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TO WHOM IT MAY CONCERN Powered By Docstoc
					City of Cleveland
Frank G. Jackson, Mayor
Department of Community Development
Division of Administrative Services
601 Lakeside, Room 320
Cleveland, Ohio 44114-1070
www.cleveland-oh.gov




                              SUBORDINATION POLICY
                         (WAIVER OF PRIORITY OF MORTGAGE)

A FINANCING INFORMATION PAMPHLET AND A CONFIRMATION FORM
ARE INCLUDED WITH THE SUBORDINATION POLICY.

THE CITY OF CLEVELAND REQUIRES THAT THIS PAMPHLET AND
CONFIRMATION FORM BE GIVEN TO THE APPLICANT FOR REVIEW
AND SIGNATURE.



    The City of Cleveland will consider the subordination of its secured
     mortgage in the following instances:
      “Streamline” refinance (refinance of senior mortgage only)
      Home improvement

    All subordination requests, satisfying the above standards, must
     also meet the following criteria:
       If the City loan is a payment loan, repayments must be current.
       The total loan to value ratio (including the City’s mortgage) may
        not exceed 90%.

    The City of Cleveland will not consider the subordination of its
     secured mortgage in the following instances:
       If the City of Cleveland loan is in first (or senior) mortgage
        position.
       If the proposed subordination request involves an “equity line of
        credit”.
       If the proposed subordination request involves the consolidation
        of “personal” debt.
       If the proposed subordination request involves “cash out” to the
        homeowner.
       If fees and costs are considered “excessive” and included as
        part of the new loan.




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The following information and documents are required when requesting a
subordination:

1. A cover letter stating the purpose of the subordination request.

        If refinancing a senior mortgage, please submit a “payoff verification”
         from the holder of the senior mortgage. This information must be on
         their letterhead.

        If the purpose of the subordination request is for home improvements,
         please submit a signed contract with specifications detailing the work to
         be done. The subordination will not be considered without the requested
         documentation.

2. Copy of a current certified appraisal.

3. Copy of a current title search from a title company (on their letterhead).

4. Copy of a Financial Disclosure Statement and a Preliminary Settlement
   Statement. The statement should include the terms of the new loan (name
   of lender, loan amount, rate, term, monthly payment amount, escrow
   amount, and details on the distribution of proceeds).

5. The subject property must be owner-occupied. Please provide documentation
   in the form of a telephone bill and a utility bill.

6. Please provide proof of income and the property owner’s financial ability to
   handle the new debt.


PLEASE SUBMIT ALL DOCUMENTS AT ONE TIME FOR OUR REVIEW;
NOT DOING SO WILL DELAY THE REVIEW PROCESS AND REQUIRE AN
ADDITIONAL REVIEW FEE.



ADDITIONAL INFORMATION:

1. Turnaround time for a response is approximately ten (10) working days from
   the date of receipt of all requested documentation.

2. The City may contact the homeowner to discuss the terms of the
   subordination request.



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3. The City places a restrictive clause on the “waiver document” limiting the
   dollar amount of the new loan to the extent of the principal amount being
   borrowed by the property owner.

4. If the loan is for home improvements, the City may do the
   following:
      Perform a site visit to review the proposed improvements.
      Perform a final inspection of the improvements.
      Instruct the escrow agent to withhold the disbursement of funds until the
       final inspection has been made and approved by the City.

5. There is a non-refundable fee (currently $50) for the review of subordination
   packages. Checks should be made payable to the City of Cleveland and
   forwarded with the subordination package. A package will be reviewed after
   receipt of the fee.

6. If the subordination request is approved, the commitment is valid
   for a period of thirty (30) days.      The “waiver of priority of
   mortgage” must be “filed” within that time period.

