HomeMy WebLinkAbout3083 RESOLUTION NO. 3 0 8 3
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, AUTHORIZING THE MAYOR AND CITY CLERK TO
PROVIDE INFORMATION TO THE CONTINENTAL SAVINGS BANK FOR
PURCHASE OR REFINANCE OF A CITY OF AUBURN EMPLOYEE'S
PRINCIPAL RESIDENCE LOCATED WITHIN THE AUBURN SCHOOL
DISTRICT.
WHEREAS, the City of Auburn will provide information to the Continental
Savings Bank for purchase or refinancing of a principal residence within the
Auburn School District for employees of the City of Auburn; and
WHEREAS, it is in the interest of the City to enter into the Continental
Savings Bank proposal as described in the attached Memorandum of
Understanding marked as Exhibit "A", attached hereto and by this reference
made a part hereof; and
NOW, Ti-IEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN,
WASHINGTON, IN A REGULAR MEETING DULY ASSEMBLED, HEREWITH
RESOLVES THAT:
Section 1. The Mayor and the City Clerk of the City of Auburn are
herewith authorized to execute the Memorandum of Understanding
marked as Exhibit "A" attached hereto and by this reference made a part
of so that the City can provide information to the Continental Savings
Resolution No. 3083
July 27,1999
Page 1
Bank for the purchase or refinancing of a principal residence within the
Auburn School District employees of the City of Auburn.
Section 2. The Mayor is hereby authorized to implement such
administrative procedures as may be necessary to carry out the
directives of this legislation.
DATED this ~-~"~ day of August, 1999.
CITY OF AUBURN
CHARLES A BOOTH
MAYOR
ATTEST:
City Clerk
Resolution No. 3083
July 27,1999
Page 2
APPROVED AS TO FORM:
City Attorney
Resolution No. 3083
July 27,1999
Page 3
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("Memorandum") is entered into between
The City of Auburn ("the City"), a Washington municipal corporation, and Continental
Savings Bank ("Continental"), a Washington Savings and Loan Association, as of
~ 1 '
the,.2 day of t~ a[.~ , 999.
The City and Continental hereby enter into this Memorandum of Understanding,
subject to City Council authorization, to memorialize their mutual intentions as 'follows:
1. Actions of Continental
'Continental shall continue to carry out, during the term of this Memorandum, the
program for financing home ownership as described in the document entitled City of
Auburn Employer-Assisted Housing Program ("Continental program"), a copy of which
is attached and incorporated herein by this reference. The Continental program shall be
available to all City employees, including new hires (collectively, "Eligible
Participants").
The Continental program shall include, without limitation, and in addition to any
terms contained in the document.entitled City of Auburn Employer-Assisted Housing
Program.
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For each Eligible Participant, a discount of one-half point off the regular
· loan fee customarily charged to any other borrower on a similar loan
transaction for the purchase or refinance of a principal residence for such
Eligible Participant within the limits of the Auburn School District. In
addition, the Eligible Participant shall not be charged an interest rate
(computed before taking account of loan fees) higher than any other
borrower would customarily be charged on a similar transaction. The
discount shall not apply to purchases or refinances of properties outside
the Auburn School District.
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Delivery to the City of a sufficient quantity of materials describing the
Continental program for delivery to all Eligible Participants, as well as a
copy of all materials used in the Continental program. Any such materials
shall be subject to the prior approval of the City, not to be unreasonably
withheld. Except for any materials required by law or materials whose
content must meet certain legal requirements, any materials prepared by
the City for this Continental program shall be subject to the prior approval
of Continental, which shall not be unreasonably withheld.
Exhibit "A", Resolution No. 3083
Co
Full compliance by Continental with all Fair Housing and
nondiscrimination laws and regulations which are hereby incorporated by
reference.
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Evaluation of all Eligible Participants for their qualification for the
Continental programs described in the Continental program, attached to
and incorporated herein.
