a loan from another lender, the City shall advance the proceeds of the Loan after all advances have been made by any lenders whose loans are secured by trust deeds encumbering the Property that are senior to the lien of the Deed of Trust. (c) Notwithstanding any provision herein to the contrary, the City shall have no obligation to disburse any funds hereunder unless and until the Owner(s) have executed and delivered to the City the Note, Deed of Trust (in recordable form), and Disclosure Statement. (d) The proceeds of the Loan will be disbursed directly into the escrow established for the purchase of the Owner's lot for the account of the Owner(s) and shall be used solely to partially fund the purchase price of the Owner's lot. (e) The Owner(s) will, within five (5) days of presentation by the City, execute any and all documents required by the City in connection with the disbursement of the Loan proceeds. 4. Title Insurance. As an additional condition to disbursement of the Loan, the City, at no cost to the Owner(s), may obtain, as a condition to the Loan, a standard form ALTA Lender's policy of Title Insurance, issued by a title company chosen by the City, which, if obtained, must be (unless otherwise elected by the City) in an amount not less than the Loan and must insure the priority of the Deed of Trust against all monetary liens and encumbrances against the Owner's property, including but not limited to, mechanic's liens claims, and excepting only (a) the lien of any non - delinquent property taxes; (b) the First Mortgage Loans (as defined in Section 7 below); and (c) other encumbrances and exceptions to title as may be approved in writing by the City in the City's sole and absolute discretion. 5. Owner's Covenants. (a) Maintenance. The Owner(s) covenant and agree, for the period commencing with the date hereof and ending on the date the Loan has been repaid or forgiven in full, to maintain the Owner's property and the improvements thereon in accordance with requirements of the Deed of Trust. (b) Owner Occupancy. The Owner(s) covenant and agree, for the period commencing with the date hereof and ending on the date the Loan has been repaid or forgiven in full, that the Owner's property shall continue to be used and occupied as the Owner's primary residence. (c) No Refinancing without City Consent. The Owner(s) shall not refinance the Owner's property or record any additional encumbrances on the property without the prior written consent of the City. -3- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc 6. Mechanic's Lien and Stop Notices. In the event of the recording of a mechanic's lien pursuant to applicable law of the State of California relating to works of improvement upon the Owner's property, and if the Owner(s) fail to furnish the City a bond causing such lien to be released, within ten (10) days of notice from the City to do so, such failure shall at the option of the City constitute a default under the terms of this Agreement. The Owner(s) shall promptly deliver to the City copies of all preliminary twenty -day notices. 7. Covenants Do Not Impair Lien. (a) The provisions of this Agreement and Deed of Trust shall be subordinate to all deeds of trust recorded on the Owner's property prior to the recordation of the Deed of Trust (herein "First Mortgage Loans") and shall not impair the rights of the lenders thereunder (herein, "First Mortgage Lenders"), or First Mortgage Lenders' assignee or successor in interest, to exercise their remedies under the First Mortgage Loans in the event of default. Such remedies under the First Mortgage Loans include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed in lieu of foreclosure, this Agreement and the Deed of Trust shall be forever terminated and shall have no further effect as to the Owner's property or any transferee thereafter. (b) The City shall cause a Request for Notice to be recorded on the Owner's property subsequent to the recordation of the First Mortgage Loans requesting a statutory notice of default as set forth in the California Civil Code Section 2924b. Such notice shall be sent to the City at the address set forth in Section 15 hereof. 8. Indemnification. The Owner(s) shall defend, indemnify and hold harmless the City and its respective officers, officials, agents, employees, representatives, and volunteers from and against any damages, costs, expenses, losses, liabilities, claims, and judgments relating in any manner to the Owner's property, this Agreement or the Loans. The Owner(s) shall remain fully obligated for the payment of taxes, liens and assessments related to the Owner's property. There shall be no reduction in taxes for the Owner, nor any transfer of responsibility to the City to make such payments, by virtue of the Loan. 9. Insurance. The Owner shall maintain, during the term of the Loan, an all risk property insurance policy insuring the Owner's property in an amount equal to the full replacement value of the structures thereon, with appropriate waiver of subrogation rights. The policy shall name the City as loss payee and shall contain a statement of obligation on behalf of the carrier to notify the City of any material change, cancellation or termination of coverage at least thirty (30) days in advance of the effective date of such material change, cancellation or termination. The Owner(s) shall transmit a copy of the certificate of insurance and loss payee endorsement to the City within thirty (30) days of the effective date of this Agreement, and the Owner(s) shall annually transmit to the City a copy of the certificate of insurance and a loss payee endorsement, signed by an authorized agent of the insurance carrier setting forth the general provisions of coverage. Any -4- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc certificate of insurance must be in a form, content and with companies approved by the City. The copy of the certificate of insurance and loss payee endorsement shall be transmitted to the City at the address set forth in Section 15 hereof. 