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3.6 Information Provided to City. The financial and <br /> other information previously provided to the City by Borrower for <br /> the purpose of qualifying to purchase a Residence was true and <br /> correct at the time it was given to the City and remains true and <br /> correct as of the date of the execution of this Note. <br /> 4.0 The loan to Borrower which is evidenced by this Note is <br /> made as part of the City of Pleasanton Homeownership Assistance <br /> Program (PHAP). The Borrower's income under the Program shall be <br /> reviewed by the Lender after two years and five years following <br /> execution of this Note and each year thereafter. Except as <br /> stated in Section 4.2, all monthly payments of principal and <br /> interest shall be waived until five (5) years after the date of <br /> this Note was executed. <br /> 4.1 At the conclusion of the fifth year after the <br /> execution of this Note, Borrower shall begin principal and <br /> interest payments on the Note as specified in Section 1.0. Any <br /> payment of principal and /or interest shall not result in the <br /> proportion of the Borrower's income applied toward monthly <br /> housing costs, which include principal and interest on any first <br /> mortgage loan, private mortgage insurance, homeowner insurance, <br /> homeowners association fees and property taxes, exceed 38 percent <br /> of the Borrower's annual income. In the event that the required <br /> principal and /or interest payment due results in monthly housing <br /> costs in excess of 38% of the Buyer's annual income, the <br /> principal and /or interest payment due will be adjusted to an <br /> amount that will result in an income to housing cost ratio of 38 <br /> percent. However, Lender shall have the option to allow deferral <br /> of interest and /or principal payments or to allow partial payment <br /> of interest and /or principal payments as specified in Section 1.0 <br /> beyond the initial waiver period if necessary to address a <br /> financial hardship as determined by the City Manager. The method <br /> and amount of partial payment or length of additional deferment <br /> shall be determined by the Lender. <br /> 4.2 If, as determined by the initial two year review <br /> as stated in Section 4.0, the Borrower has acquired residential <br /> real property in addition to the Property or if the ratio of the <br /> Borrower's current housing costs to the Borrower's current gross <br /> monthly income has decreased by more than ten (10) percentage <br /> points below that ratio of housing costs to gross income which <br /> existed at execution of the Note, the Borrower shall be required <br /> to commence interest payments on the Note. At the time of the <br /> execution of this Note, the Borrower's monthly gross income is <br /> $2664•:7-1 and Borrower's monthly housing expenses in accordance <br /> with Section 5 Program Eligibility are $1,295.82 (without MCC <br /> credit of $176.00) Housing expense as a percentage of Borrower's <br /> monthly income is 37.49% (with MCC credit 32%). <br /> - 4 - <br />