Actions of the Ci_ty
ao
The City shall announce to all Eligible Participants the availability of the
program as an incentive to home ownership within thc Auburn School
District for such emplOyees and members.
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The City shall deliver to all Eligible Participants materials prepared by
Continental describing the Continental program, subject to the City's
approval in advance. The City shall not be required and is not agreeing to
deliver materials describing services unrelated to home mortgage loans.
The City shall place notices in departmental newsletters, in new employee
orientation packets and on bulletin boards in appropriate locations
describing the Continental program.
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The manner of communication with, and distribution of materials to, City
employee union members may be subject to negotiation or bargaining with
unions. The city shall use its best efforts to obtain any union consents or
approvals necessary to carry out the foregoing, and shall encourage unions
to provide information to City employees in union publications, but the
City. shall not be obligated to take any action that might violate any
collective bargaining agreement or labor law or regulation.
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The City shall not be responsible for any costs or expenses incurred by
Continental in connection with the Continental program.
The City hereby agrees that Continental shall have the exclusive right to
provide mortgage services to Eligible Participants under the Continental
Program, and that no other lender shall participate in the program without
the express written consent of Continental.
3. Term of the Continental Program
The Continental Program shall continue indefinitely or until terminated by either
the City or Continental with adequate notice, as defined in Section 4. Neither party is
committed to any further actions after the termination of the Continental program.
Termination shall not adversely affect any pending loan application or closing.
4. Termination, Amendments and Modifications
This agreement and the obligations of all parties hereunder may be terminated
without cause by the City or the. lender by providing thirty (30) days advance written
notice served on the other parties by first class mail addressed as follows:
To the City:
Brenda Heineman
Personnel Director, City of Auburn
25 West Main
Auburn, WA 98001-4998
To Continental Savings Bank.'.
LeeAun E. Main
Continental Savings Bank
930 S. 336t" St., Ste "A"
Federal Way, WA 98003-6384
This agreement may be amended or modified at any time by written agreement of
all of the parties hereto.
In order to signify their mutual intentions as set forth above, the parties have
signed this Memorandum of Understanding as of the day and year first above written.
The 'City of Auburn
Charles A. Booth
Mayor, City of Auburn
Continental Savings Bank
By: .~
Richard W.H. Bennion
Executive Vice President
Approved As To Form:
City Attomey
Proposal for
City of Auburn
Employer-Assisted
Housing Program
A~s Presented by:
LeeAnn E. Main
Loan Officer
~~ Gontinental
,~-~_ SavingsBank ,0,~
Aqency Information_
Please provide the following information about your agency:
· Applicant agency name, address and phone number:
Continental Savings Bank
601 Union Street, Suite 2000
Seattle, WA 98101
Names of the agency's principal officers:
Walt Williams - Chairman Emedtus
Dick Swanson - President and CEO
Brian Dempsey -Vice Chairman
Bruce Williams - Executive VP and CO0
Names and titles of employees who will be responsible for Auburn's program:
LeeAnn E. Main, Loan Officer
Michelle Caputo, Loan Officer
Address at which Auburn's program staff will be located:
930 S. 336~ St., Ste. A
Federal Way, WA 98003
A_.qency Qualifications
Please submit a copy of your company's corporate mission statement:
"We build a better community by helping people achieve their dreams of acquiring a
home and realizing financial security."
Please submit a copy of your company's annual report for the most recent 'reporting year.
Continental Savings Bank is not a publicly-held corporation, and therefore does not
make it's annual report public. Continental Savings Bank is a wholly owned subsidiary of
Continental, Inc, a privately held company, whose largest stockholder is it's employee profit-
sharing fund. Continental Inc. was founded in 1921, and currently has assets of $1.2 billion.
Additional financial information is available upon request. 1998 Audited Consolidated Fir~ancial
Statement is attached. Continental Savings Bank holds the following ratings:
Community ReinvestmentAct "Outstanding"
Bauer Financial Reports' "Five-star" rating
IDC Financial Services "Superior" rating
Please submit a summary of your company's origination and servicing volumes for the
most recent reporting year:
Continental Savings Bank originated $1,5 billion in single family permanent residential.
mortgages in 1998 and $272 million in construction and land loans. Continental's 1998
servicing portfolio is $4.6 billion.
