12-21-2010 - Award of Contract - Housing Loan Services0
City of West Covina
Memorandum
To: Andrew G. Pasmant, Executive Director
and the Community Development Commission
From: Thomas Bachman, Finance Director
AGENDA
Item No.:
Date:
Subject: AWARD OF CONTRACT -- HOUSING LOAN SERVICES
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December 21, 2010
RECOMMENDATION:
It is recommended that the Community Development Commission Award the housing
administration contract to AmeriNational Community Services, Inc. for housing loan
administrative services.
BACKGROUND:
On March 1, 2004, the City of West Covina entered into a Service Agreement with Rehab
Financial Corporation ("RFC") to provide housing program administrative services, including
loan collection, title reconveyance, and any necessary loss mitigation services such as
forbearance or foreclosure proceedings. In late March 2010, RFC closed its operations and its
president has since pled guilty to embezzling $3.9 million in funds that belonged to more than 20
cities in California. The majority of the losses were sustained by cities whose housing and
rehabilitation 'assistance funds were held in escrow by RFC. In contrast, our City received
RFC's loan collections on a monthly basis. The last remittance we received was through
February 2010. Our estimated loss from unremitted collections from First Time Homebuyer
(FTHB) borrowers 'is about $ 8,000 of Housing Set -Aside funds.
The number of loans administered will soon increase as other loans become subject to
amortization in the next few years. There are currently 36 FTHB loans subject to 5 percent
interest per annum with monthly receivables for the next 16 to 23 years. In addition, 116
deferred loans under the Home Preservation Program (HPP) will cross onto their monthly
amortization period: 44 in FY 11/12, 36 in FY 12/13, and the rest in succeeding fiscal years until
FY 19/20.
DISCUSSION:
Request for Proposal (RFP) 41010-A was announced on October 20, 2010, for Housing Loan
Administrative Services. The RFP was posted on the City's website; letters inviting proposals
were mailed to companies advertising those services on the internet/directory, and an RFP legal
notice was published in the San Gabriel Valley Tribune on October 27, 2010. Bid packages were
sent to the following companies: AmeriNational Community, Cortland Capital, Wolf &
Associates, SJC Consulting, Reliable Loan Servicing, Nationwide Loan Services, Loan
Management & Bridgelock Capital. Bidding closed at 11:00 a.m. on November 18, 2010. Two
companies submitted proposals, summarized as follows:
Firm /
AmeriNational Community
Bridgelock Capital Servicing /
Features/Fees
Services, Inc. (ACS)
Asset Foreclosure Services
(BLC Servicing)
Scope of specialization
Loan servicer of affordable
Full -spectrum mortgage servicer
housing
Local office
Downey, California
Woodland Hills, California
New loan.set-up fee
$40 per loan
$50 per loan
Monthly service fee for
$13.70 per loan per month
$ 35 per payment received
amortized loans
Foreclosure service fees
$300 -- for documentation
$1,800 -- inclusive of Title
preparation.
Services Guarantee, posting and
Additional charge for other
publishing fees, any loss
foreclosure process incurred
mitigation services needed,
such as conventional legal fees,
administration of trustee's sale,
sheriffs deposits, bankruptcy
if necessary.
closing costs, fees set by law,
etc.
References provided
Housing, community
Two banks, two title companies,
development and loan sections
one law office
of 5 cities.
While both firms are experienced in servicing loan portfolios, we recommend awarding the bid
to AmeriNational. Their fees are much lower and they have more extensive experience working
with government agencies. They, work with 160 cities and agencies across 25 states. Local
agencies served include Cities of Baldwin Park, Whittier, Bellflower, Santa Ana and Los
Angeles. It is a wholly owned subsidiary of American Bank, subject to audit and compliance
programs. It has a comprehensive package of insurance coverage (business liability, excess
liability, fidelity bond, workers compensation, automobile, property, and standard coverage).
Loan collections shall be remitted to the City within ten working days of the close of the month.
AmeriNational will provide current month reconciliation, portfolio status and delinquent aging
reports. Their service will .include follow-up notifications and calls on delinquent accounts and
IRS Form 1098 reporting. Both the City and the borrowers will have access to their account
information via Internet and toll -free customer support. Furthermore, AmeriNational has the
expertise in handling bankruptcy cases, delinquencies, and foreclosure in accordance with local,
state, and federal statutes.
The proposed Service Contract (Attachment A) calls for a five-year agreement with
AmeriNational, renewable for three successive one-year terms thereafter. A projection of the
cost of their basic service would be:
Contract year*
First Time Homebuyer (FTHB)
Home Preservation Program (HPP)
One-time set up
Monthly service
fee
One-time set up
Monthly service
fee
One
$ 1,440.00
$ 5,918.40
$ 13-760.00
$ 3,616.80
Two
$ 0.00
$ 5,918.40
$ 1,440.00
$ 10,192.80
Three
$ 0.00
$ 5,918.40
$ 440.00
$ - 14,056.20
Four
$ 0.00
$ 5,918.40
$ 160.00
$ 15,289.20
Five
$ 0.00
$ 5,918.40
$ 40.00
$ 15,700.20
Total over 5 years
$ 1,440.00
$ 30,414.00
$ 3,840.00
$ 58,855.20
*These projections do not include any loss mitigation services that the City may request. Early
loan payoffs will save the City on the set-up and monthly service fees.
FISCAL IMPACT:
Adequate funding for these services were included in the Housing Fund's 2010-11 adopted
budget (862.22.2241.6119).
