Explanation
BACKGROUND: The City uses Community Development Block Grant Funds (CDBG), HOME Funds and other sources of funding to make loans for housing development and rehabilitation. A requirement for receiving CDBG, HOME and other funds for construction and rehabilitation loans from the City is to obtain hazard insurance for the buildings on the premises. An authorized agreement between the City and a mortgage servicing agent currently exists for the management of the City's loan portfolio for construction or rehabilitation loans. The servicing agent acts on behalf of the City and as such is responsible for insuring that mortgagees maintain such insurance. In the event that a claim is made for repairs, the City and/or its servicing agent may be included as payee.
Steps include obtaining a signed contract detailing the repairs along with the name and address of the homeowner. The insurance company then issues a check to the homeowner, City and at times the servicing agency. The City Treasurer will endorse the check and it will be forwarded to the servicing agency for escrow until such repairs have been completed. Under such circumstances, it is the responsibility of the servicing agent to handle funds received as part of the settlement claim by placing the insurance funds in escrow and disbursing them for payment of damage repairs following inspections of the repairs by Department of Development staff and acceptance of repairs by the property owner.
This ordinance authorizes the City to endorse checks received pursuant to a hazard insurance claim settlement relative to properties on which the City has a mortgage as part of the CDBG, HOME or other program and to convey the endorsed check to the servicing agent.
FISCAL IMPACT: There is no fiscal impact.
Title
To authorize the City Treasurer to endorse checks received by the Department of Development pursuant to a hazard insurance claim settlement relative to properties on which the City has a mortgage as part of the HOME, Community Development Block Grant and other programs and to convey the endorsed check to the servicing agent for appropriate disbursement; and to declare an emergency.
Body
WHEREAS, under the City loan programs funded with HOME, Community Development Block Grant (CDBG) and other sources it is a requirement that the mortgagee obtain hazard insurance sufficient to protect both the senior lien holder and the junior lien holder with an endorsement in favor of the City of Columbus "as their interest may appear"; and
WHEREAS, the City has an established agreement with a servicing agent for the servicing of its loans and pursuant to said agreement, it is the responsibility of the servicing agent to handle funds received as part of the settlement claim relative to said hazard insurance by placing the funds in escrow and disbursing them for payment of damage repairs following inspections of the repairs by the Department of Development staff and acceptance of the repairs by the property owner; and
WHEREAS, when a claim is made and settled relative to said hazard insurance, claim checks are made payable to the mortgagee, City of Columbus and the servicing agent, and require the endorsement of an authorized person on behalf of the City; and
WHEREAS, an emergency exists in the usual daily operation of the Department of Development, Housing Division, in that it is immediately necessary to the orderly operation and management of hazard insurance claim settlements to authorize the City Treasurer to endorse any settlement checks received and convey the check to the City's servicing agent to proceed with disbursement as described above, all for the preservation of the public health, peace, property, safety and welfare; Now, Therefore,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
Section 1. That the City Treasurer be and is hereby authorized to endorse any checks received as part of a hazard insurance claim settlement relative to mortgages possessed by the City pursuant to the established agreement between the City and its servicing agent for the servicing of construction and rehabilitation loans and mortgages under the CDBG, HOME and other programs.
Section 2. That prior to endorsement, staff of the Department of Development verifies that the appropriate repair work has been assessed and supporting documentation including property owner's name, address and nature of the work be provided along with the check to the City Treasurer.
Section 3. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is hereby declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor or ten days after passage if the Mayor neither approves nor vetoes the same.