What agencies is your company appr°ved by or affiliated with (FHA, Fannie Mae, Federal
Home Loan Bank, VA, etc.)?
Continental is FHA, VA, FNMA, GNMA, FHLMC, and WSHFC approved, as well as
being a member of the Federal Home Loan Bank. We have achieved national recognition for
our leadership in the Affordable Housing arena.
What is your knowledge of, and involvement with, relevant programs offered by agencies
such as Washington State Housing Finance Commission (VVSHFC), HoUsing and Urban
Development (HUD) and Fannie Mae.
Continental has consistently been the leading lender in Washington for WSHFC
Housekey programs. Additionally, Continental has a strong relationship with Fannie Mae, and
consequently enjoys-a number of contract variances that allow for more flexible underwriting of
their loan products, as well as .participation in a number of pilot programs, such as their new all-
in-one construction program, as well as their affordable housing product line, such as the Flex 97
and the Co .mmunity Homebuyers program. We are oneof the nation's leading FHA 203(k)
lenders.
In accordance with the Home Mortgage Disclosure Act, please provide the racial
distribution of all King County home loans made by your company for ~997 and the first
half of ~998. In addition, list the mortgage rejection percentage rate and ratio of
minorities and Caucasians.
(1) % (2) % (3) %
Applications Originated Denied
.8 .4 21.4
American Ind./Alaskan 6.9 6.5 13.:2.
Asian/Pac. Islander 4.6 4.3 16.0
Black 2.3 2.4 2.4
Hispanic 1.0 .9 5.6
Other 15.7 14.6 12.4
Minority 79.7 81.9 5.2
White 4.6 3.6 12.3
No Info
(t) Percent of Total number of applications (2) Percent of Total number of originations
(2) Number of Denied Applications as a Percent of Number of Applications for line item.
Note: Approved not accepted and With~lrawn/Incomplete statistics are not included.
Describe your experience, if any, with employer-assisted housing programs, either with
your own employees or for the employees of other corporations. Please provide contact
names for any corporate clients. ,
Continental has established a special loan origination unit to administer employer-
sponsored homeownership programs in the Puget Sound area. We currently have seven
employer client relationships established. They are:
The City of Seattle
Seattle Education Association
Providence Medical Center - Puget Sound Service Area
Seattle Community College District
Seattle Housing Development Consortium
Greater Seattle Church Council
University of Washington
In addition, we have a limited program available to the membership of AFL-CIO
affiliated trade unions, and work closely with the King County Labor Council to provide outreach
to their'membership. We have als~ established an employer-sponsored homeownership
program in Boise, Idaho, modeled after the Hometown Home Loan program in Seattle.
Please describe any additional information you feel would be helpful to us in assessing
your ability to successfully carryout this program.
The success of any employer-sponsored homeownership program is directly related to
the marketing strategies implemented for the program. Several years of expensive trial and
error have taught us the most effective marketing techniques, and have helped to build
successful programs for other clients.
Mort_qa.qe Products
MORTGAGE PRODUCTS
List the mortgage financing products or options you currently offer the general public, i.e.
~5 and 30 year fixed, ARM's, etc. What will you offer Auburn employees under this
program?
Continental Savings Bank is pleased to offer a full line of mortgage products to Auburn
employees. Here is a listing of products currently offered to the general public that would be
made available to Auburn employees:
Conforming Fixed Rate'
Conforming ARM's
Conforming Rehab
Jumbo Fixed Rate
Jumbo ARM's
FHA Fixed Rate
FHA ARM
VA Fixed Rate
15 and 30 year
1 year, 5 year], 7 year and 10 year
15 and 30 year
15 and 30 year
1 year, 5 year, 7 year and 10 year
15 or 30 year
1 year with 1% annual payment cap
15 and 30 year
In addition, we offer a number of special programs:
Conforming Portfolio
Jumbo Portfolio Rehab
Investor Rehab
Investor Rehab. ARM
FNMA All-in-one
Portfolio All-in-one
Construction to Perm
Portfolio ARM's
Purchase Money Second
Bridge Loan
Portfolio products enable us to
financing which does not fall within the
guidelines.