Prepare by: Guia Devera
` Management Analyst
Finance Director
Reviewed by: Dennis Swink
City Controller
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Attachment A
SERVICE AGREEMENT BY AND BETWEEN
THE CITY OF WEST COVINA COMMUNITY DEVELOPMENT.COMMISSION
AND
AMERINATIONAL COMMUNITY SERVICES, INC.
THIS PROFESSIONAL SERVICES AGREEMENT (this "Agreement") is made and
entered into as of the day of , 2010, by and between the City of
West Covina Community Development Commission, a public corporation, (hereinafter
referred to as the "City") and AmeriNational Community Services, Inc., a corporation
organized and existing under the laws of the State of Minnesota (hereinafter referred to as
the "Contractor").
WITNESSETH
WHEREAS, the City receives funds to provide
homeowners for housing and rehabilitation proj
WHEREAS, the City desires to engage Contractor to
projects implemented by the City; and
WHEREAS, Contractor represents that i
Agreement; and
loans to low and moderate income
in connection with
services under this
WHEREAS, Contractor is willing to render professional services, as hereinafter defined,
on the following termsand conditions.
NOW, THEREFORE, in consideration of the warranties, covenants and commitments
herein„contained, the parties mutually agree as follows:
I. SCOPE OF SERVICES
When and as requested, n writing by the City, the Contractor shall provide services in
connection with loans or grants made by the City to property owners for the improvement
of their respective properties. Services shall include those specifically set forth in the
Scope of Services attached as Exhibit A.
II. FEE SCHEDULE
In return for the services provided by the Contractor, the City shall pay fees to the
Contractor according to the Fee Schedule attached as Exhibit B.
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III. ADDITIONAL SERVICES
In the event the City requests additional services to be performed by Contractor not
specifically set forth in the Scope of Services and Contractor agrees to perform the
requested additional service(s), Contractor shall undertake such services(s) after receiving
written authorization from the City. Additional compensation for such service(s) shall be
allowed as agreed upon in writing by both the City and Contractor.
IV. ADDITIONAL TERMS
A. EQUAL EMPLOYMENT OPPORTUNITY
During the performance of this Agreement, the Contractor agrees as follows:
Contractor shall not discriminate against any employee who is employed in the
work covered by this Agreement, or against any applicant for such employment,
because of race, color, religion, sex, age, national origin, marital status, or
physical or mental handicap unrelated in nature and extent so as to reasonably
preclude the performance of such work. This provision shall include, but not be
limited to, the following: employment, promotion, demotion, or transfer;
recruitment or recruitment advertising; layoff or termination; rates of pay or other
forms of compensation; and selection for training, including apprenticeship.
2. Contractor shall include a similar provision in all subcontracts for services
covered by this Agreement and shall post and cause subcontractors to post in
conspicuous places available to employees and applicants for employment,.
notices setting forth the substance of this clause.
B. REPRESENTATION
Contractor represents that it has, and shall continue to have, adequate and proper
facilities and personnel to perform the services contained in this Agreement; that it is
duly authorized and qualified by law to enter into this Agreement and perform such
services. Contractor warrants that it shall faithfully and diligently perform the
services herein, and shall employ, as a minimum, generally accepted standards and
practices employed by other professional services organizations or persons engaged
in providing similar services in existence at the time of performance of its obligations
herein. Contractor represents and covenants that it shall comply with all applicable
laws and regulations concerning the services it has agreed to perform pursuant to the
terms of this Agreement.
C. INDEMNIFICATION
1. Contractor agrees to indemnify, defend and hold harmless the City and its
respective employees, representatives, agents, successors and assigns
(individually and collectively, "Indemnitees") from and against any and all losses,
AmeriNational Community Services, Inc. 2
damages, costs and expenses, including, without limitation, reasonable attorneys'
fees and costs, incurred by Indemnitees in connection with a breach by Contractor
of any of the covenants, agreements, representations or warranties contained
herein, or the negligence or willful misconduct of Contractor, or any of its
employees, subcontractors or agents.
2. The City agrees to indemnify, defend and hold harmless Contractor and its
respective employees, representatives, agents, successors and assigns
(individually and collectively, "Indemnitees") from and against any and all losses,
damages, costs and expenses, including, without limitation, reasonable attorneys'
fees and costs, incurred by the Contractor in connection with breach by the City
of any of the covenants, agreements, representations or warranties contained
herein, or the negligence or willful misconduct of Contractor, or any of its
employees, subcontractors or agents.
D. INDEPENDENT CONTRACTOR
Nothing contained in this Agreement shall be deemed or construed in any manner to
create a co -partnership or joint venture relationship between Contractor and the City.
The duties and responsibilities of Contractor shall be rendered as an independent
contractor and not as an agent, representative, or employee of the City, and
Contractor shall have full control of all its acts, doings, and proceedings relating to or
requisite in connection with the discharge of its duties and responsibilities under this
Agreement. Furthermore, this Agreement is by and between the City and Contractor
and is not intended, and shall not be construed, to create the relationship of agent,
servant, employee, partnership, joint venture, or association, as between City and
Contractor. The employees and agents of one parry are not the employees or agents
of the other parry for any purpose whatsoever. The Contractor and its employees are
independent contractors and are not employees of the City.