7. You may fax documents to the attention of the Accounting Section at (216)
   420-7981.




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            FINANCING INFORMATION




                             Does it matter where
                                I get my loan?
                                          You bet it does…




                                   City of Cleveland
                         Department of Community Development

                                      Frank G. Jackson, Mayor




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                             Compare the differences in:

                                                Interest Rates
                                                Fees
                                                Terms


         For example: a $12,000 HOME IMPROVEMENT LOAN


                                                Lender A            Lender B
Interest Rate                                           8%              13%
Fees                                                   $1,200          $5,000
Term                                                  30 Years        30 Years
Total Financed                                        $13,200         $17,000

Monthly Payment                                       $96.86         $188.05
Total Payment                                         $34,868         $67,699
Total Interest and Fees                               $21,668         $50,699



Difference in Monthly Payment                                         $91.19
Difference in Total Payments                                          $32,831
Difference in Total Costs (Int. and Fees)                             $29,031




What should you know?
An interest rate can be the same for the entire loan (fixed) or change (variable).
The lower the interest rate, the lower the monthly payment will be. Fees and
other costs vary from lender to lender. Be wary of balloon repayment
terms where the majority of your monthly repayment will be applied
to interest.




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Ask about:       Is the interest rate fixed or variable? What is the APR
(Annual Percentage Rate)? What are the options for the length of the
loan? What is the monthly payment? What is the total cost of the loan?
Is there a pre-payment penalty? Can any fees be waived or reduced? Are
any fees refundable? Are there any discounts for which you may qualify?

Including “other” debts in refinancing.
Often times, a refinancing package will offer you an option to convert short
term, medium interest, unsecured debt (credit card debt) into long
term, lower interest, secured debt. That debt will now be paid with
interest over the life of the refinancing. Be aware that once this debt is
included in a refinancing package, you may be paying much more for that
formerly unsecured debt over the life of the loan. That debt may also be
secured by the equity in your home.

How do you select a lender?
There are different types of lenders. These include commercial banks,
savings and loans, mortgage brokers, and finance companies. Each
institution could have unique terms and conditions. You could pay a
different amount for the same loan depending on the lender. It pays to
shop.

Are all loans the same?
There are different types of loans available. These include home equity
(lump sum or line of credit), home improvement, and signature loans. All
have advantages and disadvantages. Make sure you understand the
differences.

Are there any special loans offered in Cleveland?
There are special programs for home improvements offered in the City of
Cleveland. For more information, contact lending institutions, non-profit
organizations in your neighborhood, or the City of Cleveland’s Division of
Neighborhood Services.

How can you get assistance?
Consumer credit counseling agencies as well as neighborhood
organizations offer programs to help you understand the loan approval
process.


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The following lenders have agreements with the City of Cleveland
to provide products and services to Cleveland residents. They can
assist you in obtaining a loan or in answering questions for you
about the loan process.


Visit the branch closest to you or call:
                                  Lender                  Phone
                                  First Merit Bank        (216) 694-5625
                                  Charter One Bank        (216) 781-3467
                                  National City Bank
                                  Bank One                1(800) 800-5626
                                  Huntington Bank         (216) 447-4424
                                  Fifth Third Bank        (216) 274-5569
                                  U.S. Bank               (216) 707-2020
                                  Key Bank                1(800)Key2YOU

Also contact the City of Cleveland, Division of Neighborhood Services at (216)
664-2045 for information about City programs and services.




                                              City of Cleveland
                                           Frank G. Jackson, Mayor

                               Department of Community Development
                                      Daryl P. Rush, Director




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                                           FINANCING INFORMATION
                                            CONFIRMATION FORM



I/We __________________________________________________________________

have been provided a copy of the “Financing Information” pamphlet. I/We understand the
subject of the pamphlet, and wish to continue with the application for the subordination of
my/our loan with the City of Cleveland.

_____________________________________________                      ________________
Name                                                               Date

_____________________________________________                      ________________
Name                                                               Date




RETURN THIS SIGNED FORM WITH THE SUBORDINATION PACKAGE




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