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DRAFT- 4/16/98 <br /> Terms of the City of Mounds View Interest Subsidy Program <br /> for Market Rate Home Improvement Loans <br /> Program Overview <br /> The Mounds View Economic Development Authority(EDA) is making available a program that <br /> would provide a 3%annual interest rate subsidy for new home imorivement loans which meet <br /> the criteria of the program. The loans origionated under this program can be for a term of up to <br /> 10 years. The maximum city subsidy for all loans issued in the first two years is $20,000 of tax <br /> increment funds (TIF). Aggregate subsidies for future years will decline each year as loan <br /> balances decrease. The loans will be market rate loans provided through Western Bank and <br /> subsidized by the City of Mounds View. The City will provide a 3% subsidy for all home <br /> improvement loans. <br /> The program expects to provide subsidized loans for a period of at least two years. The City of <br /> Mounds View will provide funds in an account at the lender for the purpose of subsidizing <br /> qualifying home improvement loans. Loans provided by lender(s)will be subsidized by <br /> amortization payments over a maximum of a 10 year period(i.e. a$10,000 loan at 10%, <br /> subsidized to a 7% rate will require a 3% interest payment of$ by the city 10 years. <br /> However the city's subsidy will be amortized over a 10 year payment.) Credit will be given for <br /> loans which are paid off early. <br /> Target Properties <br /> All owner occupied residential properties having 1-4 units. No restrictions for household income <br /> or age of housing will be required for this program. <br /> Program Guidelines <br /> 1. The City of Mounds View will subsidize 3% of the market interest rate for home <br /> improvement loans within the city. <br /> 2. Participating lender(s) will utilize City of Mounds View Tax Increment Funds to write <br /> down market rate home improvement loans not to exceed $20,000 of total subsidy in the <br /> program's first two years. <br /> 3. Loans will be approved and origionated under Western Banks underwriting criteria. <br /> 4. Participating lender(s) will be responsible for servicing the loans. <br /> 5. Eligible improvements and eligible properties are determined by criteria adopted by the <br /> city. <br /> 6. Borrower's must provide proof of income,property tax statement, bid for work, and <br /> contractor warranty. <br /> 7. The property owner has 9 months from the date of closing to complete the <br /> improvement(s). <br /> 8. Loan proceeds will be dispersed by having checks issued to the applicant and contractor <br />