The Contractor shall be solely liable and responsible for providing all compensation
and benefits to, or on behalf of, all persons performing work pursuant to this
Agreement. The City shall have no liability or responsibility for the payment of any
salaries, wages, unemployment benefits, Federal, State, or local taxes, or other
compensation, benefits, or taxes for any personnel provided by or on behalf of
Contractor. The Contractor understands and agrees that all persons performing work
pursuant to this Agreement are, for purposes of worker's compensation liability,
solely employees of Contractor and not employees of the City. The Contractor shall
be solely liable and responsible for furnishing any and all worker's compensation
benefits to any person as a result of any injuries arising from or connected with any
work performed by or on behalf. of Contractor hereunder. The Contractor shall agree
to indemnify, defend with counsel acceptable to the City, and hold the City harmless
from any action or proceeding regarding Contractor's employee or agent's
independent Contractor status.
AmeriNational Community Services, Inc. 3
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E. ASSIGNMENT OF AGREEMENT
Contractor shall not assign any of its rights or obligations under this Agreement
without the prior express written consent of the City, which such consent shall not be
unreasonably withheld.
F. INSURANCE
1. Requirements: Contractor shall have and maintain in full force and effect for the
duration of this Agreement, insurance insuring against claims for injuries to
persons or damages to property which may arise from or in connection with the
performance of the work by Contractor, its agents, representatives, employees or
subcontractors. Such insurance policies shall name the City as an additional
insured as allowable under policy.
2. Limits of Insurance: Contractor shall maintain limits no less than:
a. Comprehensive General Liability of $1,000,000 combined single limit per
occurrence for bodily and personal injury, sickness, disease or death, injury to
or destruction of property, including loss of use resulting therefrom.
b. Comprehensive Automobile Liability (owned, non -owned, hired) of
$1,000,000 combined single limit per occurrence for bodily and personal
injury, sickness, disease or death, injury to or destruction of property,
including loss of use resulting therefrom.
Professional Liability of $1,000,000 limit for claims arising out of
professional services caused by the Contractor's errors, omissions, or
negligent acts.
d. Workers' Compensation limits as required by the Labor Code of the State of
California and'Employers Liability limits of $500,000 per accident.
3. Acceptability of Insurers: Insurance is to be placed with insurers with an A.M.
Best rating of no less than AXII.
4. Verification of Coverage: Contractor shall furnish the City with certificates of
insurance to the policies evidencing coverage required by this clause prior to the
start of work. The certificates of insurance for each insurance policy are to be
signed by a person authorized by that insurer to bind coverage on its behalf. The
certificate of insurance shall be on a form utilized by Contractor's insurer in its
normal course of business and shall be received and approved by the City prior to
execution of this Agreement by the City. The City reserves the right to require
complete, certified copies of all required insurance policies, at any time.
5. Subcontractors: Contractor shall include all subcontractors as insureds under its
policies or. shall furnish separate certificates for each subcontractor. All
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coverages for subcontractors shall be subject to all of the requirements stated in
this Agreement, including but not limited to naming the parties as additional
insureds.
G. RECORD KEEPING AND REPORTING. Contractor shall maintain books,
records, papers, or other documents relevant to the performance of its duties under
this Agreement, and upon written request from the City shall allow the City to
inspect, audit, copy, or abstract, any and all of such books, records, papers, or other
documents. Contractor may maintain the required books, records, paper, and other
documents in electronic form. Contractor shall use generally accepted accounting
principles in the maintenance of such books and records and shall retain all of such
books, records, and documents for a period of five (5) years from the date such books
and records are originally created.
H. NON -COLLUSION. Contractor covenants and declares that it has not employed
any person to solicit or procure this Agreement and that Contractor has not made, and
will not make, any payment of any compensation for the procurement of this
Agreement. The covenant contained herein shall survive the expiration or earlier
termination of this Agreement.
I. CONFLICT OF INTEREST. Contractor covenants and declares that it has not, and
will not, acquire any interest, directly or indirectly, in any property acquired by the
City during the term of this Agreement. Contractor warrants and covenants that it
presently has no interest in, nor shall any interest be hereinafter acquired in, any
matter that will render the services required under this Agreement a violation of any
applicable Federal, State or local law. In the event that any conflict of interest should
hereinafter arise, Contractor shall promptly notify the City in writing of the existence
of such conflict of interest.
J. CONFIDENTIALITY. Contractor agrees that such reports, information, opinions or
conclusions shall not be made available to or discussed with any individual or
organization, including the news media, without prior written approval of the City.
Contractor shall exercise reasonable precautions to prevent the unauthorized
disclosure and use of the City information whether deemed confidential or not.
K. OWNERSHIP OF WORK. All reports, designs, drawings, plans, specifications,
schedules, work product and other materials prepared or in the process of being
prepared for the services to be performed by Contractor shall be and are the property
of the City and the City shall be entitled to full access and copies of all such
materials.
L. TERM AND TERMINATION.
The term of this Agreement shall commence upon execution of this Agreement by
both parties and shall continue for a total duration of eight (8) years thereafter. The
initial term shall be for a period of five (5) years, and then the agreement shall
automatically renew for three (3) successive one year terms thereafter under the same
AmeriNational Community Services, Inc. 5
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terms and conditions unless either parry gives thirty (30) days written notice of its
intention to not renew the contract under the same terms and conditions. Any and all
revisions to the contract must be mutually agreed upon in writing and signed by both
parties.
Irrespective of any default hereunder, either party may also, at any time in their
discretion, terminate this Agreement, in whole or in part, by giving the other party
sixty (60) days written notice thereof and in such event, Contractor shall be entitled to
receive compensation specified herein for all work completed prior to such sixty (60)
days notice of termination or cancellation, delivered or not yet delivered to the City.
Contractor shall also be entitled to compensation for all subsequent work requested
by the City and delivered by Contractor, after notice of termination. For any work
partially completed at the date of termination, such work will be compensated on a
prorated basis, as mutually agreed upon. The parties agree that any controversy or
claim arising out of or relating to this Agreement shall be settled by arbitration
pursuant to the Federal Arbitration Act.