10. Loan Servicing. The City may contract with a private lender or other person or entity to originate and service the Loan, and to carry out the City's obligations under this Agreement. 11. Further Assurances. The Owner(s) shall execute any further documents consistent with the terms of this Agreement, including documents in recordable form, as the City shall from time to time find necessary or appropriate to effectuate its purposes in entering into this Agreement and disbursing the Loan. 12. Events of Default. (a) Subject to the further provisions of this Section 12, failure or delay by the Owner(s) to perform any term or provision of this Agreement, the Note, or the Deed of Trust constitutes a default. The Owner(s) must immediately commence to cure, correct, or remedy such failure or delay and shall complete such cure, correction or remedy with reasonable diligence, but in any event, within the time set forth in Sections 12 (c) and (d) below, as applicable. (b) The City shall give written notice of default to the Owner(s), specifying the default complained of by the City. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. (c) If a monetary event of default occurs, prior to exercising any remedies under any of the Loan Documents, the City shall give the Owner(s) written notice of such default. The Owner(s) shall have a period of thirty (30) days after such notice is given within which to cure the default prior to exercise of remedies by the City. (d) If a non -monetary event of default occurs, prior to exercising any remedies under any of the Loan Documents, the City shall give the Owner(s) notice of such default. If the default is reasonably capable of being cured within thirty (30) days, the Owner(s) shall have such period to effect a cure prior to exercise of remedies by the City under the Note and the Deed of Trust. If the default is such that it is not reasonably capable of being cured within thirty (30) days, and the Owner(s) (i) initiate corrective action within that period, and (ii) diligently, continually, and in good faith works to effect a cure as soon as possible, then the Owner(s) shall have such additional time as is reasonably necessary to cure the default prior to exercise of any remedies by the City. However, in no event shall the City be precluded from exercising remedies if its security becomes or is about to become materially jeopardized by any failure to cure a default or if the default is not cured within one hundred and twenty (120) days after the first notice of default is given. -5- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc (e) If any event of default occurs, then, upon the election of the City, the entire Loan shall immediately become due and payable without presentment, demand or protest, all of which are hereby expressly waived. (f) Upon an event of default, the City may accelerate the Loan and declare all principal and interest immediately due and payable, and may exercise any or all of the rights and remedies available to it under the law, at equity or as provided in the Loan Documents. (g) Any and all costs and expenses incurred by the City in pursuing its remedies hereunder shall be additional indebtedness of the Owner(s) to the City hereunder, and shall be secured by the Loan Documents. (h) Performance of covenants and conditions imposed upon the Owner(s) hereunder shall be excused while and to the extent that, the Owner(s) are prevented from complying therewith by war, riots, strikes, lockouts, action of the elements, accidents, or acts of God beyond the reasonable control of the Owner(s), provided, however, that such event is not caused by the fault, negligence or misconduct of the Owner(s); provided, further, as soon as the cause or matter so preventing compliance with such obligations is removed or ceases to exist the obligations shall be restored to full force and effect and the Owner(s) shall immediately resume compliance therewith and performance thereof. 13. Compliance with Ordinances, Rules, and Regulations. The Owner(s) agree to comply with all federal and state laws, as well as all ordinances, rules and regulations of the City. Nothing in this Agreement is intended to be, nor shall it be deemed to be, a waiver of any City ordinance, rule or regulation. 14. Severabilitv. Any failure by the City to enforce any of its remedies hereunder in any particular instance shall not constitute a waiver by the City of its right to subsequently enforce its rights under the same or any other provision in the event of a subsequent default. 15. Notices. Any written notice or payment of one party to the other shall be service by registered or certified mail, postage prepaid, return receipt requested, addressed to the parties as follows: To the City: City of Palm Desert 73-510 Fred Waring Drive Palm Desert, California 92260-2578 Attention: Finance Department To the Owner(s): At the Owner's property -6- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc All notices shall be deemed received on the date three (3) business days after the date of deposit into the U.S. mail in the fashion provided herein. 