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HomeMy WebLinkAboutPR 22298: EXECUTION OF A HOMEBUYER WRITTEN AGREEMENT , ,, ,_,___ c ,. City of , - r! rthu ,r Texas INTEROFFICE MEMORANDUM Department of Development Services Division of Housing and Neighborhood Revitalization Date: December 15, 2021 To: City Manager Mayor and City Counciltwi From: Beverly A. Freeman, Manager of Housing&Neighborhood '+ Revitalization RE: P.R. 22298—Execution of a Homebuyer Written Agreement Nature of the request: The Housing Division recommends the City Council adopt Proposed Resolution 22298 authorizing execution of a Homebuyer Written Agreement for the purchase of 2826 9th Street, Port Arthur, Texas 77640. Staff Analysis/Considerations: The City Council by authorization of Resolution Number 21-130 has obligated the City to provide homebuyers assistance to qualified persons/families of the City. Community Development Block Grant (CDBG)Program funds and HOME Investment Partnership(HOME)Program funds are allocated to the City annually to provide Homebuyers assistance activities in accordance with 24 Code of Federal Regulations Part 570 and Part 92. A homebuyer has been identified and certified and is eligible to receive up to $40,000 to assist with the purchase of new construction home located at 2826 9th Street in Port Arthur, Texas. The funds will be used to assist with principal buy down and closing fees associated with the purchase of a home. Recommendation: The Housing Division recommends the City Council adopt Proposed Resolution 22298 authorizing execution of a Homebuyers Written Agreement for the purchase of 2826 9th Street, Port Arthur, Texas 77640. Budget Consideration Funding will be provided by the Federal CDBG Program, account number 105-13-033-5422-00-40-000, project number CD6146. P. R. No. 22298 12/15/2021 BAF/Housing RESOLUTION NUMBER A RESOLUTION AUTHORIZING THE EXECUTION OF A HOMEBUYER'S WRITTEN AGREEMENT FOR THE DOWN PAYMENT ASSISTANCE AND CLOSING FEES ASSOCIATED WITH THE PURCHASE OF 2826 9TH STREET, PORT ARTHUR, TEXAS, THROUGH THE CITY'S HOMEBUYER'S ASSISTANCE PROGRAM. WHEREAS, pursuant to the Housing and Urban Development Act of 1974 the U.S. Department of Housing and Urban Development awards annual HOME Program and Community Development Block Grant Program funds to the City of Port Arthur for the primary benefit of low and moderate income persons/families in accordance with 24 Code of Federal Regulations Part 92 and Part 570; and, WHEREAS, the City Council, by its adoption of Resolution Number 21-130, (authorizing submission of the 2021 Consolidated Plan) has obligated itself to provide assistance to low and moderate income persons/families; and, WHEREAS, a homebuyer has been identified and certified and is eligible to receive up to $40,000 to assist with the purchase of a new construction home located at 2826 9th Street in Port Arthur, Texas. The funds will be used to assist with principle buy down and closing fees associated with the purchase of a home; and, WHEREAS, the closing documents must be executed on or before June 4, 2022; and, WHEREAS, no individual will be permitted to occupy the home until all documents have been approved by the City Council and signed by all parties involved; and, WHEREAS, the written agreement is attached hereto as Exhibit "A" and the Second Lien Deed of Trust and Promissory Note as attached hereto as Exhibit "B". NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. THAT the facts and opinions in the preamble are true and correct. Section 2. THAT the City Council hereby authorizes the City Manager to enter into a Written Agreement with Stephanie Brown as part of the City's Homebuyer's Assistance Program that is attached hereto in substantially the same form as Exhibit "A", and the Second Lien Deed of Trust and Promissory Note that is attached hereto in substantially the same form as Exhibit "B". Section 3. THAT a copy of the caption of this Resolution be spread upon the minutes of the City Council. READ, ADOPTED AND APPROVED this day of A.D., 2022 at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: MAYOR COUNCILMEMBERS NOES: . MAYOR, THURMAN BARTIE ATTEST: SHERRI BELLARD, CITY SECRETARY APPROVED AS TO FORM: 2/ VALECIA ZENO CITY ATTORNEY APPROVED FOR ADMINISTRATION: RON BURTON, CITY MANAGER BEVERLY A. F EMAN, MANAGER OF HOUSING & NEIGHBORHOOD REVITALIZATION APPROVED AS TO AVAILABILITY OF FUNDS: kc, d r\ f cti KANDY DA' 1EL, INTERIM DIRECTOR OF FINANCE EXHIBIT "A" WRITTEN AGREEMENT FOR THE CITY OF PORT ARTHUR'S HOMEBUYER'S ASSISTANCE NEW CONSTRUCTION PROGRAM This APPLICANT Agreement ("Agreement" hereinafter) is made and entered into by and between THE CITY OF PORT ARTHUR, TEXAS, through its duly authorized agent, Ron Burton, City Manager, hereinafter as PARTICIPATING JURISDICTION, and Stephanie Brown, Social Security Number resident(s) of Port Arthur, Texas, hereinafter referred to as "APPLICANT". This Agreement sets forth the understanding of the parties concerning the City's Community Development Block Grant (CDBG) Program 24 Code of Federal Regulations Part 570 and the HOME Investment Partnership(HOME)Program Homebuyers Assistance Program requirements in accordance with 24 Code of Federal Regulations Part 92. It is the intent of this Agreement to outline what eligible activities and procedures the APPLICANT must comply with in order to qualify for a Deferred Payment Forgivable Loan from the City's Homebuyers Assistance Program. Each party has the necessary legal capacity and sufficiency to enter into this Agreement and does severally and collectively agree by the execution hereof, that they are bound to the mutual obligations and performances of the requirements described herein. 1. THE PARTICIPATING JURISDICTION receives Community Development Block Grant (CDBG) and HOME Investment Partnership (HOME) Program funds from the U. S. Department of Housing and Urban Development, (HUD) under the Title II of the Law of the National Housing Affordable of 1990 (National Affordable Housing Act of 1990), and is authorized to make contracts and agreements. 2. THE PARTICIPATING JURISDICTION is an Entitlement city receiving funding annually under the CDBG and HOME Programs established under the National Affordable Housing Act and therefore has agreed to the use of said funds as identified its Consolidated Plan. 3. THE PARTICIPATING JURISDICTION has as public policy for the authorization to develop, provide and facilitate the acquisition of decent, safe, sanitary and affordable housing in Port Arthur, Texas, and with such purpose has allocated program funds to acquire or develop affordable housing that will be sold to Low-Moderate Income residents. 4. APPLICANT has requested assistance through the CDBG Program to acquire a housing unit located at 2826 9th Street, Port Arthur,Texas, which has a value of$169,958.00 , established in accordance with the appraisal carried out in the same or the purchase price established, whichever is lower. 5. After conducting a detailed review of the APPLICANT's application for assistance, the PARTICIPATING JURISDICTION has determined that the APPLICANT qualifies for assistance in the amount of up to $40,000.00, which will be provided in the form of a Deferred Payment Forgivable Loan ("DPFL"), in accordance with the applicable federal, state and local requirements. The funding provided will be used to assist with down payment and/or closing costs associated with the purchase of a single-family dwelling unit located at 2826 9th Street,Port Arthur, Texas. 1 tOUAL HOUSING OP P OR T UNITY 6. The DPFL will be guaranteed by a Second Lien Deed of Trust and/or Deed Restrictions in favor of the City of Port Arthur, subordinate only to a private financial institution's superior lien for a loan in a greater amount. As an additional requirement,APPLICANT must comply with the City's Recapture Provisions established for the CDBG and HOME Programs in accordance to 24 Code of Federal Regulations Part 92.254 and Part 570. 7. Such Recapture Provisions as identified in 24 Code of Federal Regulations Part 92.254 and Part 570 incorporated herein as a part of the DPFL provide for the conditions that the APPLICANT must comply with prior to the disbursement of any funds. The Recapture Provisions will also be made a part of the Second Lien Deed of Trust supported by a Promissory Note executed between the parties at the time of actual disbursement of CDBG or HOME Program funds. 8. Recapture Provisions are an essential and integral part of this agreement and are incorporated herein. 9. The APPLICANT agrees to comply with the Recapture Provisions and further understands that funds will neither be granted nor disbursed if APPLICANT does not consent to the requirements of said provisions. 10. The APPLICANT acknowledges having read the Recapture Provisions and that they have been explained by CDBG and HOME Program staff. APPLICANT further acknowledges and agrees to comply with the same as a condition of receiving assistance. 11. The APPLICANT acknowledges and agrees to comply with the requirement that the dwelling unit must continue to be the principal residence of the APPLICANT during the period of affordability being ten (10) years, as set forth in the Recapture Provisions, and that it may not be used for any other purpose than that of APPLICANT's principal residence during the same period. The APPLICANT acknowledges and agrees that this dwelling unit may not become rental property during the affordability period set forth in the Recapture Provisions. The APPLICANT further acknowledges and agrees that any violation of these requirements would require that the entire amount of assistance provided is subject to recapture, and must be repaid to the City, including any related expenditures, costs and attorney fees incurred by the PARTICIPATING JURISDICTION in the event of any resulting legal action. 