M. CHOICE OF LAW AND VENUE. All matters, whether sounding in tort or in
contract, relating to the validity, construction, performance, or enforcement of this
Agreement shall be controlled by and determined in accordance with the laws of the
State of California without regard to conflicts of law principles. The prevailing party
shall be entitled to reasonable attorneys' fees and costs in addition to any other relief
to which said party may be entitled.
N. MODIFICATIONS. No waiver or modification of any language contained in this
Agreement shall be valid unless in writing and duly executed by both parties.
O. SEVERABILITY. Should any part of this Agreement be declared by a final
decision by a court or tribunal of competent jurisdiction to be unconstitutional,
invalid or beyond the authority of either parry to enter into or carry out, such decision
shall not affect the validity of the remainder of this Agreement, which shall continue
in full force and effect, provided that the remainder of this Agreement, absent the
unexcised portion, can be reasonably interpreted to give effect to the intentions of the
parties.
P. DUPLICATE ORIGINAL. The original of this Agreement and one or more copies
hereto have been prepared and signed in counterparts as duplicate originals, each of
which so executed shall irrespective of the date of its execution and delivery, be
deemed an original. Each duplicate original shall be deemed an original instrument as
against any party who has signed it.
Q. NOTICES. All notices or communications under this Agreement shall be in writing
and shall be deemed delivered as follows: on the date of delivery if delivered in
person or via facsimile (if sent prior to 5:00 p.m., California time; or if delivered after
5:00 p.m., it shall be deemed delivered on the following business day); on the next
day, if delivered by a nationally recognized overnight courier (such as UPS or
FedEx); five (5) days after the date of mailing, if sent by certified first class U.S.
AmeriNational Community Services, Inc. 6
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mail, return receipt requested and postage prepaid, at the address of the respective
parties below, or such other address as may be given to the other party in writing::
If to Contractor:
AmeriNational Community Services, Inc.
217 South Newton Ave
Albert Lea, MN 56007
Facsimile: (507) 377-0838
Attn: Amber Anderson
Marketing and Contracts Manager
If to the City:
City of West Covina
1444 W. Garvey Ave., Room 308
West Covina, CA 91790
Attn: - Guia Devera
Management Analyst, Finance Dept.
R. WAIVER. No waiver by either party of any covenant or condition of this
Agreement shall be valid unless in writing and signed by the party so waiving.
Neither the failure by either party in any one or more instances to insist upon the
complete and total observance or performance of any term or provision herein, nor
the failure by either party to exercise any right, privilege, or remedy conferred herein
or afforded by law, shall be construed as waiving any breach of such term, provision
or the right to exercise such right, privilege or remedy thereafter. In addition, no
delay on the part of either party in exercising any right or remedy herein shall
operate as a waiver thereof, nor shall any single or partial exercise of any right or
remedy preclude other or further exercise thereof, or the exercise of any other right
or remedy.
S. FORCE MAJEURE: Any delays in or failure of performance by either party,
except in respect of the obligation of payments under this Agreement, shall not
constitute default of this Agreement, if and to the extent such delays or failures are
caused by occurrence(s) beyond the reasonable control of the party affected, and
which by the exercise of due diligence such party is unable to prevent, such
occurrence(s) including but not limited to: acts of God, sabotage, war, acts of
terrorism, riots, insurrections, civil unrest, riots, embargoes, strikes, lockouts, fires,
floods, tornados, hurricanes or other natural disaster or governmental actions. In any
such event, the party claiming Force Majeure shall promptly notify the other party of
the nature of the event in writing, and, if reasonably possible, such notice shall set
forth the extent and duration thereof, and shall resume performance at the earliest
possible date.
AmeriNaiional Community Services, Inc. 7
T. SURVIVAL. Terms and conditions of this Agreement, which by their sense and
context survive the expiration or termination of this Agreement, shall so. survive.
U. ENTIRETY. The parties acknowledge and agree that they are entering into this
Agreement freely and voluntarily, and that each has had the opportunity to consult
with legal counsel prior to executing this Agreement. The parties also acknowledge
and agree that no representations, inducements, promises, agreements or warranties,
oral or otherwise, have been made by that party or anyone acting on that parry's
behalf, which are not embodied in this Agreement, and that that party has not
executed this Agreement in reliance on any representation, inducement, promise,
agreement, warranty, fact or circumstance not expressly set forth in this Agreement.
This Agreement, and the attached exhibits, contain the entire agreement between the
parties respecting the subject matter of this Agreement, and supersede all prior
understandings and agreements whether oral or in writing between the parties
respecting the subject matter hereof.
V. AUTHORITY TO EXECUTE THIS AGREEMENT. Both parties hereto
represent and warrant that they have the full right, power and authority- to execute
this Agreement.
W. ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement
between the parties with respect to any matter referenced herein and supersedes any
and all other prior writings and oral negotiations. This Agreement may be modified
only in writing, and signed by the parties in interest at the time of such modification.
The terms of this Agreement shall prevail over any inconsistent provision in any
other.contract document appurtenant hereto, including exhibits to this Agreement.
AmeriNational Community Services, Inc. 8
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
and intend to be legally bound thereby.