16. Attorneys' Fees and Costs. In the event that any action is instituted to enforce payment or performance under this Agreement, the parties agree that the non -prevailing party shall be responsible for and shall pay all costs and all attorneys' fees incurred by the prevailing party in enforcing this Agreement. If the City shall be or shall become a party to any legal proceedings instituted in connection or arising with respect to the Loan, or in the event of any dispute between the parties hereto arising out of this Agreement in which the City is the prevailing party, the Owner(s) agree to pay to the City on demand all sums paid or incurred by the City as costs and expenses in the legal proceedings, including but not limited to actual attorneys' fees and costs incurred by the City. 17. No Waiver; Remedies Cumulative. All rights and remedies existing under this Agreement or the other Loan Documents are cumulative to and not exclusive of any rights or remedies otherwise available. The City's acceptance of less than the entire amount due for any payment on the Note shall not constitute a waiver by the City to thereafter demand the entire amount due. The waiver by the City of any breach or default herein shall not be deemed, nor shall constitute, a waiver of any subsequent breach or breaches. 18. Governing Law. This Agreement shall be governed by the laws of the State of California. Any legal action brought under this Agreement must be instituted in the Superior Court of the County of Riverside, State of California, or in an appropriate municipal court in that County or in the United States District Court for the Central District of California. 19. Amendment of Agreement. No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made except by a written agreement executed by the Owner(s) and the City. 20. City May Assign; Role of the City. The City may, at its option, assign the Loan, the Loan Documents and its right to receive repayment of the Loan proceeds without obtaining the consent of the Owner(s). 21. Owner Assignment Prohibited. In no event shall the Owner(s) assign or transfer any portion of this Agreement or the Owner's rights or obligations under the Agreement without the prior express written consent of the City, which consent shall be given by the City only in the event that the City determines that (i) the Owner(s) are not in default hereunder and (ii) any such transfer or assignment is made in conjunction and in full compliance with the sale or transfer of the Owner's property as described in that certain Purchaser's Restrictive Agreement by and between the Owner(s) and the City, dated -7- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc as of , 2022 and recorded in the Official Records of the Riverside County Recorder as Instrument No. , and (iii) the assignee or transferee has expressly assumed this Agreement by execution of a written assignment document to be provided by the City. 22. Relationship of the Owner(s) and the City. The relationship of the Owner(s) and the City pursuant to this Agreement is that of debtor and creditor and shall not be or be construed to be a joint venture, equity venture, partnership, or other relationship. 23. Counterparts. This Agreement may be executed in counterparts, which counterparts shall be construed as a single document and have the same effect as if all of the parties had executed the same instrument. 24. General. Time is of the essence of this Agreement and of each and every provision hereof. This Agreement, together with the other Loan Documents, constitutes the entire agreement between the parties hereto pertaining to the Loan, and there shall be no other agreement regarding the subject matter thereof unless signed in writing by the part to be charged. If there is more than one "Owner," the obligations of all Owners shall be joint and several. IN WITNESS WHEREOF, the Owner(s) have entered into this Agreement as of the date and year first above written and has hereunto duly executed this document the day of , 20 . "CITY" CITY OF PALM DESERT, a California municipal corporation By: Name: Title: ATTEST: , City Clerk -8- "OWNER(s)" Print Name: Print Name SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside ) ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) -9- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside ) ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) -10- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside ) ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) -11- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc APPENDIX 1 PROMISSORY NOTE SECURED BY DEED OF TRUST VERY LOW INCOME HOUSEHOLD US BASIC PROVISIONS Date: Palm Desert, California Annual Principal Forgiveness Amount 6.67% of the outstanding principal amount annually Maturity/Full Forgiveness Date: Fifteenth (15th) anniversary of the Interest Accrual Date Borrower(s) ("Borrower") Principal Amount: and 00/100 Dollars ($ ) Default Interest Rate: Three percent (3%) per year Interest Accrual Date: First day of the first full calendar month after the Loan disbursement. FOR VALUE RECEIVED, the Owner(s), as set forth in the Basic Provisions above, hereby promises to pay to the City of Palm Desert, a California municipal corporation, as lender (the "City"), at 73-510 Fred Waring Drive, Palm Desert, California 92260, Attention: , or order, without deduction or offset, the Principal Amount set forth in the Basic Provisions above, together with any interest required pursuant to the provisions below. If more than one person is signing this as Owner, then the obligations of the Owner(s) shall be joint and several. This Promissory Note (this "Note") is issued pursuant to and arises out of the terms and conditions of a Loan and Grant Agreement (the "Loan Agreement") dated the