15 and 30 year
15 and 30 year
15 and 30 year, Jumbo and Conforming
I Year
(Pilot program) 30 year term
15 and 30 year, Jumbo and Conforming
I year, 3 year, 5 year, and 7 year options
15 year fixed, or 10 yr. Balloon w/30 year amort.
1 year
offer more flexible underwriting to our clients who require
secondary market (Fannie Mae & Freddie Mac)
The following Affordable Housing products are available to first-time homebuyers and
borrowers with moderate .incomes:
WSHFC Housekey FHA or Conventional, 3% down payment
first-time homebuyers
RHS Rural Housing 0 down, 30 years, rural areas only
FannieMae Flex 97 3% down payment may be borrowed or gifted
Are your rates and points competitive with other local lenders? What will you offer
Auburn employees?
Continental conducts a weekly market survey to ensure that our rates and Points are
always competitive with those offered by other leading lenders in the area. Auburn employees
would receive market rate pricing from our retail rate sheet. No interest rate adjustment will be
made to offset the discounts being offered under'the program.
What are Your standard discount fees or points? How much of this is for an origination
fee? What will you offer Auburn employees?
Continental Savings Bank charges a 1% origination fee on each loan. A reduction of
50% of this loan fee will be offered to Auburn employees. This fee reduction may be applied to
discount points rather than origination fee on government loans in order to provide maximum
benefit to the borrower. In addition, Auburn employees would receive a discounted fee on the
buyer's side of the escrow fee on transactions closed through participating escrow companies, as
well as a discount on the credit report ranging from $15 to $60. Continental will work with other
vendors such as Appraisers, Inspectors, etc. to provide discounted services within the Auburn
School District. Appraisal fees may vary, however, depending upon the type and location of
property (waterfront homes, 2-4 units, rehab appraisals, etc. require higher fees).
Overage on interest rate or discount points will be prohibited per the terms of the
Memorandum of Understanding. Our rate sheet will be available for review upon request, should
a client wish to verify that all program discounts are being offered based upon published rates.
Do you offer mortgages up to 95% LTV? Will you offer this to Auburn employees?
Continental Savings Bank is authorized to originate loans under the Flex 97 program per
our contract with Fannie Mae. We also offer the Fannie 97, which is available to households
with incomes under 120% of median. For households over 120% of median, we offer a portfolio
version of the Fannie 97. Also, FHA allows for 97% LTV. FHA recently increased their loan
limits to $208,800 in King County, making their program much more viable. Zero down loans are
available with VA financing, or under the RHS Rural Housing Program. The RHS program may
also be originated under the Housekey program, thus providing a below-market interest rate to
the borrower. "
How long do you guaranty th'~ rate? Are extended rate guarantees available? If so, is
there a fee? What will you offer Auburn employees?
Continental does not require a fee for extended locks. Locks are typically available for
15, 30, 45, 60 and 90 day terms, but longer locks may be negotiated upon request'. Typically,
processing times do not exceed 30 days, so longer locks are generally unnecessary. Continental
does collect a lock deposit on refinances, but this deposit is refunded at the time the loan closes.
Proposed Service Delivery fo_r
Auburn's EmploYer-Assisted Housing Proc~ram
How do you determine the balance between the number of counselors needed and the
volume of transactions? Is this how you will determine it for Auburn's program?
The volume of business being transacted will determine the number of staff who will be
needed, to support the program. Affinity programs of this type require an extraordinarily high
level of customer service, and it is necessary to maintain sufficient capacity within the branch to
ensure that the customer service level remains high.