City of West Covina ("City")
Date:
Attest:
Name:
Title:
Date:
Name:
Title:
AmeriNational Community Services, Inc. ("Contractor")
By: Date:
Adrienne L. Thorson
Chairperson, CEO/CFO
Date:
Michael Torres
President & COO
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EXHIBIT A
SCOPE OF WORK
Loan Servicing for Amortized Loans:
1. Introductory Package: Upon boarding of each new loan, AmeriNational will
send to each borrower a welcome package. This welcome package contains a
Notice of Servicing Transfer, Fair Debt Notice, FACT Act Letter, ACH sign-
up form and a supply of coupons. The letters can be offered in .Spanish and
English, which, along with our bilingual staff, can better assist those
customers who communicate more proficiently in Spanish.
2. Collection and Remittance of Payments: AmeriNational will collect payments
from the borrowers through monthly or other scheduled remittances of
principal, interest, fees, escrow balances and other identified payments. These
remittances will be posted to the loan and ancillary records in accordance -with
the loan documents and the City's written instructions. Payments will be
posted the same day as receipt. All funds will be maintained in an FDIC
insured banking institution in a custodial account for the benefit of the City
and the borrowers as applicable. AmeriNational will ensure the proper
balancing of cash received and transmitted and loan portfolio totals on a daily
and monthly basis.
3. Payment of Property Taxes: At the City's request, AmeriNational will
monitor the timely payment of property taxes. Tax service will be required to
monitor payment of property tax.
4. Written Delinquent Notification: AmeriNational will notify the borrower in
writing of delinquent payments at intervals of 30, 60 and 90 days past the
payment due date. Upon issuing the ninety -day notice, AmeriNational will
provide foreclosure or forbearance service, if requested by the City (see Loss
Mitigation section).
5. Insurance Monitoring: AmeriNational will notify the insurance agent in
writing that AmeriNational is monitoring premium payments and that we are
to be made aware of delinquencies or cancellations. AmeriNational will force
place insurance at the request of the City (see Insurance section).
6. Escrow/Impound Account: If the City chooses, AmeriNational will establish
an escrow/impound account for any borrower for the payment of taxes and
insurance. Many borrowers find it easier to pay into an escrow account on a
monthly basis rather than making large semi-annual or annual tax and
insurance payments. AmeriNational will collect the monthly escrow payment
from the borrower and make the tax and insurance payments on the
borrower's behalf. The borrower escrow accounts will be analyzed annually in
accordance with the Real Estate Settlement Procedures Act (RESPA). Tax
AmeriNational Community Services, Inc. 10
service is necessary to ensure the timely and accurate payment of property
taxes.
If the City chooses to establish an escrow/impound account for any borrower,
AmeriNational will also establish a Client Escrow Deficit account. This
account is used to track and reconcile borrower accounts with escrow deficits
as a result of payments made on the borrower's behalf in excess of their
escrow balance. The escrow deficit account will be reconciled monthly and
the net change will be included or deducted from the City's monthly
remittance; a net shortage/negative will be deducted and a net
overage/positive will be remitted.
At portfolio transfer AmeriNational will require a cash deposit of the total
amount of positive escrow balances. Negative escrow balances will be set up,
but the total amount of negative escrow balances will not be netted out of the
positive cash escrow balances.
7. Late Fees: In keeping with the provisions of the City's promissory note,
AmeriNational will assess and retain a late fee when payment is not made
within the grace period.
Loan Servicing for Deferred Loans:
1. Introductory Package: Upon boarding of each new loan, AmeriNational will
send to each borrower a welcome package. This welcome package contains a
Notice of Servicing Transfer, Fair Debt Notice and a FACT Act Letter. The
letters can be offered in Spanish and English, which, along with our bilingual
staff, can better assist those customers who communicate more proficiently in
Spanish.
2. Collection and Remittance of Payments: AmeriNational will collect payments
from the borrowers through monthly or other scheduled remittances of
principal, interest, fees, escrow balances and other identified payments. These
remittances will be posted to the loan and ancillary records in accordance with
the loan documents and the City's written instructions. Payments will be
posted the same day as receipt. All funds will be maintained in an FDIC
insured banking institution in a custodial account for the benefit of the City
and the borrowers as applicable. AmeriNational will ensure the proper
balancing of cash received and transmitted and loan portfolio totals on a daily
and monthly basis.
3. Payment of Property Taxes: Upon the City's request, AmeriNational will
monitor the timely payment of property taxes. Tax service will be required to
monitor the payment of property tax.
AmeriNational Community Services, Inc. 11
4. Written Delinquent Notification: AmeriNational will notify the borrower in
writing of delinquent payment at intervals of 30, 60 and 90 days past the date
the loan is finally due. Upon issuing the ninety -day notice, AmeriNational
will provide foreclosure or forbearance service, if requested by the City (see
Loss Mitigation section).
5. Insurance Monitoring: AmeriNational will notify the insurance agent in
writing that AmeriNational is monitoring premium payments and that we are
to be made aware of delinquencies or cancellations. AmeriNational will force
place insurance at the request of the City (see Insurance section).
6. Escrow/Impound Account: If the City chooses, AmeriNational will establish
an escrow/impound account for any borrower for the payment of taxes and
insurance. Many borrowers find it easier to pay into an escrow account on a
monthly basis rather than making large semi-annual or annual tax and
insurance payments. AmeriNational will collect the monthly escrow payment
from the borrower and make the tax and insurance payments on the
borrower's behalf. The borrower escrow accounts will be analyzed annually in
accordance with the Real Estate Settlement Procedures Act (RESPA). Tax
.service is necessary to ensure the timely and accurate payment of property
taxes.
