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THE CITY OF <br /> " CITY COUNCIL AGENDA REPORT <br /> pL£ASANTONo <br /> June 19, 2012 <br /> City Manager <br /> TITLE: APPROVE WRITE-OFF OF $31,175 UNCOLLECTABLE ACCOUNT <br /> RECEIVABLE FROM THE CITY DOWN PAYMENT ASSISTANCE <br /> PROGRAM <br /> SUMMARY <br /> On October 18, 2011, the City Council adopted a Policy for Write-Off of Uncollectible <br /> Accounts Receivable. This policy requires that the write-off of any individual <br /> uncollectible account receivable that exceeds $10,000 must be approved by the City <br /> Council. <br /> A first-time homebuyer utilizing the City's Down Payment Assistance (DPA) with a City <br /> $40,000 second mortgage loan defaulted on the primary mortgage in early 2011. The <br /> primary lender foreclosed in 2012, and the remaining unpaid principal ($31,175) on the <br /> City's loan, as a junior security, was extinguished. The City's loan was non-recourse, <br /> so the loan has been legally extinguished and is uncollectable from the borrower. <br /> RECOMMENDATION <br /> Staff recommends the City Council approve the write-off of the account receivable <br /> indentified herein. <br /> FINANCIAL STATEMENT <br /> The recommended write-off will result in the reduction of City assets of $31,175 in the <br /> Lower Income Housing Fund (Fund 272). <br /> It has been noted that the write-off of an uncollectible accounts receivable from the <br /> City's accounting records does not constitute forgiveness of the debt or a gift of public <br /> funds. <br />