same date as this Note, between the Owner(s) and the City, and is secured by that certain Deed of Trust of even date herewith executed by the Owner(s) for the benefit of the City (the "Deed of Trust"). The Owner(s) acknowledge that, but for the execution of this Note, the City would not enter into the Loan Agreement or make the loan contemplated therein (the "Loan"). Unless otherwise defined in this Note, each capitalized term shall have the meaning ascribed to such term in the Loan Appendix 1 Page -1- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc Agreement. As required by the Loan Agreement, concurrently with the execution of this Note, the Owner(s) are executing the Deed of Trust, which is incorporated herein by this reference. This Note and the Deed of Trust are junior and subordinate to the lien of the First Mortgage Loans. No interest shall accrue on the Loan, except in the case of a default (as defined below), in which case, interest shall accrue at the Default Interest Rate as set forth in the Basic Provisions from the date the Loan and all amounts due hereunder have been declared to be accelerated as provided in Section 12 of the Loan Agreement, and until the earlier of the date all such amounts due and payable hereunder have been paid in full, or the City shall have completed the exercise of its right of foreclosure as provided in the Deed of Trust. The City agrees to defer payment of principal and interest until the Maturity Date as set forth in the Basic Provisions, provided that the Owner(s) have not breached the terms and conditions of this Note and the other Loan Documents. In addition, on each anniversary of the Interest Accrual Date, if the Owner(s) have not defaulted in performing the terms and conditions of this Note (as "default" is described below) at any time during the preceding year, then the outstanding amount of principal due under the Note shall be reduced by 6.67% of the total Loan proceeds disbursed prior to such anniversary date. If, on the fifteenth (15th) anniversary of the Interest Accrual Date, the Owner(s) have not defaulted under the Loan Documents, the entire amount of principal shall be deemed to have been a grant, all interest due under the Note shall be forgiven by the City, this Note shall be cancelled and the City shall reconvey the lien of the Deed of Trust. Subject to the provisions of Section 12 of the Loan Agreement, at the option of the City, the outstanding principal balance of the Loan, and any accrued but unpaid Interest, shall become due and immediately payable upon the occurrence of any one of the following events prior to the Maturity Date: (1) any sale of the Property except as permitted under the Loan Agreement; provided, however, that the transfer of the Owner's property solely as a result of the marriage, divorce, incompetency or death of the Owner(s) or any person constituting the Owner(s) shall not accelerate the Loan so long as the transferee gives notice to the City of such event within thirty (30) days of its occurrence and the transferee assumes the Owner's obligations under the Loan Agreement, by execution of an assignment and assumption agreement approved by the City; (2) if the Owner(s) fail to properly maintain the Owner's property in accordance with the requirements of the Deed of Trust; (3) if the Owner(s) do not obtain all the necessary permits from the City of Palm Desert and fails to adhere to all pertinent City regulations in connection with the proposed improvements; (4) if the Owner(s) ceases to occupy the Owner's property as the Owner's primary residence or otherwise fails to comply with Section 5 of the Loan Agreement; Appendix 1 Page -2- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc (5) an uncured event of default by the Owner(s) under the Loan Agreement, this Note, the City Deed of Trust or the First Mortgages; or (6) if the Owner(s) refinance the First Mortgages, if any, unless the City consents in writing prior to the refinancing. At the request of the Owner(s), the City may, in its sole and absolute discretion, waive the acceleration requirements of this Note and defer repayment and/or extend the term of the Loan. Any waiver must be in writing. If any payment due under this Note or the Deed of Trust is not received by the City within fifteen (15) calendar days of the date such payment is due, the Owner(s) shall pay to City a late charge of twenty-five dollars ($25.00), which late charge shall be immediately due and payable without demand or notice by the City. The Owner(s) acknowledge that late payment under this Note will cause the City to incur costs that would be costly or inconvenient to establish. The Owner(s) agree that this late charge represents a reasonable sum considering all of the circumstances and represents a fair and reasonable estimate of the costs that the City will incur by reason of late payment. The City may, at its option, assign this Note and its right to receive payment under this Note without necessity of obtaining the consent of the Owner(s) or the First Mortgage Lender. In no event shall the Owner(s) assign or transfer any portion of this Note, the Loan or the Loan Agreement except as permitted by Section 21 of the Loan Agreement. This Note may be subject to Section 2966 of the California Civil Code, which provides that the City shall give written notice to the Owner(s), or the Owner's successor in interest, of prescribed information at least sixty (60) and not more than one hundred fifty (150) days before any balloon payment is due. Failure or delay in giving any notice required hereunder shall not constitute a waiver of any default or late payment, nor