If the City chooses to establish an escrow/impound account for any borrower,
AmeriNational will also establish a Client Escrow Deficit account. This
account is used to track and reconcile borrower accounts with escrow deficits
as a result of payments made on the borrower's behalf in excess of their
escrow balance. The escrow deficit account will be reconciled monthly and
the net change will be included or deducted from the City's monthly
remittance; a net shortage/negative will be deducted and a net
overage/positive will be remitted.
At portfolio transfer AmeriNational will require a cash deposit of the total
amount of positive escrow balances. Negative escrow balances will be set up,
but the total amount of negative escrow balances will not be netted out of the
positive cash escrow balances.
Force -Placed Insurance:
AmeriNational will force place insurance at the request of the City. Upon notification of
a policy cancellation from the borrower's insurance carrier, or when proof of a current
policy is not received, AmeriNational will request forced -placed insurance from
AmeriNational's insurance provider.
1. Coverage is instantly bound upon receipt of request with an effective date up to
30 days prior to receipt of our request.
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2. AmeriNational's insurance provider or their carrier will send out three letters to
the borrower over the course of forty-five days (Flood) to sixty days (Hazard). If
the borrower provides proof of coverage, foree-placed coverage will be cancelled.
3. If the effective date of this coverage is the same and there is no lapse in coverage,
there will be no premium charged. If there is a lapse in coverage, there may be a
fee charged to the borrower's account for an earned premium.,
4. If the borrower does not provide proof of coverage, AmeriNational's insurance
provider will send an insurance policy and notification of premium to the
borrower and bill AmeriNational for a one-year policy. If the borrower does not
have an established impound account; AmeriNational will create one and disburse
the premium from it. If the borrower fails to pay the premium before the end of
the month, and the disbursed premium results in an escrow deficit balance, said
balance will be accounted for in that month's reconciliation of the Client Escrow
Deficit Account. If the aggregate portfolio remittance for said month is
insufficient to cover the deficit amount, the City will be billed and responsible for
the cost until recouped from the borrower. Any pay-off quotations or demands
will reflect any impound deficit amounts (caused by the cost of any forced -place
insurance or other advances) so that the borrower will still be held responsible for
the cost even if they are unresponsive.
The Portfolio Status Report, delivered monthly to the City, will also reflect such
negative impound balances (i.e. the total amount of such premiums owed by
borrower). ,
5. The one-year policy is cancelable at any time by either AmeriNational or the City.
Account Inquiries:
Borrowers and the City have 24-hour electronic access to their loan information via
AmeriNational's Website at www.amerinational.net: Continuous access to all loan
account information is also provided during normal working hours through our toll free
customer service telephone lines. In addition, . we can provide hard copy account
payment histories or other information through facsimile transmission or email. When
requested by a borrower, AmeriNational will provide, without charge, a detailed
statement of all transactions relating to the borrower's. payments and/or escrow account.
Non -sufficient Funds (NSF) Checks:
In the event that a check is returned to us unpaid due to non -sufficient funds, a returned
check fee will be assessed. A letter will be sent to the borrower requesting immediate
payment plus the returned check fee. If this fee is not received, a memo will be placed on
the individual's account and the fee will be collected at the time the loan is paid off.
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Additional Portfolio Management Services:
Loan Payoff Quotations, Satisfactions, Reconveyances: AmeriNational will
provide Loan Payoff Quotations and will perform Satisfactions and
Reconveyances of Mortgage at the borrower's expense for any loan at the City's
request.
2. Loan Amortization Schedules: AmeriNational will provide Loan Amortization
Schedules for any loan at the City's request.
3. 1098 Tax Forms: Pursuant to IRS regulations and, on behalf of the City,
AmeriNational will submit required 1098 tax form for any and all borrowers
paying interest on any City loan.
4. Year -End Account Summary: AmeriNational will supply a year-end account
summary statement to each borrower if there has been principal, interest or
escrow activity on their account. The report will indicate principal and interest
paid, amount of payments AmeriNational made on the borrower's behalf for taxes
and insurance, and any remaining escrow balance.
5. Tickler Notifications: AmeriNational will provide for an annual tickler
notification to any borrower, at the City's request.
Portfolio Cleanup:
Over the course of our 30-year history, we have assisted cities, agencies and other
governmental entities in cleaning up their portfolio of loans to ensure the accuracy and
consistency of the booked loans with the terms and conditions of the original loan
contracts. Another benefit of this portfolio maintenance has been to ensure all reporting
is accurate and fully updated. Clean up work may typically involve a detailed review of
payment histories to determine posting accuracy and compliance with amortization
statements, truth in lending statements, and other applicable loan documents.
Portfolio Transfer:
In the event the City requires AmeriNational to transition loans back to the City or to
another Servicer, AmeriNational will gather and package all loan files (hard -copy and/or
electronic copy) for shipment. AmeriNational has an in-house IT department that is
dedicated to the maintenance and enhancement of its proprietary loan servicing system.
AmeriNational's IT department will work with City staff to electronically transmit
servicing data in an agreed upon format.
AmeriNational Community Services, Inc. 14
Loss Mitigation:
Loss of income to public sector agencies due to non -performing loans is very common
because of the unrelenting follow-up and labor involved. Because of budget and staff
cuts, many of these agencies are unable to dedicate the personnel necessary to generate
the maximum return on this valuable asset. AmeriNational's diligent collection efforts
have been tailored through our 30 years of experience as we work with our clients to
reduce delinquency and default rates.
A borrower is delinquent if payment is not received on or before its due date, irrespective
of the grace period. A borrower is in default of the promissory note when two payments
are past due, or as otherwise specified in the promissory note. AmeriNational provides
treatment for delinquent mortgages through positive pressure that is fair but firm. If
delinquent borrowers have a positive attitude toward their obligations, we will work with
them to help them retain title to their property.
