Title
Approval of Housing Program Short Sale Grant/Loan Forgiveness Policy (B)
Explanation
In accordance with certain housing programs, the City of Gainesville Housing Division is required to file a mortgage lien in the public records of Alachua County on the property of the owner who receive certain types of financial assistance from the Comprehensive Housing Program such as rental rehab, downpayment assistance, housing rehabilitation, etc. When applicable, the property owner is required to execute a promissory note and mortgage to receive the financial assistance. Filing a mortgage lien secures the City's note that is executed by the property owner. Upon receiving the financial assistance, the property owner must meet the terms and conditions of the mortgage and note over a stated compliance period, which generally includes continued ownership and occupancy, maintaining the property, keeping the property taxes current, etc. The City's lien position is typically subordinate to the 1st mortgage lien holder. This practice is the norm for the affordable housing industry because most property owners have a 1st mortgage loan on their property.
When the property owner pays the loan in full and/or completes the stated compliance period, then City Housing Division must release the mortgage lien by executing and filing a Satisfaction of Mortgage in the public records of Alachua County. The City Attorney has approved the Satisfaction of Mortgage document for form and legality. The document is on file with the City Housing Division. However, occasionally, a property owner may experience an economic hardship and is unable to meet the terms and conditions of the mortgage and note. In some instances, it could force the property owner into foreclosure and/or to sell their home through a short sale transaction. A short sale occurs when a mortgage lender(s) agrees to discount the loan balance due to an economic hardship on the part of the borrower. The propert...
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