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HomeMy WebLinkAboutReso 91-515 - Authorize and Direct the CM to execute the contract between the COR and United States Escrow, Inc for loan collection services RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING AUTHORIZING AND DIRECTING THE CITY MANAGER TO EXECUTE THE CONTRACT BETWEEN THE CITY OF REDDING AND UNITED STATES ESCROW, INC. , FOR LOAN COLLECTION SERVICES WHEREAS, the City of Redding has operated the Housing Rehabilitation Loan Program since 1976; and WHEREAS, U. S. Escrow, Inc. , has been providing loan collection services to the City of Redding for six years; and WHEREAS, U. S. Escrow, Inc. , has provided the City with a satisfactory proposal to continue loan collection services for said program; and WHEREAS, it is deemed to be in the best interests of the City of Redding to enter into said contract with U. S. Escrow, Inc. , ; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Redding hereby authorizes and directs the City Manager to sign said contract with U. S. Escrow, Inc. , for loan collection services under the Housing Rehabilitation Program. I HEREBY CERTIFY that the foregoing resolution was introduced and read at a regular meeting of the City Council of the City of Redding on the 3rd day of Decemi-)er 1991, and was duly adopted at said meeting by the following vote: AYES: COUNCIL MEMBERS: Aniess, Fulton & Moss NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: Buffuril & Dahl ABSTAIN: COUNCIL MEMBERS: Mone 1' loss, Vice Mayor City of Redding ATTEST: c ez v ETHEL NIC OLS, City Clerk FORM APPROVED: R DALL A. -HAY5,Xity Attorney i U SERVICE AGREEMENT BY AND BETWEEN THE CITY OF REDDING AND UNITED STATES ESCROW, INC. THIS AGREEMENT is entered into as of the day of 19 1 by and between the CITY OF REDDING, a public body, corporate and politic, (hereinafter referred to as the "Agency") and UNITED STATES ESCROW, INC. , a corporation organized and existing under the laws of the State of California (hereinafter referred to as the "Contractor") . W I T N E S S E T H WHEREAS, Agency has authorized a Property Rehabilitation or Revitalization Program, hereinafter collectively referred to as "Rehabilitation Program" ; and WHEREAS, a below market interest rate improvement loan program has been created by the Agency; and WHEREAS, a portion of these funds are allocated and advanced to the Agency for rehabilitation/redevelopment activities; and WHEREAS, pursuant to such agreements, the Agency is undertaking certain activities necessary for the planning or execution of a number of rehabilitation/redevelopment projects (Projects) , adopted by the Agency; and WHEREAS, the Agency desires to engage the Contractor to render services in connection with projects implemented by the Agency for improvements within the Agency; and 1 WHEREAS, the Wractor represents that ies qualified to perform services under this contract; NOW, THEREFORE, THE PARTIES HERETO DO HEREBY MUTUALLY AGREE AS FOLLOWS: I. SCOPE OF SERVICES When and as requested in writing by the Agency, the Contractor shall provide loan collection services in connection with loans made by the Agency to homeowners and/or property/business owners for the expansion or improvement of the property. Services shall include, but shall not be limited to, the following: A. LOAN COLLECTION SERVICES AND PORTFOLIO MANAGEMENT 1 . Amortized (monthly payment) Collections a. The Agency will provide necessary loan information ( loan terms, due dates, borrower's name and address, etc. ) to Contractor to activate account. b. The Contractor will notify the borrower(s) in writing that all loan repayments shall be made to the Contractor. C. At the request of the Agency, the Contractor will establish an impound account for each borrower for payment of property taxes and/or insurance premiums pending on the property securing the loan. d. Where collection of regular monthly payments is required, the Contractor will provide borrower with monthly notices of the total amount due and payable. e. Collection proceeds are forwarded to the Agency monthly along with a reconciliation report of accounts collected and a Portfolio Status Report. f. Contractor will notify the borrower in writing of delinquent payments at intervals of thirty ( 30) , sixty ( 60) and ninety ( 90) days past the payment due date. Upon issuance of such ninety ( 90) day notice no 2 further Oction shall be required • the Contractor with respect to the delinquent account unless otherwise instructed in writing by the Agency. The Contractor shall begin forbearance or foreclosure proceedings if requested by the