The following policy of follow-up will be adhered to by AmeriNational to minimize any
loss of income to the City:
1. New Borrower Delinquency: Early delinquency can be a sign of a chronic
delinquent borrower. AmeriNational forwards its first letter to new delinquent
borrowers at 5 days past the first payment due date. If there is no response, a
second letter is sent at 15 days. Borrowers are invited to contact our office to
discuss difficulties they may be facing in meeting their obligations. If no response
is received to either letter, due diligence phone calls begin at 31 days delinquent.
2. Delinquency/Default Letter Production: While most borrowers will pay without
much individual attention, delinquencies will rise because some borrowers, left
alone, will fall into poor paying habits. Therefore, letters of varying tone and
composition will be sent at 15, 30 and 45 days past the payment due date. The
letters emphasize the seriousness of the situation, the potential for loss of the
borrower's property, and demands immediate payment.
3. Due Diligence Phone Calls: Telephone calls will be placed to all mortgage loan
borrowers beginning at 31 days delinquent. Telephone contact offers several
advantages: it demands attention; it interrupts other activity; it establishes a
personal communication; and it requires immediate response. The objective of
the call is to secure or demand prompt payment, obtain information needed to
determine the reason for the delinquency, and to gain a commitment for future
payments.
4. Credit Reporting_ AmeriNational will report to the credit bureaus any borrower
payment activity on a monthly basis.
5. Confirmation Letters: Contact with borrowers is used to solicit commitments to
repay past due amounts. A borrower will be provided with the opportunity to
bring the loan current immediately, and within six months. Once a commitment
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is gained, AmeriNational will forward a confirmation letter to document both the
call and the commitment. The revised payment plan of no greater than six
month's duration is then implemented. Default under this plan may cause
AmeriNational to recommend foreclosure.
Forbearance Plans:
Formal forbearance plans are typically used for defaults of 90+ days. A forbearance plan
of less than six months. duration is executed by the borrower and immediately
implemented by AmeriNational, with notice immediately provided to the City. Formal
modifications to promissory note terms and forbearance plans of greater than six months
duration are forwarded to the City for pre -approval. Before the borrower executes the
agreement, the City is requested to approve the plan.
Once approved, AmeriNational will implement the new payment schedule. Should a
borrower default from the new payment schedule without cause, AmeriNational will
recommend foreclosure.
Forbearance Evaluation Process: A hardship is defined as a situation or set of events or
circumstances beyond the normal control of the borrower that prohibits the borrower
from adhering to a planned repayment schedule. If a borrower states, either verbally or in
writing, that a hardship situation. exists, AmeriNational will document the circumstances
and provide the following:
i. Letter from borrower requesting City's consideration of hardship
ii. Nature of the hardship
iii. Expected duration of the hardship
iv. Evidence to substantiate hardship
V. Forbearance Plan Proposal
If the City approves the Forbearance Plan Proposal and executes the agreement with the
borrower, AmeriNational will resume loan servicing under the new payment plan. The
file will be tickled for.follow-up at the expiration of the temporary plan.
AmeriNational's objective is to formulate a plan to bring the loan current as soon as
possible. However, in light of the City's original purpose in making these loans (to assist
the low/moderate income and disadvantaged citizens of its community), AmeriNational
may recommend forbearance plans. that defer all or part of the regular repayments for a
specified period of time.
Loan Foreclosure:
The mortgage transaction and all collections efforts are predicated on the assumption that
the borrower is motivated and able to meet the mortgage obligation. A decision to
foreclose is based on an analysis of an individual loan. We will look at the borrower with
AmeriNational Community Services, Inc. 16
particular emphasis on basic motivation, ability to pay; and attitude or level of
cooperation. If a borrower has been uncooperative,. non -responsive, or unwilling to cure
the existing default by all reasonable means, AmeriNational will recommend foreclosure.
This step is generally taken between 90 and 120 days. Upon City approval, and in
accordance with respective local, state and federal statutes, AmeriNational will send the
borrower a notice of intent to foreclose/demand letter, with a copy to the City. If no
response is received within 30 days, AmeriNational will advise the City of the non -
response. Upon City direction, AmeriNational will proceed to foreclosure.
AmeriNational will properly document all steps taken to affect a cure.
If the loan is not reinstated or paid off, AmeriNational will continue foreclosure up to and
including the sale of the property. Upon sale of the property, AmeriNational will return
all proceeds of the sale to the City less foreclosure fees and any previously un-reimbursed
costs incurred.
In the event the borrower reinstates the loan, AmeriNational will remit to the City all
payments received from the borrower. For those loans that are reinstated by the
borrower, AmeriNational will resume normal servicing functions.
Reports:
AmeriNational's standard reports are designed to meet the City's objectives and funding
source requirements. Data reporting is . flexible and can be reported in several ways,
including program type, funding source and funding year. Hard -copy reports are
available as indicated in addition to the electronic reporting available to the City online
through our Internet LoanLink service. Through LoanLink, the City has unlimited access
to account and portfolio data, and can view the information as well as generate reports
that can be downloaded into Excel.
1. Portfolio Status Report: The report provides a complete accounting per loan of
the total portfolio. The report identifies annual payments made, remaining
balances, borrower's name and account number, original loan balance, interest
rate, and loan term. For those deferred loans accruing interest, the report shows
the ongoing accrued interest balance.
Frequency: Available on-line, one hard -copy report forwarded monthly to the
City.
2. Current Month Reconciliation Report: This report serves as reconciliation for the
loan payments remitted by borrowers.