shall it change the time for any default or payment. This Note and the Deed of Trust shall be governed by and construed in accordance with the laws of the State of California. All parties who are obligated to pay any portion of the indebtedness represented by this Note, whether as principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor, and all other notices to which they might otherwise be entitled, and further waive all defenses based on release of security, extension of time or other indulgence given in respect to payment of this Note, to whomsoever given, and further waive all defenses, generally, except the defense of actual payment of this Note in accordance with its provisions. The Owner(s) agree to pay the following costs, expenses, and attorneys' fees paid or incurred by the City, or adjudged by a court: (1) reasonable costs of collection, costs and expenses, and attorneys' fees paid or incurred in connection with the collection or enforcement of this Note, whether or not suit is filed; and (2) costs of suit and such sum as the court may adjudge as attorneys' fees in any action to enforce payment of this Note or any part of it. In addition to the Appendix 1 SelfHelp Homebuyer Assistance Page -3- P6401-0001\2581749v5.doc foregoing award of attorneys' fees, the City shall be entitled to its attorneys' fees incurred in any post judgment proceedings to enforce any judgment in connection with this Note. This provision is separate and several and shall survive the merger of this provision into any judgment. Subject to the provisions of Section 12 of the Loan Agreement, the Owner(s) waive any right to require the City to (a) demand payment of amounts due (known as "presentment"); (b) give notice that amounts due have not been paid (known as "notice of dishonor") and (c) obtain an official certification of nonpayment (known as "protest"). Subject to the foregoing, the terms of this Note shall be binding upon and inure to the benefit, as the case or context may require, of the respective heirs, successors in interest and assigns of the Owner(s) and the City. IN WITNESS WHEREOF, the Owner has hereunto duly executed this document the day of , 20 . "Owner" Print Name Print Name Appendix 1 Page -4- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc APPENDIX 2 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Attention: City Order No. Title Order No.: APN: Space Above This Line For Recorder's Use This Document is recorded for the benefit of the City of Palm Desert and is exempt from recording fees pursuant to Sections 6103 and 27383 of the California Government Code. DEED OF TRUST This Deed of Trust is made as of the day of , , by and among herein called Trustor, whose address is , in favor of , a California corporation, as Trustee, for the benefit of the CITY OF PALM DESERT, a California municipal corporation, herein called Beneficiary. Trustor in consideration of the promises recited herein and the trust herein created, IRREVOCABLY GRANTS, TRANSFERS, AND ASSIGNS TO TRUSTEE IN TRUST, WITH POWER OF SALE, that certain land (the "Land") situated in the City of Palm Desert, County of Riverside, State of California, described more particularly on Exhibit "A" hereto which is hereby incorporated into this Deed of Trust as if fully set forth below: TOGETHER with all the improvements now or hereafter erected on the Land, and all easements, rights, appurtenances and all fixtures now or hereafter attached to the Land, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the Land covered by this Deed of Trust; and TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected, or hereafter to be erected, on the Land which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefor, whether or not the same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Land, is herein referred to as the "Property"; Appendix 2 Page -1- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc To have and to hold the Property together with acquittances to the Trustee, its successors and assigns forever; For the Purpose of Securing: A. Performance of each agreement of Trustor herein contained. B. The performance of each agreement of Trustor set forth in, and rights of the Beneficiary under, that certain Loan and Grant Agreement (the "Loan Agreement") dated concurrently herewith. C. Payment of the indebtedness evidenced by that certain promissory note (the "Note") dated concurrently herewith, and any extension or renewal thereof, in the principal sum of $ executed by Trustor in favor of Beneficiary or order pursuant to the Loan Agreement. D. Performance of Trustor's obligations and the rights of Beneficiary under any modifications of the foregoing. To Protect the Security of This Deed of Trust, Trustor Agrees: (1) To keep the Property and the improvements thereon clean and in good condition and repair; not to remove or demolish any building thereon; to complete or restore promptly and in good workmanlike manner any building which may be constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials furnished therefore; to comply with all laws affecting the Property, or requiring any alterations or improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act upon the Property in violation of law; and to do all other acts which from the character or use of the Property may be reasonably necessary, the specific enumerations herein not excluding the general. (2) To provide or cause to provide, maintain and deliver to Beneficiary fire insurance satisfactory to and with loss payable to Beneficiary and any senior trust deed holder, as their interests may appear. The amount collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. (3) To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; and to pay all costs and expenses, including cost of evidence of title and attorneys' fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust. (4) To pay: Before delinquency all taxes and assessments affecting the Property, including assessments on appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on the Property or any part thereof, which appear to be prior or senior hereto; all costs, fees and expenses of this Trust. Appendix 2 SelfHelp Homebuyer Assistance Page -2- P6401-0001\2581749v5.doc Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or Trustee, but without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation hereof, may: make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee being authorized to enter upon the Property for such purposes; appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the judgment of either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary expenses, employ counsel and pay its reasonable fees. (5) To pay immediately and without demand all sums so expended by Beneficiary or Trustee, with interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any statement provided for by law in effect at the date hereof regarding the obligation secured hereby any amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when the statement is demanded. (6) That any award of damages in connection with any condemnation for public use of or injury to the Property or any part thereof is hereby assigned and shall be paid to Beneficiary (and to any senior trust deed holder, as their interests may appear) who may apply or release such moneys received by it in the same manner and with the same effect as above provided for disposition of proceeds of fire or other insurance. (7) That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay. (8) That at any time or from time to time, without liability therefor and without notice, upon written request of Beneficiary and presentation of this Deed of Trust and the Note for endorsement, and without affecting the personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of the Property; consent to the making of any map or plat thereof; join in granting any easement thereon; or join in any extension agreement or any agreement surrounding the lien or charge hereof. (9) That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon surrender of this Deed of Trust and the Note to Trustee for cancellation and retention and upon payment of its fees, Trustee shall reconvey, without warranty, the Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or person legally entitled thereto." Five years after issuance of such full reconveyance, Trustee may destroy the Note and this Deed of Trust (unless directed in such request to retain them). (10) That upon default by Trustor in payment of any indebtedness secured hereby, or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default and election to cause the Property to be sold, which notice Trustee shall cause to be filed for record. Beneficiary also shall deposit with Trustee this Deed of Trust, the Note and all documents evidencing expenditures secured hereby. Appendix 2 Page -3- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc After the lapse of such time as may then be required by law following the recordation of the notice of default, and notice of sale having been given as then required by law, Trustee, without demand on Trustor, shall sell the Property at the time and place fixed by it in the notice of sale, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee may postpone sale of all or any portion of the Property by public announcement at such time and place of sale, and from time to time thereafter may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed conveying the Property so sold, but without any covenant or warranty, express or implied. The recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof. Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at such sale. After deducting all costs, fees, and expenses of Trustee and of this Trust, including cost of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of: all sums expended under the terms hereof, not then repaid, with accrued interest at the amount allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder, if any, to the person or persons legally entitled thereto. (11) Beneficiary, or any successor in ownership of any indebtedness secured hereby, may from time to time, by instrument in writing, substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where the Property is situated, shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties. The instrument must contain the name of the original Trustor, Trustee, and Beneficiary hereunder, the date and instrument number where this Deed of Trust is recorded, and the name of the new Trustee. (12) That this Deed of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees, devisees, administrators, executors, successors, and assigns. The term Beneficiary shall mean the owner and holder, including pledges, of the Note, whether or not named as Beneficiary herein. In this Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. (13) That Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is made a public record as provided by law. Trustee is not obligated to notify any party hereto of pending sale under any Deed of Trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought by Trustee. (14) Not to refinance the Property or encumber the Property with any additional debt without the prior written consent of Beneficiary. (15) Upon the Trustor's breach of any