12. The APPLICANT acknowledges and agrees that the dwelling unit must be acquired, evidenced by the execution of a Second Lien Deed of Trust and a Promissory Note, within six (6)months after the execution of this Agreement. This and any prior Agreements become null and void six (6)months from the execution date of this Agreement. This document is made of record in Port Arthur, Texas on 2 (OVAL HOUSING OPPORTUNITY Date: PARTICIPATING JURISDICTION: APPLICANT: Ron Burton Signature City Manager CITY OF PORT ARTHUR CITY ATTORNEY CO-APPLICANT: Val Tizeno Signature 3 A nwwt KOUZV$Y OPPORTUNITY EXHIBIT " B " NOTICE OF CONFIDENTIALITY RIGHTS IF YOU OR A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM THE INSTRUMENT BEFORE IT IS FILED RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER. AFTER RECORDING RETURN TO: City of Port Arthur Housing and Neighborhood Revitalization Department P.O.Box 1089 Port Arthur, TX 77640-1089 SECOND LIEN DEED OF TRUST NEW CONSTRUCTION PROGRAM Date: , 2022 Grantor/Borrower: Stephanie Brown Grantor's/Borrower's Mailing Address (including county): 2826 9th Street Port Arthur, Texas 77640 Jefferson County, Texas Trustee: Ron Burton(or his designated successor) City Manager Trustee's Mailing Address (including county): Office of the City Manager P.O. Box 1089 Port Arthur, TX 77640-1089 Jefferson County Beneficiary/Lender: City of Port Arthur Beneficiaries/Lender Mailing Address (including county): City of Port Arthur Housing&Neighborhood Revitalization Department P.O. Box 1089 Port Arthur, TX 77640-1089 Jefferson County 1 (OVAL HOVS111G O➢i or Tv Nil Y Obligation: The City of Port Arthur is a home rule Beneficiary/Lender and participating jurisdiction in the Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) Programs. HOME Program. The City (hereinafter referred to as Beneficiary/Lender) has provided the Grantor/Borrower with up to $40,000.00 of CDBG or HOME Program funds for down payment assistance and closing costs. Pursuant to 24 Code of Federal Regulation Part 92.254, and Part 570 the period of affordability for homebuyer units is based upon the direct CDBG or HOME subsidy provided to the homebuyer that enabled the homebuyer to purchase the unit. Any CDBG or HOME program income used to provide direct assistance to the homebuyer is included when determining the period of affordability. Note: Date: , 2022 Original principal amount: up to $40,000.00 Grantor/Borrower: Stephanie Brown Beneficiary/Lender: City of Port Arthur Maturity Date: , 2032 (10 year affordability period) Terms of Payment: As provided in the note, the Grantor/Borrower will abide by the requirements of the CDBG or HOME program. Homeownership Assistance per Unit Affordability Period (Years) Up to $40,000.00 10 That certain promissory note of even attached hereto as Exhibit"B"of even date herewith executed by Grantor/Borrower and payable to Beneficiary/Lender, in the principal amount of up to $40,000.00. The Note shall mature and become finally due and payable upon the occurrence of any default during the Affordability Period of ten (10) years (the affordability period) after the date hereof) being 2032 unless the debt evidenced by the Note is forgiven as provided in the Note. Recapture Provisions: Homes acquired with CDBG or HOME Program funds must satisfy certain requirements for the ten (10) year affordability period.The funds must be recaptured in the event the following rules are not adhered to: • The dwelling acquired with the CDBG or HOME subsidy must be the principal residence of the Grantor/Borrower and will not be rented or used for other purposes. • The Grantor/Borrower will not engage the property to obtain a mortgage, gift, sell or exchange the property without the written consent of the Beneficiary/Lender. 2 A • (OVAL MOUSING OPPORTUNITY • The Beneficiary/Lender will inspect the property to confirm that the participant is in full compliance with the CDBG or HOME program guidelines during the affordability period of the property. FAILURE TO COMPLY WITH THE REQUIREMENTS OF THE HOME PROGRAM WILL OBLIGATE THE GRANTOR/BORROWER TO REIMBURSE THE TOTAL AMOUNT OF THE SUBSIDY TO THE BENEFICIARY/LENDER. The Beneficiary/Lender may recover up to $5,000 for legal services rendered in the event of a breach of terms and conditions set forth above. Sale of Property Within the Affordability Period: If the Grantor/Borrower sells the property within the affordability period and the net proceeds are sufficient to repay all of the CDBG or HOME Program funds invested and Grantor/Borrower's investment, the Beneficiary/Lender will recover the full amount of CDBG or HOME investment only. The participant will recover any amount for investments and apply the following formula for distribution of surplus net proceeds. Sale during affordability period Recapture amount of Down Share of net proceeds Down Payment & Closing Costs Payment & Closing Costs subsidy funds only Subsidy funds only 1 -5years 100% 75 % 6- 10years 50 % 50 % If the participant sells the property within the affordability period and the net proceeds are insufficient to repay CDBG or HOME funds invested and the Grantor/Borrower's investment, the Beneficiary/Lender will allow the Grantor/Borrower to recover its entire investment and will the Beneficiary/Lender will recapture any remaining funds. Specific documentation will be required to calculate CDBG or HOME and net proceeds. The Beneficiary/Lender may require additional information such as: o Housing Unit Sale Price(Settlement Statement) o Grantor/Borrower Investments — evidence of down payment, closing costs, payments to principal, and any other capital investment to improve the housing unit(original Settlement statement and Capital Expenditures Receipts. Once the documentation is presented, the Beneficiary/Lender will determine the amount of the recapture on a case-by-case basis. The indebtedness evidence by the Note, and any other financial obligation which may hereafter be imposed on Grantor/Borrower by the Beneficiary/Lender, is subordinate to the indebtedness evidence by a note payable to a senior lender ("Senior Lien Holder"), which note is secured by a first deed of trust (the "First Deed of Trust")dated of even date therewith encumbering certain real property located in Port Arthur, Texas (the"Property"). In the implementation of the Homeownership Program,the Department will comply and will require recipients to comply with the provisions of 24 CFR Part 92.217 and Part 570, Income targeting Homeownership and 24 CFR Part 92.254 and Part 570, Qualifications as affordable housing. 3 A (OVAL MOUSING OPPORTUNITY Property: The land described in Exhibit "A", attached hereto and made a part hereof, and all rights and appurtenances thereto; all improvements now or hereafter located on the land; all fixtures and equipment now or hereafter attached to the land or improvements, and all substitutions and replacements thereof and additions and successions thereto, including without limitation, all air conditioning, heating ventilation,plumbing and electrical fixtures and equipment; and all leases,contracts, rental, royalties and other income received in connection with the land and improvements, which has the address of: 2826 9th Street, Port Arthur, Jefferson County, Texas 77640, Lot Number Three (3), in Block Number Two Hundred Nineteen (219), of the City of Port Arthur Addition located in Jefferson County, Texas, according to the map or plat of record in/ under Volume 1, Page 50 of the Map Records of Jefferson County, Texas Prior Lien: Senior Lien Holder: JP Morgan Chase,N.A. (its successors and/or assigned) P.O. Box 47020 Atlanta, GA 30362-7020 In addition to the loan, the Grantor/Borrower obtained a Deed of Trust Loan (the "First Deed of Trust Loan") from: J.P. Morgan Chase, N.A., (the "Senior Lien Holder"), which loan is secured by a First Deed of Trust Lien on the Property (the "First Deed of Trust"). The documents evidencing or securing the first Deed of Trust Loan are collectively referred to herein as the First Deed of Trust Loan Documents. This Security Instrument secures to Beneficiary/Lender: (a)the repayment of the debt evidenced by the Note, with interest or shared appreciation as provided in the Note, and all renewals, extensions and modifications of the Note;(b)the payment of all other sums,with interest as provided in the note, advanced under Paragraph 8 to protect the security of this Security Instrument; and (c) the performance of Grantor/Grantor/Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Grantor/Borrower irrevocably grants and conveys to Trustee, in trust, with power of sale, subject to the rights of the Senior Lien Holder under the First Deed of Trust,the property located in Jefferson County which has the address of 2826 9th Street,Port Arthur,Jefferson County,Texas 77640,Lot Number Three (3), in Block Number Two Hundred Nineteen(219), of the City of Port Arthur Addition location in Jefferson County, Texas, according to the map or plat of record in/under Volume 1, Page 50 of the Map Records of Jefferson County, Texas and is further described in Exhibit "A", attached hereto ("Property Address): TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements, appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument as the"Property". GRANTOR/BORROWER COVENANTS that Grantor/Borrower is lawfully seized of the Estate hereby conveyed and has the right to grant and convey the Property and, except for the First Deed of Trust and other encumbrances of record acceptable to the Senior Lien Holder,the Property is unencumbered. Grantor/Borrower warrants and will defend generally the title to the Property against all claims and demands, subject to such encumbrances of record. THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a uniform security instrument covering real 4 EQUAL MOUSING C F property. UNIFORM COVENANTS. Grantor/Borrow and Beneficiary/Lender covenant and agree as follows: 1. Payment of Principal and Interest; Prepayment and Late Charges. Grantor/Borrower shall promptly pay when due the principal of and interest(or any shared appreciation) on the debt evidenced by the Note and any late charges due under the Note. 2. Keep Property and Good Repair Condition. 