Frequency: Available on-line, one hard -copy report, along with remittance
check, forwarded to the City within ten working days of the close of the month.
3. Delinquent Aging Report: This report reflects delinquent accounts at the 30, 60,
90, and over 90 day levels. Borrower accounts moved into the forbearance or
foreclosure process are designated.
AmeriNational Community Services, Inc. 17
Frequency: Available on-line, one hard -copy report forwarded monthly to the
City.
4. Loan Amortization Schedule: The Loan Amortization Schedule shows the
breakout of principal and interest paid for each payment during the term of the
loan. This schedule is useful in determining how much principal is still owed and
how much interest has been paid, at any period of time. This report can also be
used in determining any balloon amounts due per the terms of the note.
Frequency: Available to the City upon request.
5. Escrow Analysisport: For loans requiring monthly escrow/impound payments
for taxes and/or insurance, AmeriNational conducts an annual escrow analysis to
determine the proper monthly payment a given borrower needs to make in order
to cover future tax and insurance payments. This report is especially useful when
escrow requirements change significantly, e.g., a marked increase in property tax
due to a reassessment or supplemental tax.
Frequency: Available to the City upon request.
6. Account Status Information Report: Provides borrower profile, loan term and
current balance and status information for individual borrower accounts within a
client's portfolio. This report includes a vast amount of information on any
particular account within the Client's portfolio.
Frequency: Available on-line.
7. Current Year Payment History Details transactions on individual accounts for
- the current year's activity.
Frequency: Available on-line.
8. Payment History with Memos: AmeriNational uses a series of memo codes to
help classify various borrower requests or processing activity. Activities subject
to memo code classification include, for example, requests for duplicate coupon
books, payoff requests, and other miscellaneous borrower questions. This report
summarizes the loan history with identification of these types of activities along
with associated comments by AmeriNational personnel.
Frequency: Available on-line. .
9. Memo Listing Report: This report lists the various coded activities and their
dates. It is particularly useful when researching activity on any particular
borrower account.
Frequency: Available on-line.
AmeriNational Community Services, Inc. 18
EXHIBIT B
FEESCHEDULE
Loan Portfolio Management.
New Loan Set -Up Fee: $40.00 per loan.
Monthly Service Fee for Amortized Loans: $13.70 per loan per month.
Escrowing and/or monitoring of taxes and insurance are included with the service at no
additional cost (except for a potential one-time tax service vendor fee). Please note: The
establishment of a new tax service contract or the transfer of an existing contract from an
acceptable service provider is required for the escrowing and/or monitoring of taxes. Tax
service vendor fees are outside costs passed through from outside vendors and are subject
to marketplace increases. Such costs shall be reasonable and competitive_ with other
similar services provided in the general vicinity of the project.
Monthly Service Fee for Deferred Loans:
i. Warehouse: $2.15 per loan per month
ii. Warehouse and monitor of taxes and/or insurance: $2.70 per loan per month plus
a one-time tax service vendor fee.
iii. Warehouse and escrow of taxes and/or insurance: $9.35 per loan per month plus a
one-time tax service vendor fee.
iv. Flat fee for receiving occasional payments on deferred loans: $9.35 per payment
Tax service fees are outside costs passed through from outside vendors and are subject to
marketplace increases. Such costs shall be reasonable and competitive with other similar
services provided in the general vicinity of the project.
Loss Mitigation
Included in monthly service fee.
Forbearance Plans
A flat fee of $300 per loan per occurrence will be charged to institute a formal
forbearance plan (usually in excess of 6 months in duration and with approval of the
City). The City may require the borrower to pay this fee. Informal forbearances (usually
less than 6 months in duration) to allow a delinquent borrower to catch up and bring their
loan current are performed at no charge to the borrower or the City.
AmeriNational Community Services, Inc. 19
Loan Foreclosute
1. Document Preparation: A one-time charge of $300 to prepare documents to
commence foreclosure proceedings and to manage the foreclosure process on behalf
of the City. In addition to the above foreclosure service fee, AmeriNational will
deduct and pay from remittance or bill City 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 City and within all applicable statutory
limits.
2. Reinstatement Terms: City reimbursement for foreclosure services rendered, and its
costs and other charges, will be made by the borrower upon reinstatement or full
payment of any Deed of Trust or Mortgage under foreclosure.
Per -Event Fees
Tickler Notifications 1. $12.50 per notification
Portfolio Clean-up Fee: $39.00 per loan
Portfolio Transfer Fee: $50 per loan (Only applies if loans are transferred
before contract expires.
Extraordinary Account Research
AmeriNational will conduct ongoing routine maintenance and research activities on
borrower information and balances as part of its servicing duties at no charge to the City
or its borrowers.
Should the City request additional research to be conducted, an extraordinary research fee
of $85.00 per hour will be charged, with a minimum of one hour. Any such fee will be
approved by the City before the research is conducted.
If the City engages AmeriNational to conduct a portfolio clean-up service on its portfolio,
and AmeriNational's efforts result in the discovery of additional research and/or
reconciliation beyond the scope of the portfolio clean-up service, the extraordinary
research fee will be applied in lieu of the portfolio clean up fee. AmeriNational will
identify such loans to the City and seek City approval for continued research before
starting the work.
When research is conducted at the request. of the City because of a discrepancy between
the City's records and AmeriNational's records relating to the principal balance or other
loan information, and the result of the research determines that the discrepancy was the
result of activity being posted at the City and not forwarded to AmeriNational for
updating of its records, the extraordinary research fee will be charged for the time spent
on the research.
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