COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 090757

Authorizing the Director of Housing and Community Development and/or the court-appointed Receiver of the Housing and Economic Development Financial Corporation (HEDFC), pursuant to approval by the Federal Court, to liquidate all single family loans currently in HEDFCs portfolio that require payments by first offering the loans to the individual homeowner to payoff said loan at a discounted percentage and second, by bundling and selling the remaining loans in the secondary market.

WHEREAS, prior to 2005 the City provided funding received from the U.S. Department of Housing and Urban Development (HUD) to the Housing and Economic Development Finance Corporation (HEDFC) through yearly contracts for the purpose of administering housing and community development programs for the City; and

WHEREAS, as part of said funding, HEDFC created and administered a loan portfolio which consists of single-family and multi-family loans; and

WHEREAS, the loan portfolio currently administered by HEDFC consists of HOME, HOPE 3, UDAG, PIN, FLAME, CDBG and other mortgage loans; and

WHEREAS, the City has prepared and submitted an Asset Transfer and Capacity Building Plan (Plan) to the U.S. District Court for the Western District of Missouri in the case styled City of Kansas City, Missouri v. HEDFC, Case No. 4:05-CV-00368-GAF, as part of its request for transfer of the assets of HEDFC to the City; and

WHEREAS, said Plan establishes that the City will bundle and sell loans by November 30, 2009; and

WHEREAS, it is recommended that individual homeowners be given first offer (first offer) to payoff the balances of said loans at a discounted rate of fifty percent (50%) of the remaining balance of the loans in first position and a discounted rate of seventy-five percent (75%) of the remaining balance of all other loans; and

WHEREAS, individual homeowners will be given thirty days from the date of written offer to either accept or reject the offer; and

WHEREAS, individual homeowners who accept the offer will be given ninety days from the date of the written offer to pay the payoff amount to HEDFC; and

WHEREAS, individual homeowners participating in the first offer opportunity must either attend one or more financial/credit counseling session(s) to obtain approval of all refinance terms and conditions or sign a waiver for exemption; and

WHEREAS, any loans remaining after first offer to individual homeowners will be bundled and sold in the secondary market to the highest bidder; NOW THEREFORE,

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY, MISSOURI:

Section 1. That the Director of Housing and Community Development and/or the court-appointed Receiver for the Housing and Economic Development Financial Corporation (HEDFC) in the case styled City of Kansas City, Missouri v. HEDFC, Case No. 4:05-CV-00368-GAF, pursuant to approval of the Federal Court, are hereby authorized to liquidate all single family loans currently in HEDFCs portfolio that require payments by first offering the loans to the individual homeowner to payoff the balance at a discounted rate of fifty percent (50%) of the remaining balance of the loans in first position and a discounted rate of seventy-five percent (75%) of the remaining balance of all other loans and second, by bundling and selling the remaining loans in the secondary market to the highest bidder.

Section 2. That the Director of Housing and Community Development and/or the court-appointed Receiver for the Housing and Economic Development Financial Corporation (HEDFC) in the case styled City of Kansas City, Missouri v. HEDFC, Case No. 4:05-CV-00368-GAF, pursuant to approval of the Federal Court, are further authorized to allow the individual homeowners thirty days from the date of the written offer to either accept or reject the offer; and for homeowners who accept the first offer to be given ninety days from the date of the written offer to pay the payoff amount to HEDFC and to require the individual homeowners participating in the first offer opportunity to either attend one or more financial/credit counseling session(s) to obtain approval of all refinance terms and conditions or to sign a waiver for exemption.

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Approved as to form and legality:

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Nicole Rowlette

Assistant City Attorney