3. Pay all taxes, assessments and homeowner insurance. 4. Prior Deeds of Trust; Charges; Liens. The Grantor/Borrower shall perform all of the Grantor/Borrower's obligations under the First Deed of Trust, including Grantor/Borrower's covenants to make payments when due. Grantor/Borrower shall pay all taxes, assessments, charges, fines and impositions attributable to the Property which may attain priority over this Security Instrument, and Leasehold payments or ground rents, if any. Grantor/Borrower shall pay these obligations in the manner provided in Paragraph 2, or if not paid in that manner, Grantor/Borrower shall pay them on time directly to the person owed payment. Grantor/Borrower shall promptly furnish to Beneficiary/Lender all notices of amounts to be paid under this paragraph. If Grantor/Borrower makes these payments directly, Grantor/Borrower shall promptly furnish to Beneficiary/Lender receipts evidencing the payments. Except for the lien of the First Deed of Trust, Grantor/Borrower shall promptly discharge any other lien which shall have attained priority over this Security Instrument unless Grantor/Borrower: (a) agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to Beneficiary/Lender; (b)contests in good faith the lien by,or defends against enforcement of the lien in, legal proceedings which in the Beneficiary/Lender's opinion operate to prevent the enforcement of the lien; or(c) secures from the holder of the lien an agreement satisfactory to Beneficiary/Lender subordinating the lien to this Security Instrument. Except for the lien of the First Deed of Trust, if Beneficiary/Lender determines that any part of the Property is subject to a lien which may attain priority over this Security Instrument, Beneficiary/Lender may give Grantor/Borrower a notice identifying the lien. Grantor/Borrower shall satisfy such lien or take one or more of the actions set forth above within five (5) days of the giving of notice. 5. Subordination. Beneficiary/Lender and Grantor/Borrower acknowledge and agree that this Security Instrument is subject and subordinate in all respects to the liens, terms, covenants, and conditions of the First Deed of Trust and to all advances heretofore made or which may hereafter be made pursuant to the First Deed of Trust, including all sums advanced for the purpose of(a) protecting or further securing the lien of the First Deed of Trust, curing defaults by the Grantor/Borrower under the First Deed of Trust or for any other purpose expressly permitted by the First Deed of Trust or (b) constructing, renovating, repairing, furnishing, fixturing, or equipping the Property. The terms and provisions of the First Deed of Trust are paramount and controlling, and they supersede any other terms and provisions hereof in conflict therewith. In the event of a foreclosure or deed in lieu of foreclosure of the First Deed of Trust, any provisions herein or any provisions in any other collateral agreement restricting the use of the Property to low or moderate income households or otherwise restricting the Grantor/Borrower's ability to sell the Property shall have no further force or effect on subsequent owners or purchasers of the property. Any person, including his successors or assigns (other than the Grantor/Borrower or a related entity of the 5 gni EQUAL HOUSING OPP Oft UNITY Grantor/Borrower),receiving title to the Property through a foreclosure or deed in lieu of foreclosure of the first Deed of Trust shall receive title to the Property free and clear from such restrictions. Further, if the Senior Lien Holder acquires title to the Property pursuant to a deed in lieu of foreclosure,the lien of this Security Instrument shall automatically terminate upon the Senior Lien Holder's acquisition of title,provided that(i)the Beneficiary/Lender has been given written notice of a default under the First Deed of Trust,and(ii)the Beneficiary/Lender shall not have cured the default under the First Deed of Trust, or diligently pursued curing the default as determined by the Senior Lien Holder, within the sixty (60) day period provided in such notice sent to the Beneficiary/Lender. 6. Hazard or Property Insurance. Grantor/Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire,hazards included within the term"extended coverage" and any other hazards, including floods or flooding, for which Beneficiary/Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Beneficiary/Lender requires. The insurance carrier providing the insurance shall be chosen by Grantor/Borrower subject to Beneficiary/Lender's approval which shall not be unreasonably withheld. If Grantor/Borrower fails to maintain coverage described above, Beneficiary/Lender may, at Beneficiary/Lender's option, obtain coverage to protect Beneficiary/Lender's rights in the Property in accordance with Paragraph 8. All insurance policies and renewals shall be acceptable to Beneficiary/Lender and shall include a standard mortgagee clause. All requirements hereof pertaining to insurance shall be deemed satisfied if the Grantor/Borrower complies with the insurance requirements under the First Deed of Trust. All original policies of insurance required pursuant to the First Deed of Trust shall be held by the Senior Lien Holder; provided, however, Beneficiary/Lender may be named as a loss payee as its interest may appear and may be named as an additional insured. If Beneficiary/Lender requires, Grantor/Borrower shall promptly give to Beneficiary/Lender copies of all receipts of paid premiums and renewal notices. In the event of loss, Grantor/Borrower shall give prompt notice to the insurance carrier, the Senior Lien Holder and Beneficiary/Lender. Beneficiary/Lender may make proof of loss if not made promptly by the Senior Lien Holder or the Grantor/Borrower. Unless Beneficiary/Lender and Grantor/Borrower otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the Property damaged, if the restoration or repair is economically feasible and Beneficiary/Lender's security is not lessened. If the restoration or repair is not economically feasible or Beneficiary/Lender's security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Grantor/Borrower. If Grantor/Borrower abandons the Property, or does not answer within thirty(30) days, a notice from Beneficiary/Lender that the insurance carrier has offered to settle a claim,then Beneficiary/Lender may collect the insurance proceeds. Beneficiary/Lender may use the proceeds to repair or restore the Property or to pay sums secured by this Security Instrument, whether or not then due. The 30-day period will begin when the notice is given. Unless Beneficiary/Lender and Grantor/Borrower otherwise agree in writing, any application of proceeds to principal shall not extend or postpone the due date of the monthly payments referred to in Paragraphs 1 and 2 or change the amount of the payments. If under Paragraph 23, the Property is acquired by Beneficiary/Lender, Grantor/Borrower's right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to Beneficiary/Lender to the extent of the sums secured by this Security Instrument immediately prior to the acquisition. 6 A CQUwt HOUSING O►►ORTUMItT Notwithstanding the above, the Beneficiary/Lender's rights to collect and apply the insurance proceeds hereunder shall be subject and subordinate to the rights of the Senior Lien Holder to collect and apply such proceeds in accordance with the First Deed of Trust. 