Describe how you currently take applications - by phone or in person or both? How do
you anticipate taking applications for Auburn's program?
We prefer to take applications face-to-face, so that the customer is able to get to know
their loan officer and feels more comfortable about the process; however, we often take
applications by mail, fax or phone.
Describe your proposed approval process for, City of Auburn employees under this
program.
We strongly recommend customers get pre-approved for financing before shopping for a
home. This eliminates much of the stress associated with mortgage financing and the home
purchase process. We will offer free pre-approvals to City of Auburn employees. City
employees who provide us with the necessary information at application can expect loan
approval within 72 hours of application.
Describe the options City of Auburn employees would have prior to and during the
application process.
The borrower will have the Option to change loan programs at any time prior to closing.
The customer also has the option to float or lock their rate at anytime prior to closing, or to adjust
the amortization term of their loan.
Describe your underwriting guidelines.
Since the majority of our loans are sold in the secondary market, our underwriting
guidelines conform to those established by our investors and insuring, agencies (FannieMae,
FHLMC, FHA and VA).
However, we have been successful in negotiating with our investors to achieve more
flexible underwriting guidelines for many of our products. This flexibility often allows us to
approve a loan using higher ratios than most other lenders can use, accept cash-on-hand to
close in some cases, and to reduce the amount of documentation normally required.
Our portfolio underwriting guidelines are based upon secondary market guidelines, but
the underwriting manager, or a member of senior level management has the authority to over-
ride any aspect of the portfolio guidelines allowing us total flexibility for loan alSproval, provided
we feel that the loan will be an acceptable risk and that the client won't be jeopardized by
approving the loan.
Describe your PMI options
Continental has elected to limit our PMI providers to three, thus ensuring a higher level
of service from all of them. Approved PMI companies are currently: PMI, MGIC, and GE.
What phone service would you provide Auburn employees for inquiries and mortgage
services? What procedures do or'will you have in place to accommodate overflow
volume to reduce the carl "hold" time for our employees?
A special "Hotline" will be used which will ring to a chime in the department. The tone of
the chime signals in incoming customer call. Floor duty is assigned on a rotational basis among
the loan officers, The loan officer on duty is responsible for answering the incoming customer
call. If the "floor" officer is not available, the call will be answered by any available loan officer,
thus avoiding voice mail. Callers will have their calls answered immediately 99% of the time.
What are your hours of operation? Can you make allowances for the fact that many
Auburn employees work swing or graveyard shifts?
Our published hours of operation are 8:00 am to 5:00 pm. We always make allowances
for customers who work swing or graveyard shifts. Hotline hours are 8am until 7:30pm
weekdays, and 9am to 3pm on Saturdays. The Hotline is always staffed with a loan officer
during these hours. These hours are for initial set up of the Auburn program and may be
increased if the program requires it.
Describe any proposed streamlined documentation procedures for this program.
Most loans can be approved with a minimum of documentation, usually consisting of two
paystubs, the past two years W2's, two months most recent bank statements.
Describe the full mortgage process from application through .closing. How many people
will be involved? How will each loan be tracked?
Continental recently implemented an automated underwritir~g system that can expedite
the underwriting process and often, allows us to provide approval within 48 hours or less of
application. It is our expectation to be able to offer approval at the time of application for the
majority of our borrowers by year-end.
However, borrowers with complicated credit histories, or who are short of the required
cash needed to close may experience longer timeframes to loan approval to allow us adequate
time to build a case for loan approval.
Once the borrowers loan has been credit approved, it only remains for them to' find a
property and have an offer accepted. At that time we order an appraisal, title, insurance, and
clear all original underwriting conditions before preparing final closing documents. It is generally
not necessary for the loan to be re-underwritten unless the terms have changes substant a!ly
from the time of original approval:'
Transaction deadlines are monitored by .both the Loan officer and the processor, who are
jointly responsible to make sure the loan closes within the timeframe required by the terms of the
earnest money agreement or interest rate lock. Usually the customer will deal with only two
people - the loan officer and the processor. At the time the transaction is closed, the borrower
will meet with the escrow officer, who is usually employed by another company.