Agency. The Contractor shall provide the Agency with a Delinquent Aging Report once monthly. g. Contractor shall assess and retain any borrower's late charges in keeping with the provisions of the borrower's promissory note. h. Contractor shall process and record a Substitution of Trustee and Full Reconveyance at borrower's expense, upon loan satisfaction or when property is sold. 2 . Additional Services a. Contractor shall provide loan payoff quotations and shall perform reconveyances for any loan at the Agency's request. b. Contractor shall provide for an annual tickler notification to any borrower, should the Agency request it. C. Per IRS regulations, Contractor will submit each year on behalf of the Agency, required 109$ tax information returns for any borrower paying interest on an Agency loan. Such informational returns shall be issued on conforming magnetic tape as required by IRS. d. Contractor shall supply a year end account summary statement to each borrower if there has been activity on their account. The report will indicate principal and interest paid, the amount of payments made on the borrower's behalf for taxes and insurance, and any remaining impound balance. 3 . Loan Forbearance Services a. At the request of the Agency, the Contractor shall provide forbearance services on behalf of the Agency by arranging Agency approved repayment schedules with borrowers who are delinquent in loan repayment. b. A repayment schedule agreement will be prepared by the Contractor to be executed by both borrower and Agency. C. Contractor shall commence loan collection services under the revised repayment schedule. 3 4 . Loan Foreclosure Services a. At the written request of the Agency, Contractor shall commence loan foreclosure proceedings on all borrowers whose loan payments are delinquent for more than 90 days. b. After the 90 day period the Agency may sell to the Contractor for one dollar ($1.00) the delinquent note and associated Trust Deed or Mortgage. C. Contractor will notify the borrower that the Note has been sold to the Contractor and shall notify the borrower of intent to foreclose and record the Notice of Default. d. Reinstatement of the Note by the borrower will require all payments to render the Note current plus all foreclosure costs incurred by Contractor. Should the borrower reinstate the Note, Contractor will resume the normal collection of loan payments. e. Should the foreclosure go to sale, Contractor will sell the Note back to the Agency for one Dollar ($1 . 00) , returning any proceeds of the sale less foreclosure fees and outside costs incurred. f. The Agency shall be responsible for the payment of any foreclosure fees or related outside costs due that cannot be regained from borrower by the Contractor from the proceeds of a foreclosure. g. At the request of the Agency, the Contractor shall sell back to the Agency any Note and associated Trust Deed originally owned by the Agency for one dollar ($1 .00) . h. The Contractor shall not sell any Note and associated Trust Deed or Mortgage originally owned by the Agency to any other third party. II . FEE SCHEDULE In return for the services provided by the Contractor, the Agency shall pay fees to the Contractor according to the following schedule: A. LOAN COLLECTION SERVICES 1 . Amortized -- One time loan set up fee of $20.00 per loan 4 i i for all new loans plus 1/24 of 1% per month of the original loan amount with a minimum monthly fee of $8 .00; maximum monthly fee of $12 . 50. Impounding of taxes and insurance is included with service at no additional cost except for one time charge of $53.00 to order tax service. Collection fees apply to existing portfolio and new loans. B. LOAN FORBEARANCE SERVICES A one time charge of $150.00 for each loan for which Contractor provides forbearance services. C. FORECLOSURE 1 . A one time charge of $150. 00 to transfer note ownership and prepare documents to commence foreclosure proceedings and to manage the foreclosure process on behalf of the Agency. 2 . In addition to the above foreclosure service fee Contractor shall be reimbursed for other costs incurred in the foreclosure process such as but not limited to: conventional legal fees, sheriffs deposits, bankruptcy closing costs, fees set by law, etc. These fees will be accurately quoted on a case by case basis upon request by the Agency and they will be within all applicable statutory limits . 