7. Occupancy, Preservation, Maintenance and Protection of the Property; Grantor/Borrower's Loan Application; Leaseholds. Grantor/Borrower shall occupy, establish, and use the Property as Grantor/Borrower's principal residence within sixty (60) days after the execution of this Security Instrument. Grantor/Borrower shall not destroy,damage or impair the Property,allow the Property to deteriorate,or commit waste on the Property. Grantor/Borrower shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that in Beneficiary/Lender's good faith judgment could result in forfeiture of the Property or otherwise materially impair the lien created by this Security Instrument or Beneficiary/Lender's security interest. Grantor/Borrower may cure such a default and reinstate, as provided in Paragraph 19, by causing the action or proceeding to be dismissed with a ruling that, in Beneficiary/Lender's good faith determination, precluded forfeiture of the Grantor/Borrower's interest in the Property or other material impairment of the Lien created by this Security Instrument Beneficiary/Lenders security interest. Grantor/Borrower shall also be in default if Grantor/Borrower, during the loan application process, gave materially false or inaccurate information or statements to Beneficiary/Lender (or failed to provide Beneficiary/Lender with any material information) in connection with the loan evidenced by the Note, including, but not limited to, representations concerning (i) Grantor/Borrower's occupancy of the Property as a principal residence and(ii)Grantor/Borrower's income. If this Security Instrument is on a leasehold, Grantor/Borrower shall comply with all the provisions of the lease. If Grantor/Borrower acquires fee title to the Property, the leasehold and the fee title shall not merge unless Beneficiary/Lender agrees to the merger in writing. The Grantor/Borrower acknowledges that this Property is subject to certain use and occupancy restrictions(which may be further evidenced by a separate agreement recorded in the real property records where the Property is located), limiting the Property's use as Grantor/Borrower's primary residence in accordance to the CDBG and HOME Program Regulations 24 Code of Federal Regulations Part 92 and Part 570 and use as "low and moderate income housing,within the meaning of the CDBG and Home Program Regulations 24 Code of Federal Regulations Part 92 and Part 570 affordable housing as defined by the Beneficiary/Lender in the City of Port Arthur Housing and Neighborhood Revitalization Housing Assistance Programs New Construction & Existing Home Purchasing Program Guidelines and in accordance with 24 Code of Federal Regulations Part 85. The use and occupancy restrictions may limit the Grantor/Borrower's ability to rent the Property and require that Borrow use property as Grantor/Borrower's principal residence during the term of such agreement which is ten(10) years from the date of the Deed of Trust being , 2022. The violation of any use and occupancy restrictions may, if not prohibited by federal law, entitle the Beneficiary/Lender to the remedies provided in Section 23 hereof. 8. Protection of Beneficiary/Lender's Rights in the Property. If Grantor/Borrower fails to perform the covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Beneficiary/Lender's rights in the Property (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture or to enforce laws or regulations), then Beneficiary/Lender may do and pay for whatever is necessary to protect the value of the Property and Beneficiary/Lender's rights in the Property. Beneficiary/Lender's actions may include paying any sums secured by a lien which has priority over this Security Instrument(including sums secured by the first Deed of Trust), appearing in Court, paying reasonable attorney's fees and entering on the Property to make repairs. Although Beneficiary/Lender may take action under this Paragraph 8,Beneficiary/Lender does not have to do so. 7 A EQUAL HOUSING OPPORTUNITY Any amounts disbursed by Beneficiary/Lender under this Paragraph 8 shall become additional debt of Grantor/Borrower secured by this Security Instrument.Unless Grantor/Borrower and Beneficiary/Lender agree to other terms of payment,these amounts shall bear interest from the date of disbursement at the Note rate and shall be payable, with interest, upon notice from Beneficiary/Lender to Grantor/Borrower requesting payment. Prior to taking any actions under this Section 8,however,Beneficiary/Lender shall notify the Senior Lien Holder of such default in the manner provided in Section 23 of this Security Instrument, and shall provide the Senior Lien Holder with the opportunity to cure any such default under this Security Instrument. All amounts advanced by the Senior Lien Holder to cure a default hereunder shall be deemed advanced by the Senior Lien Holder and shall be secured by the First Deed of Trust. In addition, the Beneficiary/Lender agrees that it will not commence foreclosure proceedings or accept a deed in lieu of foreclosure,or exercise any other rights or remedies hereunder until it has given the Senior Lien Holder at least sixty (60) days' prior written notice. Any action by Beneficiary/Lender hereunder to foreclose or accept a deed in lieu of foreclosure shall be subject to the "due on sale"provisions of the First Deed of Trust. Beneficiary/Lender and Grantor/Borrower further agree that a default hereunder shall constitute a default under the First Deed of Trust. In the event of a default hereunder,the Senior Lien Holder shall have the right to exercise all rights and remedies under the First Deed of Trust. 9. Mortgage Insurance. If Beneficiary/Lender required mortgage insurance as a condition of making the loan secured by this Security Instrument, Grantor/Borrower shall pay the premiums required to maintain the mortgage insurance in effect. If, for any reason, the mortgage insurance coverage required by Beneficiary/Lender lapses or ceases to be in effect, Grantor/Borrower shall pay the premiums required to obtain coverage substantially equivalent to the mortgage insurance previously in effect, at a cost substantially equivalent to the cost to Grantor/Borrower of the mortgage insurance previously in effect, from an alternate mortgage insurer approved by Beneficiary/Lender. If substantially equivalent mortgage insurance coverage is not available, Grantor/Borrower shall pay to Beneficiary/Lender each month a sum equal to one-twelfth of the yearly mortgage insurance premium being paid by Grantor/Borrower when the insurance coverage lapsed or ceased to be in effect. Beneficiary/Lender will accept, use and retain these payments as a loss reserve in lieu of mortgage insurance. Loss reserve payments may no longer be required, at the option of Beneficiary/Lender, if mortgage insurance coverage(in the amount and for the period that Beneficiary/Lender requires) provided by an insurer approved by Beneficiary/Lender again becomes available and is obtained. Grantor/Borrower shall pay the premiums required to maintain mortgage insurance in effect, or to provide a loss reserve, until the requirement for mortgage insurance ends in accordance with any written agreement between Grantor/Borrower and Beneficiary/Lender or applicable law. • 10. Inspection. Beneficiary/Lender or its agent may make reasonable entries upon and inspections of the Property. Beneficiary/Lender shall give Grantor/Borrower notice at the time of or prior to an inspection specifying reasonable cause for the inspection. 11. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Beneficiary/Lender,subject to the terms of the First Deed of Trust. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Grantor/Borrower. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the 8 [OVAL HOUSING OPPORTUNITY taking is equal to or greater than the amount of the sums secured by this Security Instrument immediately before the taking, unless Grantor/Borrower and Beneficiary/Lender otherwise agree in writing, the sums secured by this Security Instrument shall be reduced by the amount of the proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the taking, divided by (b) the fair market value of the Property immediately before the taking. Any balance shall be paid to Grantor/Borrower. In the event of a partial taking of the Property in which the fair market value of the Property immediately before the taking is less than the amount of the sums secured immediately before the taking, unless Grantor/Borrower and Beneficiary/Lender otherwise agree in writing or unless applicable law otherwise provides, the proceeds shall be applied to the sums secured by this Security Instrument whether or not the sums are then due. If the Property is abandoned by Grantor/Borrower, or it, after notice by Beneficiary/Lender to Grantor/Borrower that the condemner offers to make an award or settle claim for damages, Grantor/Borrower fails to respond to Beneficiary/Lender within thirty(30) days after the date of the notice is given, Beneficiary/Lender is authorized to collect and apply the proceeds, at its option, either to restoration or repair of the Property or to the sums secured by Security Instrument,whether or not then due. Unless Beneficiary/Lender and Grantor/Borrower otherwise agree in writing, any application of proceeds to principal shall not extend or postpone the due date of the monthly payments referred to in Paragraphs 1 and 2 or change the amount of such payments. 12. Grantor/Borrower Not Released; Forbearance by Beneficiary/Lender Not in Waiver. Extension of the time for payment or modification of amortization of the sums secured by this Security Instrument granted by Beneficiary/Lender to any successor in interest of Grantor/Borrower shall not operate to release the liability of the original Grantor/Borrower or Grantor/Borrower's successors in interest. Beneficiary/Lender shall not be required to commence proceedings against any successor in interest or refuse to extend time for payment or otherwise modify amortization of the sums secured by this Security Instrument by reason of any demand made by the original Grantor/Borrower or Grantor/Borrower's successors in interest. Any forbearance by Beneficiary/Lender in exercising any right or remedy shall not be a waiver of or preclude the exercise of any right or remedy. 