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If the recipient is a homeowner and the problem causing the assistance to be ineligible cannot be corrected, a recipient who has defaulted on the requirements but wishes to remain in the dwelling may stipulate to reverting from the current loan structure and converting the loan into a conventional non -forgivable mortgage loan having a fixed term (between five (5) and fifteen (15) years), or into a deferred loan with repayment of principal and interest due at sale, refinance, or transfer of the property at the currently prevailing interest rate. Examples of an irremediable violation of a Forgivable Promissory Note are: • The homeowner is renting the property and is unwilling to terminate the lease. • The homeowner will not allow final inspection. • The homeowner received more monies than what was reported in the application for federal assistance. For recipients of assistance under the Buyout or Acquisition Programs, if the recipient refuses a repayment plan or ceases payments on the repayment plan, the City will institute legal proceeding to recover the funds since there will be no mechanism available for the City to lien a property that was already sold. If a sub -grantee has expended funds ineligibly and a corrective action cannot be determined, then the City will negotiate a zero interest loan repayment plan with the sub -grantee. Repayment Agreement If violations are irremediable, then the City may seek repayment of all ineligible assistance received by a recipient, plus the cost of collection to the fullest extent permitted by law. The City's efforts to collect ineligible assistance may include repayment agreements, court orders, garnishment of wages and/or income tax returns, the use of private or public collection agents, intergovernmental agreements with the BCC Partner, and any other remedies available, on a case-by-case basis. The recipient may repay BCC in a lump -sum payment of the entire amount or by entering into a repayment agreement. A recipient who is a homeowner and who has defaulted on the rehabilitation requirements but wishes to remain in the dwelling, may agree to converting the current loan into a conventional non -forgivable mortgage loan having a fixed term (between five (5) and fifteen (15) years) at the currently prevailing interest rate. A repayment agreement is a formal document prepared by the City and signed by the recipient, in which the recipient acknowledges the debt and the amount owed. The agreement specifies: 1. The amount to be paid, including processing fees; 2. How the amount owed is to be repaid; 3. Where payments are to be sent; 4. The specific date each month when the payment is due; and 5. Consequences of delinquent or defaulted payments. 26 L \FRIEDLAN\My Documents L\CDBG\2016 CDBG-DR IGA Louisville FINAL docx 3/15/2016