What is the average loan closing time? If necessary, do you use express service to mail
documents?
The length of time to closing is generally determined by the terms of the purchase and
sale agreement, or the customer's preference. It is not uncommon to close a transaction within
two weeksfrom the signing of the purchase and sale agreement. Express mail may be used if
necessary.
Do you retain the servicing of the loans you originate?
It is Continental's policy to retain the servicing of all of the loans we originate. The sale
of servicing, however, is an integral part of the mortgage lending industry, and all loans are
subject to Sale if it 'is determined to be in the best interest of the 'company to do so. Our
servicing department is located on the 7TM floor of the Two Union Square building in Seattle, and
they pride themselves on providing excellent service to our customers.
However, occasionally we are.able to offer the customer_ a better rate if we sell the .loans
servicing released. These programs are generally certain ARM products and some Jumbo
products. Since our primary goal is to provide the' best terms to the customer, we will
recommend these products if they are better suited to the customers needs. We also have the
ability to broker, if a customer needs a program we don't offer. In the event we broker a loan, we
would not retain the servicing.
Can tax escrows be .waived?
Escrows can be waived on conventional or portfolio loans which have 80% LTV or less.
An additional .25% in discount (points) is charged on loans where escrow reserves have been
waived. This is standard in the industry.
Can you offer checking or payroll deduction if we choose to offer it?
It isn't possible to arrange payroll deduction, but automatic deduction from a checking or
savings account is easily accomplished.
Describe how your employees will be trained on the City of Auburn Program.
Very little training will be needed, since we manage similar programs for other clients.
However, in the event staff is added (as would probably be the case), Continental has a
comprehensive 80 hour mandatory training program. Specific training about the Auburn
program would take place on a one-to-one basis with the department manager.
Do you have quality assurance procedures in p/ace? What safeguards will you have in
place for the City of Auburn program?. Submit sample forms and describe your process
for handling complaints.
Customer Satisfaction surveys are automatically sent out upon completiOn of each,.
transaction. These surveys provide valuable information concerning our customer service, and
the i'esults of the survey can be made available to the City if requested. Complaints will be
handled by the manager of the Federal Way Branch. Within the past five years, we haVe only
had one complaint, and that was from a customer who purchased a home for $20,000 more than
they were approved for and was required to obtain a co-signer in order to qualify.
How many different people will our employees deal with throughout the mortgage
process under this program?
Generally two - the loan officer and the processor.
Describe your proposed reporting process to Auburn. Please provide a sample report if
possible.
Continental has a very talented corporate marketing group. They will assist in the
creation of collateral materials, as well as articles, press-releases, promotional press
conferenCes, trade,show booths, and a web page. We can make available a customized web
Page that will allow City employees to obtain information on the program 24 hours a day.
Customers can also get pre-qualified via the web page, ask a question about the program or a
general queStiOn about their indiVidual circumstances, and even make loan application
electronically, if they choose to do so.
here are significant costs involved in the creation of marketing materials, they
AIt~ou.gh t ............ o,, all costs are the responsibility of Continental
are considered an expense el ~.~ ~,,,~,o,, .... d
Savings Bank.
Program Summary_
In your cp.. mpany's philosophy, what are the key ingredients needed to make Auburn's
program successful?
The most important factor will be the development and implementation of a long-term,
comprehensive, marketing plan. It is imperative that this plan involve a dedicated contact
person in the City who will make it a priority to assist the lender with the implementation of the
marketing plan, and who will be responsible for the co-ordination of the promotion of the
program.
Based on the above information, including your company's philosophy, please provide a
concise summary of the key aspects of your program proposal.
The overall aspect of this program is to offer the City of Auburn employees an affordable
way to purchase, refinance or remodel within specified boundaries. This will be done by working
as a team with the City representative to make the City employees aware of this program
through long-term, comprehensive marketing and promotion of this employee benefit.