13. Successors and Assigns Bound; Joint and Several Liability; Co-signers. The covenants and agreements of this Security Instrument shall bind and benefit the successors and assigns of Beneficiary/Lender and Grantor/Borrower, subject to the provisions of Paragraph 18. Grantor/Borrower's covenants and agreements shall be joint and several. Any Grantor/Borrower who co-signs this Security Instrument but does not execute the Note: (a)is co-singing this Security Instrument only to mortgage, grant and convey the Grantor/Borrower's interest in the Property under the terms of this Security Instrument; (b) is not personally obligated to pay the sums secured by this Security Instrument; and (c) agrees that Beneficiary/Lender and any other Grantor/Borrower may agree to extend, modify, forbear or make any accommodations with regard to the terms of this security Instrument or the Note without that Grantor/Borrower's consent;provided, however, that such modification or accommodations with regard to the terms of this Security Instrument or the Note without that Grantor/Borrower's consent; provided, however, that such modification shall not be made without the prior written consent of the Senior Lien Holder. 14. Loan Charges. If the loan secured by this Security Instrument is subject to a law which sets maximum loan charges, and that law is finally interpreted so that the interest or other loan charges collected or to be collected in connection with the loan exceed the permitted limits,then: (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any 9 EQUAL MOUSING OPPORTUNITY sums already collected from Grantor/Borrower which exceeded permitted limits will be refunded to Grantor/Borrower. Beneficiary/Lender may choose to make this refund by reducing the principal owed under the Note or by making a direct payment to Grantor/Borrower. If a refund reduces principal, the reduction will be treated as a partial prepayment without any prepayment charge under the Note. 15. Notices. Any notice to Grantor/Borrower provided for in this Security Instrument shall be given by delivering it or by mailing it by first class mail unless applicable law requires use of another method. The notice shall be directed to the Property Address or any other address Grantor/Borrower designates by notice to Beneficiary/Lender. Any notice to Beneficiary/Lender shall be given by first class mail to Beneficiary/Lender's address stated herein or any other address Beneficiary/Lender designates by notice to Grantor/Borrower. Any notice required to be given to the Senior Lien Holder shall be given by first class mail to the following address of Senior Lien Holder: SENIOR LIEN HOLDER: JP Morgan Chase,N.A.(its successors and/or assigned) P.O.Box 47020 Atlanta,GA 30362-7020 or such other address the Senior Lien Holder designates by notice to the Grantor/Borrower. Any notice provided for in this Security Instrument shall be deemed to have been given to Grantor/Borrower or Beneficiary/Lender when given as provided in this Paragraph. 16. Governing Law; Severability. This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located. In the event that any provision or clause of this Security Instrument or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Security Instrument or the Note which can be given effect without the conflicting provision. To this end, the provisions of this Security Instrument and the Note are declared to be severable. 17. Grantor/Borrower's Copy. Grantor/Borrower shall be given one conformed copy of the Note and of this Security Instrument. 18. Transfer of the Property or a Beneficial Interest in Grantor/Borrower. Except for a conveyance to the trustee under the First Deed of Trust, if all or any part of the Property or any interest in it is sold or transferred without Beneficiary/Lender's prior written consent in accordance with the CDBG and HOME Program Regulations 24 Code Of Federal Regulations Part 92 and Part 570 or Grantor/Borrower does not utilize the property as its principal residence or use the property for low to moderate income housing, Beneficiary/Lender may, at its option, require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Beneficiary/Lender if exercise is prohibited by the federal law as of the date of this Security Instrument. If Beneficiary/Lender exercises this option,Beneficiary/Lender shall give Grantor/Borrower and the Senior Lien Holder prior written notice of acceleration. The notice shall provide a period of not less than thirty(30)days from the date the notice is delivered or mailed within which Grantor/Borrower must pay all sums secured by this Security Instrument. If Grantor/Borrower fails to pay these sums prior to the expiration of this period, Beneficiary/Lender may invoke any remedies permitted by this security Instrument without further notice or demand on Grantor/Borrower. Notwithstanding Beneficiary/Lender's right to invoke any remedies hereunder, as provided in Section 8 above, Beneficiary/Lender agrees that it will not commence foreclosure proceedings or accept a deed in lieu of foreclosure, or exercise any other rights or remedies hereunder until it has given the Senior Lien Holder at least sixty (60)days' prior written notice. 10 A EQUAL MOUS3FI6 OPP OP 1 TY The Grantor/Borrower and the Beneficiary/Lender agree that whenever the Note or this Security Instrument gives the Beneficiary/Lender the right to approve or consent with respect to any matter affecting the Property(or the construction of any improvements thereon)or otherwise(including the exercise of any "due on sale" clause), and a right of approval or consent with regard to the same matter is also granted to the Senior Lien Holder pursuant to the First Deed of Trust,the Senior Lien Holder's approval or consent or failure to approve or consent, as the case may be, shall be binding on the Grantor/Borrower and the Beneficiary/Lender. Any restrictions on transferability, such as occupancy requirements or resale restrictions, will automatically and permanently terminate upon foreclosure, deed-in-lieu of foreclosure, or assignment of the insured mortgage to HUD. 19. Grantor/Borrower's Right to Reinstate. If Grantor/Borrower meets certain conditions, Grantor/Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earlier of: (a) ten (10) days (or such other period as applicable law may specify for reinstatement) before sale of the Property pursuant to any power of sale contained in this Security Instrument; or (b) entry of a judgment enforcing this Security Instrument. Those conditions are that Grantor/Borrower: (a) pays Beneficiary/Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c)pays all expenses incurred in enforcing this Security Instrument, including,but not limited to, reasonable attorney's fees; and (d) takes such action as Beneficiary/Lender may reasonably require to assure that the lien of this Security Instrument, Beneficiary/Lender's rights in the Property and Grantor/Borrower's obligation to pay the sums secured by this Security Instrument shall continue unchanged. Upon reinstatement by Grantor/Borrower,this Security Instrument and the obligations secured hereby shall remain fully effective as if no acceleration had occurred. However, this right to reinstate shall not apply in the case of acceleration under Paragraph 18. 20. Sale of Note; Change of Loan Servicer. The Note or a partial interest in the Note (together with this Security Instrument)may be sold one or more times without prior notice to Grantor/Borrower. A sale may result in a change in the entity (known as the "Loan Servicer") that collects monthly payments due under the Note and this Security Instrument. There also may be one or more changes of the Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer, Grantor/Borrower will be given written notice of the change in accordance with Paragraph 15 above and applicable law. The notice will state the name and address of the new Loan Servicer and the address to which payments should be made. The notice will also contain any other information required by applicable law. 21. No Assignment. Until the loan secured by the First Deed of Trust has been satisfied in full,the Beneficiary/Lender and the Grantor/Borrower agree that the Note and the Security Instrument will not be assigned without the Senior Lien Holder's prior written consent. 22. Hazardous Substance. Borrow shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances on or in the Property. Borrow shall not do, nor allow anyone else to do, anything affecting the Property that is in violation of any Environmental Law. The preceding two (2)sentences shall not apply to the presence,use,or storage on the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property. Grantor/Borrower shall promptly give Beneficiary/Lender written notice of any investigation,claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the 11 [QUAL HOUSING OPPORTUNITY Property and any Hazardous Substance or Environmental Law of which Grantor/Borrower has actual knowledge. If Grantor/Borrower learns, or is notified by any governmental or regulatory authority, that any removal or other remediation of any Hazardous Substance affecting the Property is necessary, Grantor/Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law. Prior to taking any such remedial action,however, the Grantor/Borrower shall notify the Senior Lien Holder that such remedial action is necessary and shall obtain the Senior Lien Holder's prior written consent for such remedial action. As used in this Paragraph 22, "Hazardous Substances" are those substances as defined as toxic or hazardous substances by Environmental Law and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. As used in this Paragraph 22, "Environmental Law" means federal laws and laws of the jurisdiction where the Property is located that relate to health, safety or environmental protection. NON-UNIFORM COVENANTS. Borrow and Beneficiary/Lender further covenant and agree as follows: 23. Acceleration; Remedies. Beneficiary/Lender shall give notice to Grantor/Borrower and the Senior Lien Holder prior to acceleration following Grantor/Borrower's breach of any covenant or agreement in this Security Instrument. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than thirty(30)days from the date the notice is given to Grantor/Borrower(and with respect to the Senior Lien Holder, sixty(60) days from the date the notice is given to the Senior Lien Holder), by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument and sale of the Property. The notice shall further inform Grantor/Borrower of the right to reinstate after acceleration and the right to bring a Court action to assert the non-existence of a default or any other defense of Grantor/Borrower to acceleration and sale. If the default is not cured by the Grantor/Borrower on or before the date specified in the notice, and the Senior Lien Holder has not exercised its right to cure the default, then Beneficiary/Lender at its option may require immediate payment in full of all sums secured by this Security Instrument without further demand and may invoke the power of sale and any other remedies permitted by applicable law. Notwithstanding Beneficiary/Lender's right to invoke any remedies hereunder, as provided in Section 8 above, the Beneficiary/Lender agrees that it will not commence foreclosure proceedings or accept a deed in lieu of foreclosure, or exercise any other rights or remedies hereunder until it has given the Senior Lien Holder at least sixty (60) days' prior written notice. Beneficiary/Lender shall be entitled to collect all expenses incurred in pursuing the remedies provided in this Paragraph 23, including,but not limited to,reasonable attorney's fees and costs of title evidence. If Beneficiary/Lender invokes the power of sale, Beneficiary/Lender or Trustee shall mail copies of a notice of sale in the manner prescribed by applicable law to Grantor/Borrower, the Senior Lien Holder and to the other persons prescribed by applicable law. Trustee shall give notice of sale by public advertisement for the time and in the manner prescribed by applicable law. Trustee, without demand on Grantor/Borrower, shall sell the Property at public auction to the highest bidder for cash at the time and place and under the terms designated in the notice of sale in one or more parcels and in any order Trustee determines. Trustee may postpone sale of all or any parcel of the Property to any later time on the same date by public announcement at the time and place of any previously scheduled sale. Beneficiary/Lender or its designee may purchase the Property at any sale. 12 A CCUAL HOUSING OPP ORTUHITY Trustee shall deliver to the purchaser Trustee's deed conveying the Property without any covenant or warranty, expressed or implied. The recitals in the Trustee's deed shall be prima facie evidence of the truth of the statements made therein. Trustee shall apply the proceeds of the sale in the following order: (a) to all expenses of the sale, including, but not limited to, reasonable Trustee's and attorney's fees; (b) to all sums secured by this Security Instrument; and (c) any excess to the person or persons legally entitled to it. 24. Release. Upon payment of all sums secured by this Security Instrument, Beneficiary/Lender shall release this Security Instrument without charge to Grantor/Borrower. Grantor/Borrower shall pay any recordation costs. 25. Substitute Trustee. Beneficiary/Lender, at its option, may from time to time revoke Trustee and appoint a successor trustee to any Trustee appointed hereunder by an instrument recorded in the county in which this Security Instrument is recorded. Without conveyance of the Property, the successor trustee shall succeed to all the title,power and duties conferred upon Trustee herein and by applicable law. 26. Modification of First Deed of Trust Loan Documents. The Beneficiary/Lender consents to any agreement or arrangement in which the Senior Lien Holder waives, postpones, extends, reduces or modifies any provisions of the First Deed of Trust Loan Documents,including any provisions requiring the payment of money. 27. Grievance Procedure. Should any applicant or participant of services from the Housing Assistance Division wish to file a grievance against the City of Port Arthur pertaining to services received or applied for,they may do so by the following procedure: 1) The person(s) filing the grievance may in writing request an appointment with the Housing and Neighborhood Revitalization Manager and/or the Director of Development Services or assigned designee to present the complaint. At this informal stage of the resolution process, the complaint may be presented either in written form or verbally. It is the Department's intent to respond to and resolve the complaint as practically & quickly as possible. A response to the complaint should be made no later than 5 working days from the date of receipt. 2) Should the response by the Housing and Neighborhood Revitalization Manager, Director of Development Services or assigned designee not be satisfactory to the person(s)bringing the complaint, an appeal may be made directly to the City Manager or his designated successor requesting review of the decision. At this stage of the resolution process,the request for appeal and the complaint itself should be submitted in writing. The complaint should fully describe the nature of the problem and contain all pertinent information that may aid in understanding the scope of the problem. The City Manager has option of meeting with the person(s) involved before reaching a decision. A response to the complaint shall be made as expeditiously as practical,but no later than twenty (20) working days from the date of receipt of all written information provided or requested and the request for appeal to the City Manager. 28. Restrictions on Transfer Ability. Any restrictions on transferability, such as occupancy requirements or resale restrictions, will automatically and permanently terminate upon foreclosure, deed-in- lieu of foreclosure or the assignment of the First Deed of Trust to the United States Department of Housing and Urban Development("HUD"). 13 A (QUAL MOUSING OPPORTUNITY The following list identifies the names, addresses, and telephone numbers of the persons to contact to file a grievance: Beverly A. Freeman, Housing& Pamela Langford, Assistant City Ron Burton, Neighborhood Revitalization Manager Manager—Operations/ Director City Manager Room 500 of Development Services Room 410 300 4th Street Room 336 444 4th Street Port Arthur, TX 77640 444 4`t' Street Port Arthur, TX 77640 (409) 983-8259 Port Arthur, TX 77640 (409)983-8101 (409)983-8135 14 A EQUAL HOUSING OPPORTUNITY BY SIGNING BELOW, the Grantor/Borrower and the Beneficiary/Lender accept and agree to the terms and covenants contained in this Security Instrument. Signature: Stephanie Brown, Grantor/Borrower ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF JEFFERSON § This instrument was acknowledged before me on the day of , 20 , by Notary Public, State of Texas Notary's Printed Name: Notary's Expiration Date: Signature: Ron Burton, City Manager ACKNOWLEDGEMENT STATE OF TEXAS § COUNTY OF JEFFERSON § This instrument was acknowledged before me on the day of , 20_, by Ron Burton, City Manager. Notary Public, State of Texas Notary's Printed Name: Notary's Expiration Date: 15 EQUAL MOUSING OPPORTUNITY Promissory Note Original Date: , 2022 Grantor/Borrower: Stephanie Brown Grantor/Borrower's Mailing Address (including county): 2826 9th Street Port Arthur, Texas 77640 Jefferson County, Texas Beneficiary/Lender: City of Port Arthur Place for Payment(including county): City of Port Arthur Housing&Neighborhood Revitalization Department P.O. Box 1089 Port Arthur, Texas 77640-1089 Jefferson County, Texas Original Principal Amount: up to $40,000.00 Annual Interest Rate: 0% Maturity Date: ,2032 Terms of Payment(principal and interest): Security for Payment: This note is secured by a Deed of Trust of even date from , 2022 through ,2032 the ten(10)year affordability period,pursuant to the Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) Programs Regulations 24 Code of Federal Regulations Part 92, Part 570, and 24 Code of Federal Regulations Part 85, to cover the following real property: 2826 9th Street,Port Arthur, Jefferson County,Texas 77640, Lot Number Three(3),in Block Number Two Hundred Nineteen (219), of the City of Port Arthur Addition locate in Jefferson County, Texas, according to the map or plat of record in/under Volume 1, Page 50 of the Map Records of Jefferson County, Texas. Grantor/Borrower promises to pay to the order of Beneficiary/Lender the Principal Amount plus interest at the Annual Interest Rate. This note is payable at the Place for Payment and according to the Terms of Payment. All unpaid amounts are due by the Maturity Date. If any amount is not paid either when due under the Terms of Payment or on acceleration of maturity, Grantor/Borrower promises to pay any unpaid amounts plus