covenant or agreement of the Trustor in this Deed of Trust or in the Note or Loan Agreement, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, which remains uncured after the applicable period of time after notice of default specified in the Loan Agreement, the Beneficiary, at the Appendix 2 Page -4- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc Beneficiary's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; and (b) either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its Property, enter upon the Property and take possession thereof (or any part thereof) and of any of the Property, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Property, or part thereof or interest therein, increase the income therefrom or protect the Property thereof. The entering upon and taking possession of the Property shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Property, the Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which the Trustor acquires title to any Property, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. The Beneficiary shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorneys' fees. (16) Notwithstanding the Beneficiary's acceleration of the sums secured by this Deed of Trust, the Trustor will have the right to have any proceedings begun by the Beneficiary to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Property pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) The Trustor pays the Beneficiary all sums which would be then due under this Deed of Trust and no acceleration under the Note has occurred; (b) the Trustor cures all breaches of any other covenants or agreements of the Trustor contained in this Deed of Trust; (c) the Trustor pays all reasonable expenses incurred by the Beneficiary and the Trustee in enforcing the covenants and agreements of the Trustor contained in this Deed of Trust, and in enforcing the Beneficiary's and the Trustee's remedies, including, but not limited to, reasonable attorneys' fees; and (d) the Trustor takes such action as the Beneficiary may reasonably require to assure that the lien of this Deed of Trust, the Beneficiary's interest in the Property and the Trustor's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by the Trustor, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. (17) Upon a sale of the Property not permitted by the Loan Agreement, the Beneficiary may, at its option, require immediate payment in full of all sums secured by this Deed of Trust. However, this option shall not be exercised by the Beneficiary if such exercise is prohibited by federal law as of the date of this Deed of Trust, or if the Beneficiary has executed a separate written waiver of this option. (18) Upon payment or forgiveness of all sums secured by this Deed of Trust, the Beneficiary will request the Trustee to reconvey the Property and will surrender this Deed of Trust and the Note to the Trustee. The Trustee will reconvey the Property without warranty and without Appendix 2 Page -5- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. (19) The Beneficiary, at the Beneficiary's option, may from time to time remove the Trustee and appoint a successor trustee to any Trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. (20) Notwithstanding any provision herein, this Deed of Trust shall not diminish or affect the rights of the First Mortgage Lender under any First Mortgage (as such terms are defined in Section 7 of the Loan Agreement), executed by the Trustor in favor of the First Mortgage Lender and recorded in the County of Riverside concurrently herewith or any subsequent First Mortgage Lender deeds of trust hereafter recorded against the Property provided the Beneficiary has approved the form of subordination agreement to be executed by the Beneficiary as well as the terms of the First Mortgage and the loan secured thereby. (21) Subject to the provisions of Section 13 of the Loan Agreement, Trustor waives any right to require the Beneficiary to (a) demand payment of amounts due (known as "presentment"); (b) give notice that amounts due have not been paid (known as "notice of dishonor") and (c) obtain an official certification of nonpayment (known as "protest"). (22) This Deed of Trust may be executed in counterparts, which counterparts shall be construed as a single document and have the same effect as if all of the parties had executed the same instrument. Appendix 2 Page -6- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc The undersigned Trustor requests that a copy of any Notice of Default and of any Notice of Sale hereunder be mailed to it at its address hereinbefore set forth. "BENEFICIARY" "TRUSTOR" CITY OF PALM DESERT, a California municipal corporation Signature By: Name: Title: ATTEST: City Clerk Appendix 2 Page -7- Print Name: Signature Print Name: SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside ) ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Appendix 2 Page -8- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside ) ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Appendix 2 Page -9- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Riverside ) ) On , before me, (insert name and title of the officer) Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) Appendix 2 Page -10- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY That certain real Property situated in the City of Palm Desert, County of Riverside, State of California, described as follows: LOT OF TRACT MAP NO. , IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PER SUBDIVISION MAP RECORDED IN BOOK OF MAPS, PAGES THROUGH INCLUSIVE, RECORDS OF SAID COUNTY. APN: Appendix 2 Page -11- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc APPENDIX 3 DISCLOSURE STATEMENT TRUTH IN LENDING DISCLOSURE STATEMENT Creditor City of Palm Desert Mailing Address 73-510 Fred Waring Drive Palm Desert, CA 92260 Loan Number ANNUAL PERCENTAGE RATE The cost of your credit as a yearly rate. E* % PAYMENT SCHEDULE Applicant(s) Property Address Preparation Date FINANCE CHARGE AMOUNT FINANCED The dollar amount the credit will cost you. E* NUMBER OF *AMOUNT OF PAYMENTS PAYMENTS 1 $(Total of Payments) MONTHLY PAYMENTS ARE DUE BEGINNING Upon default only TOTAL OF PAYMENTS The amount of credit provided to The amount you will have paid you on your behalf. after you have made all payments as scheduled. E* $ E* $ NUMBER OF *AMOUNT OF PAYMENTS PAYMENTS "E" means estimated." All amounts and payments are estimated. After final rehabilitation/improvement disbursement, a statement will be provided showing principal and payment amounts. Excludes taxes or insurance. DEMAND FEATURE: MONTHLY PAYMENTS ARE DUE BEGINNING This loan does not have a Demand Feature. This loan has a Demand Feature ITEMIZATION: You have a right at this time to an ITEMIZATION OF AMOUNT FINANCED. I/We REQUIRED DEPOSIT: earlier. do do not want an itemization This loan has a Variable Rate Feature. Variable Rate Disclosures have been provided to you SECURITY: You are giving a security interest in: The real property known as Appendix 3 Page -1- SelfHelp Homebuyer Assistance P6401-0001\2581749v5.doc ASSUMPTION: Someone buying this property cannot assume the remaining balance due under original mortgage terms may assume, subject to lender's conditions, the remaining balance due under original mortgage terms FILING/RECORDING FEES: PROPERTY INSURANCE: Property / hazard insurance is a required condition of the loan. Owner may purchase this insurance from any insurance company acceptable to the lender. Hazard Insurance is is not available through the lender at an estimated cost of $ for a month term. LATE CHARGES: If your payment is more than days late, you will be charged a later charge of $ PREPAYMENT: If you prepay this loan in full or in part, you may will not have to pay a penalty. may will not be entitled to a refund of part of the finance charge. See your contract documents for any additional information regarding non-payment, default, required repayment in full before scheduled date, and payment refunds and penalties. I/We hereby acknowledge reading and receiving a complete copy of this disclosure. I/We understand there is no commitment for the creditor to make this loan and there is not obligation for me/us to accept this loan upon delivery or signing of this disclosure. Date Date Date Date Appendix 3 Page -2- Self-Help Homebuyer Assistance P6401-0001\2581749v5.doc Loan Number: Owners: NOTICE OF RIGHT TO CANCEL Date: Property Address: Palm Desert, CA 922 YOUR RIGHT TO CANCEL: You are entering into a transaction that will result in a mortgage, lien or security interest on/in your home. You have a legal right under federal law to cancel this transaction, without cost, within THREE (3) BUSINESS DAYS from whichever of the following events occurs last: 1. The date of the transaction, which is ; or 2. The date you received your Truth -in -Lending disclosures; or 3. The date you received this notice of your right to cancel. If you cancel the transaction, the mortgage, lien or security interest is also cancelled. Within 20 CALENDAR DAYS after we receive your notice, we must take the steps necessary to reflect that the mortgage, lien or security interest on/in your home has been cancelled, and we must return to you any money or property you have given to us or to anyone else in connection with this transaction. You may keep any money or property we have given you until we have done the things mentioned above, but you must then offer to return the money or property. If it is impractical or unfair for you to return the property, you must offer its reasonable value. You may offer to return the property at your home or at the location of the property. Money must be returned to the address below. If we do not take possession of the money or property within 20 CALENDAR DAYS of your offer, you may keep it without further obligation. HOW TO CANCEL: If you decide to cancel this transaction, you may do so by notifying us in writing at: City of Palm Desert 73-510 Fred Waring Drive, Palm Desert, CA 92260-2578 Attn: You may use any written statement that is signed and dated by you and states your intention to cancel, or you may use this notice by dating and signing below. Keep one copy of this notice because it contains important information about your rights. If you cancel by mail or telegram, you must send the notice no later than midnight (or midnight of the THIRD BUSINESS DAY following the latest of the three events listed above). If you send or deliver your written notice to cancel some other way, it must be delivered to the above address no later than that time. I WISH TO CANCEL Date Signature I/WE ACKNOWLEDGE RECEIPT OF TWO (2) COPIES OF NOTICE OF RIGHT TO CANCEL AND ONE (1) COPY OF THE FEDERAL TRUTH -IN -LENDING DISCLOSURE STATEMENT, ALL GIVEN BY LENDER IN COMPLIANCE WITH TRUTH -IN -LENDING SIMPLIFICATION AND REFORM ACT OF 1980 (PUBLIC LAW 96-221). Each Owner in this transaction has the right to cancel. The exercise of this right by one Owner shall be effective as to all Owners. Date Date Notice of Right to Cancel SelfHelp Homebuyer Assistance Page -1- P6401-0001\2581749v5.doc Contract No. C36510 City of Palm Desert Self -Help Affordable Housing Development DATE: 10/017 14 SELF-HELP LOTS SITE MAP MERLE STREET 1 inch = 150 feet VICINITY MAP