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BOOK 97 F,1Iu 75 <br />• The third option is for the county to assign its <br />promissory note and subordinate mortgage to the builder <br />at a discounted price. The builder would then assume the <br />bank loan, finish the home, sell it, and pay back the <br />bank's loan. The builder has offered to buy the county's <br />mortgage for $3,000.00. <br />While this option would ensure that the county would <br />recover $3000.00 of its $9,737.83 loan to the Marotta's, <br />there are problems with this option. By allowing -the <br />builder to pay a discounted price for assignment of the <br />SHIP loan, a precedent would be established that could in <br />the future lead to complicity between SHIP applicants and <br />builders to defraud the county. <br />• The fourth option is to do nothing and let the bank, <br />builder, and the applicant resolve the problem. <br />It seems that no option will guarantee that the county will recover <br />its full loan amount. With the first and second options, it is <br />uncertain how much, if any, money the county may finally recapture. <br />With the third option, the county would be assured of receiving <br />almost a third of its loan amount; however, that option would not <br />be a good policy to pursue, given the potential for fraud with that <br />type of arrangement. <br />Besides the options listed above, another alternative has been <br />pursued by staff. Since a number of people are on the waiting list <br />for SHIP loans, staff has contacted potentially qualified <br />applicants to determine if one would agree to assume the SHIP and <br />bank loans and buy the house. This would require bank approval. <br />As of this time, that effort has been unsuccessful. <br />Given these circumstances, planning staff and the county attorney's <br />office feel that bank foreclosure would be the best option. <br />RECOMMENDATION <br />Planning staff and the County Attorney's office recommend that the <br />Board of County Commissioners allow the bank to foreclose the <br />Marotta loan. <br />Community Development Director Bob Keating gave a brief <br />background of the SHIP loan program, noting that we have given out <br />a total of 131 loans and have encumbered $900,000 in loans. This <br />is the first time we have encountered a default of a loan. The <br />good news is that it looks like everything is going.to work out. <br />Staff has been working with other applicants and at least 5 have <br />considered assuming the loan. Even better news, the bank and the <br />builder have notified us that there is a cash buyer for the house <br />whereby both the County and the bank would be paid in full. It <br />appears that everybody will come out of this 100 percent. Director <br />Keating advised that it was staff's position to come to the Board <br />to get directives in how to proceed just in case the loan doesn't <br />close. Staff would like the Board to allow the bank to foreclose <br />if something happens and things fall through and the loan doesn't <br />close. <br />26 <br />JANUARY 9, 1996 <br />