interest from the date the payment was due to the date of payment at the Annual Interest Rate on Matured,Unpaid Amounts. In return for a loan that I have received(the"Loan"), I promise to pay an amount not to exceed up to $40,000.00 (this amount is called "principal"), plus interest, to the order of the Beneficiary/Lender. The Beneficiary/Lender is the City of Port Arthur.The Beneficiary/Lender 16 Int (OVAL HOUSING OPPORTUNITY or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder." PAYMENTS (A) Time and Place of Payments The principal amount of this Note represents funds advanced by Beneficiary/Lender to or for my benefit to assist me in paying part of the purchase price of the Property or the closing costs on the Property or lot. On the same date as the date of this Note, I have entered into an agreement with Beneficiary/Lender that I will, among other things, continue to use the property as my principal residence and will use the Property as"low and moderate income housing" as defined in the CDBG and HOME Program Regulations 24 Code of Federal Regulations Part 92, and Part 570, and as defined in the "Grantor/Borrower Agreement" for a period of ten (10) years, ( , 2022 through , 2032). If for any reason I default under any of the provisions of the Grantor/Borrower Agreement, the Beneficiary/Lender may at its option, accelerate the maturity of this Note and demand payment by me of the entire balance of this Note together with any interest thereon accruing after maturity. (B) Amount of Monthly Payments There are currently no monthly payments. This is a forgivable note whereby Grantor/Borrower is required to use the property as his/her principal residence in accordance with the CDBG or HOME Program Regulations 24 Code of Federal Regulations Part 92 and Part 570. In the event Grantor/Borrower ceases to comply with section 3 of this agreement, the full balance of the note will become due. Obligation: The City of Port Arthur is a home rule Beneficiary/Lender and participating jurisdiction in the CDBG and HOME Program. The City (hereinafter referred to as Beneficiary/Lender) has provided the Grantor/Borrower with up to $40,000.00 of CDBG or HOME funds for down payment assistance and closing costs. Pursuant to 24 Code of Federal Regulation Part 92.254, and Part 570, the period of affordability for homebuyer units is based upon the direct CDBG or HOME subsidy provided to the homebuyer that enabled the homebuyer to purchase the unit. Any CDBG or HOME program income used to provide direct assistance to the homebuyer is included when determining the period of affordability. Note: Date: , 2022 Original principal amount: up to $40,000.00 Grantor/Borrower: Stephanie Brown Beneficiary/Lender: City of Port Arthur Maturity Date: , 2032 (10 year affordability period) 17 A [DUAL MOUSING OPPORTUNITY Terms of Payment: As provided in the note,the Grantor/Borrower will abide by the requirements of the CDBG and HOME Programs. Homeownership Assistance per Unit Affordability Period (Years) Up to $40,000.00 10 That certain promissory note of even attached hereto as Exhibit"B"of even date herewith executed by Grantor/Borrower and payable to Beneficiary/Lender, in the principal amount of up to $40,000.00. The Note shall mature and become finally due and payable upon the occurrence of any default during the Affordability Period of ten (10) years (the affordability period) after the date hereof) being 2032 unless the debt evidenced by the Note is forgiven as provided in the Note. Recapture Provisions: Homes acquired with CDBG or HOME program funds must satisfy certain requirements for the ten (10)year affordability period.The funds must be recaptured in the event the follow-ing rules are not adhered to: a. The dwelling acquired with the CDBG or HOME subsidy must be the principal residence of the Grantor/Borrower and will not be rented or used for other purposes. b. The Grantor/Borrower will not engage the property to obtain a mortgage, gift, sell or exchange the property without the written consent of the Beneficiary/Lender. c. The Beneficiary/Lender will inspect the property to confirm that the participant is in full compliance with the CDBG or HOME program guidelines during the affordability period of the property. FAILURE TO COMPLY WITH THE REQUIREMENTS OF THE HOME PROGRAM WILL OBLIGATE THE GRANTOR/BORROWER TO REIMBURSE THE TOTAL AMOUNT OF THE SUBSIDY TO THE BENEFICIARY/LENDER. The Beneficiary/Lender may recover up to $5,000 for legal services rendered in the event of a breach of terms and conditions set forth above. Sale of Property Within the Affordability Period: If the Grantor/Borrower sells the property within the affordability period and the net proceeds are sufficient to repay all of the CDBG or HOME Program funds invested and Grantor/Borrower's investment, the Beneficiary/Lender will recover the full amount of CDBG or HOME investment only. The participant will recover any amount for investments and apply the following formula for distribution of surplus net proceeds. Sale during affordability period Recapture amount of Down Share of net proceeds Down Payment & Closing Costs Payment & Closing Costs subsidy funds only Subsidy funds only 1 -5years 100% 75 % 6— l0years 50% 50 % 18 (OVAL HOUSING OPPORTUNITY If the participant sells the property within the affordability period and the net proceeds are insufficient to repay CDBG or HOME funds invested and the Grantor/Borrower's investment, the Beneficiary/Lender will allow the Grantor/Borrower to recover its entire investment and will the Beneficiary/Lender will recapture any remaining funds. Specific documentation will be required to calculate CDBG or HOME net proceeds. The Beneficiary/Lender may require additional information such as: o Housing Unit Sale Price(Settlement Statement) o Grantor/Borrower Investments — evidence of down payment, closing costs, payments to principal, and any other capital investment to improve the housing unit(original Settlement statement and Capital Expenditures Receipts. Once the documentation is presented, the Beneficiary/Lender will determine the amount of the recapture on a case-by-case basis. The indebtedness evidence by the Note, and any other financial obligation which may hereafter be imposed on Grantor/Borrower by the Beneficiary/Lender, is subordinate to the indebtedness evidence by a note payable to a senior lender ("Senior Lien Holder"), which note is secured by a first deed of trust (the "First Deed of Trust")dated of even date therewith encumbering certain real property located in Port Arthur, Texas (the"Property"). In the implementation of the Homeownership Program,the Department will comply and will require recipients to comply with the provisions of 24 CFR Part 92.217, and Part 570 Income targeting Homeownership and 24 CFR Part 92.254, and Part 570 Qualifications as affordable housing. Other requirements shall apply: • The participants will pay up to $5,000.00 to cover the costs of legal services rendered because of a breach of any of the terms and conditions of this contract. • Specific documentation will be required to calculate CDBG or HOME and net proceeds. In addition to the recapture restrictions to be incorporated in the deed of sale and promissory note, other provisions will be established to guarantee that the units remain affordable for subsequent homebuyers. These provisions include the following considerations: • A provision restricting refinancing and subsequent mortgages of the property, without the written consent of the Beneficiary/Lender. Refinancing will be limited to capital improvements without equity return. This restriction is necessary, as refinancing with cash return will have the effect of reducing the profit at resale thus violating the purpose of resale/recapture provisions. In addition, a higher monthly payment after refinancing could represent a risk of foreclosure due to income adjustments. • A requirement that the property will be used as the principal residence of the homebuyer(s)will not be leased, converted, sold, donated, and permuted to other such use without written consent of the Beneficiary/Lender. If, on the sale, lease, lease with an option to purchase, transfer or other disposition (including any contract for deed) of all or any interest in the Property, I still owe amounts under this Note, Note 19 [OVAL MOUSING OPPORTUNITY Holder may require payment in full of sums owed hereunder as ore specifically provided by the Second Lien Deed of Trust(hereinafter defined) and the date upon which Note Holder requires such payment in full is called the "maturity date." Any payments required will be made to the City of Port Arthur at 444 4th Street, Port Arthur, Texas 77640. I will make these payments every month until I paid all of the principal and interests, if any, and any other charges described below that I may owe under this Note. If interest is charged on the Loan, my monthly payments will be applied to interest before principal. GRANTOR/BORROWER'S RIGHT TO REPAY I have the right to make payments of principal at any time before they are due. A payment of principal only is known as a"prepayment." When I make a prepayment, I will tell the Note Holder in writing that I am doing so. I may make a full prepayment or partial prepayments without paying any prepayment charge. The Note Holder will use all of my prepayments to reduce the amount of principal that I owe under this Note. If I make a partial prepayment, there will be no changes in the