Assistance will be provided in the form of a no-cost, zero-percent-interest, deferred forgivable loan up to $20,000. These are loans in which the entire principal and interest payments are deferred to a future date with terms to forgive the entire repayment amount. The loan is forgiven incrementally, typically forgiven at one-fifth (20%) of the loan each year over five (5) years until the end of the repayment term. At the end of the term, the repayment amount is reduced to zero. Most recipients will pay zero dollars toward the loan.
The assistance is secured by a contractual lien, which is a security interest by a lender (the City) with the consent of the property owner. The lien gives the lender the right to collect money from the sale of the property if the property is sold within the repayment period, as explained above. The lien is mutually agreed upon by the recipient/homeowner and the lender, and is secured through a written agreement, like a mortgage. Recipients will sign loan documents including a Promissory Note and Deed of Trust covering the cost of repairs.