3 . No cash deposit will be required from the Agency at the time foreclosure proceedings are instituted, pursuant to 5 this agreem(. However, Contractor*ee for services rendered, and its costs and other charges, shall be due and payable, by the Borrower, upon reinstatement (or full payment) of any Deed of Trust under foreclosure, pursuant to this Agreement; or payable by the Agency at the time of publication of any Notice of Trustee's Sale of the real property encumbered by said Deed of Trust; or payable by the Agency five (5) months from the date foreclosure proceedings are instituted in connection with such Deed of Trust, whichever event shall sooner occur. III. ADDITIONAL TERMS A. EOUAL OPPORTUNITY Durina the performance of this Aareement, the Contractor aarees as follows: 1 . The Contractor will not discriminate aaainst anv emplovee or applicant for emplovment because of their race , reliaious creed, color, national oriain , ancestrv, phvsical handicap, medical condition, marital status , or sex. The Contractor will take affirmative action to ensure that the applicants are emploved, and that emplovees are treated durina emplovment without reaard to their race , reliaious creed, color, national oriain , ancestrv, phvsical handicap, medical condition, marital status , or sex. Such action shall include, but not be limited to , the followina: emplovment, uparadina. demotion or transfer, recruitment or recruitment advertising, lavoff or termination, rates of Dav or other 6 forms of compensation and selectionn for training, including apprenticeship. 2. The Contractor will , in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, religious creed, color, national origin, ancestry, physical handicap, medical condition, marital status, or sex. 3 . The Contractor will cause the foregoing provisions to be inserted in all subcontracts for any work covered by this Agreement so that such provisions will be binding upon each subcontractor, provided that the foregoing provisions shall not apply to contracts or subcontracts for standard commercial supplies or raw materials . B. REPRESENTATIONS 1 . As an inducement to the execution of this Agreement, the Contractor represents and agrees that it has , and will continue to have , adequate and proper facilities and personnel to perform the services and work agreed to be performed by it hereunder; that it is dulv aualified by law to perform such services and work, and that it has not employed anv person to solicit or procure this Agreement, and has not made , and will not make , anv pavment or anv agreement for the navment of anv commission, percentaae, brokeraae, contingent fee or 7 other competition in connection with f procurement of this Agreement. C. INDEMNIFICATION 1 . Contractor agrees to indemnify, defend and hold the Agency harmless from any and all claims, causes of action, injuries or damages arising out of negligence and intentional misconduct on the part of U.S. Escrow. This indemnity shall include reasonable costs and attorney's fees incurred in defending any action covered by this provision. D. TERMINATION OF SERVICES 1 . In the event of breach of anv condition or provision hereof, the Agency shall have the right, by prior written notice to the Contractor, to terminate its employment hereunder and cancel this Aareement and have the work called for hereby otherwise performed, without prejudice to any other rights or remedies of the Agency. The Agency shall have the benefit of such work as may have been completed uo to the time of such termination and with respect to any dart_ which shall have been delivered to and accepted by the _ aencv: there -,h,111 tie an P_aui tabl e adjustment of commensati_on, 2 . IrrespPCt i ve of any default hereunder, the Agency may also , at any time at its disc-ret.itin , terminate this rYatSrPPmeTit , 1 Ti w�ii i P i�r l n [la rt -v gi ti l n(7 t}1P �'e7ntratltnr (A wr i %t e..n ni�tl cr- her �i and i n 7,11 c-. eN n event, the(Pontractor shall be enAed to receive compensation specified herein for all work completed and accepted prior to such thirty ( 30) days notice of termination or cancellation. An equitable adjustment shall be made, as compensation to the Contractor to the date of such termination or cancellation, but not yet delivered to the Agency. The Contractor, at its discretion, may terminate this Agreement, in whole or in part, by giving the Agency thirty ( 30) days written notice. 3 . The term of the Agreement shall commence upon execution of this Agreement by both par}.ies and Shall continue for one year thereafter. ThiS Agreclicnt shall automatically renew for successive one year terms. IN WIT11:ESS HEREOF, the Agency and Contractor have executed t111.J Agreement as C1 tllc uut.e i1.r Si, hereinabove Lvc Set_ 1.vi t.l 111E 11 1 1 LL./Ll •V Tit) DZ TITLE TXT I (STAIN" ESC 11 , II'1 Si n 7