due date. LOAN CHARGES If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so that the interest or other loan charges collected or to be collected in connection with this loan exceed the permitted limits, then: (i) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and(ii) any sums already collected from me which exceeded permitted limits will be refunded to me. The Note Holder may choose to make this refund by reducing the principal I owe under this Note or by making a direct payment to me. If a refund reduces principal, the reduction will be treated as a partial prepayment. GRANTOR/BORROWER'S FAILURE TO PAY AS REQUIRED (A) Default Except as otherwise provided above, if I do not pay the full amount due hereunder on the date it is due, or utilize the property as his/her principal residence, I will be in default. A default under the terms and provisions of the documents evidencing, securing or pertaining to the indebtedness secured by the First Deed of Trust, including, without limitation, the First Deed of Trust, shall constitute a default hereunder. In addition, I will be in default if I default under the terms and provisions of the Second Lien Deed of Trust executed by me dated the same date as this Note securing my obligations under this Note. (B) Notice of Default If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of principal which has not been paid and all the interest that I owe on that amount. That date must be at least 30 days after the date on which the notice is delivered or mailed to me. 20 (OVAL HOUSING OPPORTUNITY (C) No Waiver by Note Holder Even if, at a time when I am in default, the Note Holder does not require me to pay immediately in full as described above, the Note Holder will still have the right to do so if I am in default at a later time. (D) Payment of Note Holder's Costs and Expenses If the Note Holder has required me to pay immediately in full as described above, the Note Holder will have the right to be paid back by me for all of its costs and expenses in enforcing this Note to the extent not prohibited by applicable law. Those expenses include, for example, reasonable attorneys' fees. GIVING OF NOTICES Unless applicable law requires a different method, any notice that must be given to me under this Note will be given by delivering it or by mailing it by first class mail to me at the Property Address above or at a different address if I give the Note Holder a notice of my different address. Any notice that must be given to the Note Holder under this Note will be given by mailing it by first class mail to the Note Holder at the address stated in Section 3(A) above or at a different address if I am given a notice of that different address. OBLIGATIONS OF PERSONS UNDER THIS NOTE If more than one person sign this Note, each person is fully and personally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed. Any person who is a guarantor,surety or endorser of this Note is also obligated to these things. Any person who takes over these obligations, including the obligations of a guarantor, surety or endorser of this Note, is also obligated to keep all of the promise made in this Note. The Note Holder may enforce its rights under this Note against each person individually or against all of us together in accordance with 24 Code of Federal Regulations Part 92 and Part 570 and 24 Code of Federal Regulations Part 85. This means that any one of us may be required to pay all of the amounts owed under this Note. WAIVERS I and any other person who has obligations under this Note waive the rights of presentment and notice of dishonor. "Presentment" means the right to require the Note Holder to demand payment of amounts due. "Notice of dishonor"means the right to require the Note Holder to give notice to other persons that amounts due have not been paid. UNIFORMED SECURED NOTE This Note is a uniform instrument with limited variations in some jurisdictions. In addition to the protections given to the Note Holder under this Note, a Second Lien Deed of Trust (the "Subordinate Security Instrument"),dated the same date as the Note,protects the Note Holder form possible losses which might result if I do not keep the promises which I make in this Note. The Subordinate Security Instrument is and shall be subject and subordinate in all respects to the lien terms, covenants and conditions of the First Deed of Trust. The Subordinate Security Instrument describes how and under what conditions I may be required to make immediate payment in full of all amounts I owe under this Note. Some of those conditions are described as follows: 21 COUOI MOUSING OPPORTUNITY Transfer of Property or a Beneficial Interest in Grantor/Borrower. Except for a conveyance to the trustee under the First Deed of Trust,if all or any part of the Property or any interest in it is sold,conveyed, leased, leased with an option to purchase or transferred (including any contract for deed) without Note Holder's prior written consent. Note Holder may,at its option,require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Note Holder if exercise is prohibited by federal law as of the date of this Security Instrument. If Note Holder exercises this option, Note Holder shall give Grantor/Borrower and the Senior Lien Holder prior written notice of acceleration. The notice shall provide a period of not less than 30 days from the date the notice is delivered or mailed within which Grantor/Borrower must pay all sums secured by this Security Instrument. If Grantor/Borrower fails to pay these sums prior to the expiration of this period,Note Holder may invoke any remedies permitted by this Security Instrument without further notice or demand on Grantor/Borrower. POSSIBLE FORGIVENESS Note Holder hereby agrees to forgive the principal of this Note on the 10th anniversary of the date of this Note,being , 2032 ; provide,however, as conditions precedent to the possible forgiveness of the principal of this Note on the 10th anniversary of the date of this Note being , 2032 as provided above, during such 10 year affordability period (A) I must have allowed the occurrence of any default under this Note or the Subordinate Security Instrument; (B) I must not have allowed the occurrence of any default under any deed of trust("Superior Deed of Trust"), including the First Deed of Trust, (i)the lien of which encumbers the Property, and (ii) which evidences a lien on the Property superior to the lien of the Subordinate Security Instrument; (C) I must not have allowed the occurrence of any default in the payment of any indebtedness secured by a Superior Deed of Trust; and (D) I must have occupied the Property as my principal residence continuously during the period commencing on the date hereof through and including the 10th anniversary of the date of this Note being , 2032. IN WITNESS WHEREOF,the undersigned has executed this Note. 22 Ink [OVAL HOUSING OPPORTUNITY Stephanie Brown, GRANTOR/BORROWER ACKNOWLEDGMENT STATE OF TEXAS § § COUNTY OF JEFFERSON § Before me, the undersigned authority, on this day personally appeared Stephanie Brown owner(s) known to me to be the persons whose name(s) are subscribed to the foregoing instrument, and acknowledge to me that they executed the same for the purposes and consideration therein expressed. GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of 20 Notary Public, State of Texas My Commission Expires: 23 A [QUA[ MOUSING OPPORTUNITY RIDER PROMISE TO GIVE PERSONAL NOTICE TO THE CITY OF PORT ARTHUR,TEXAS (SECOND LIEN HOLDER) OF DATE OF ANY FORECLOSURE SALE OR OTHER ADVERSE ACTION RELATING TO THE PROPERTY In consideration for the City of Port Arthur, Jefferson County, Texas subordinating its lien and becoming a Second Lien Holder with respect to the following property:2826 9th Street,Port Arthur,Jefferson County, Texas 77640, Lot Number Three (3), in Block Number Two Hundred Nineteen (219), of the City of Port Arthur Addition located in Jefferson County,Texas,according to the map or plat of record in/under Volume 1, Page 50 of the Map Records of Jefferson County, Texas, the Bank/Mortgage Company, JP Morgan Chase, N.A. , First Lien Holder, agrees to notify the City of Port Arthur at the address below, by certified mail,return receipt requested, of the date of any foreclosure sale relating to the above-referenced property or of any other adverse action relating to the property. This Notice Provision will either be included in the First Lien Holder's Deed of Trust and filed of record, or this document will be attached as a rider to the First Mortgage or Deed of Trust and filed of record. All future assignees of the First Lien Documents are hereby notified of and agree to comply with this notice agreement. AGREED TO BY, (FIRST LIEN HOLDER): Authorized Signature: Title: ACKNOWLEDGMENT THE STATE OF TEXAS § COUNTY OF JEFFERSON § This instrument was acknowledged before me on the day of , 20 , by Title Company: Notary Public, State of Texas My commission expires: AFTER RECORDING RETURN TO: City of Port Arthur Housing and Neighborhood Revitalization Department P.O.Box 1089 Port Arthur,TX 77640-1089 24 A COUK HOUSING OPPORTUNITY EXHIBIT "A" 2826 9TH STREET, PORT ARTHUR, JEFFERSON COUNTY, TEXAS 77640, LOT NUMBER THREE (3), IN BLOCK NUMBER TWO HUNDRED NINETEEN (219), OF CITY OF PORT ARTHUR LOCATED IN JEFFERSON COUNTY TEXAS, ACCORDING TO THE MAP OR PLAT OF RECORD IN/UNDER VOLUME 1, PAGE 50, OF THE MAP RECORDS OF JEFFERSON COUNTY, TEXAS. 25 gni [ou►l MOUSING o►►ORIUMITY