I first learned of Scott Ochoa's sweetheart loan form the City of Monrovia several years ago when I was a contributing blogger at The Foothill Cities Blog.
Attached here I have uploaded several of the relevant documents, including the promissory note.
Here's the most important section:
The monthly payments shall initially be in an amount equal to two fifths of the interest on the Principal balance, (i.e., interest at the rate of two percent (2.0%) per annum); however, upon 30 days' prior written notice to Lender, Borrower may increase the monthly payments to a sum sufficient to fully amortize the outstanding Principal and pay all interest (including interest accrued as of the date of the first such increased payment) based on a 30-year loan amortization schedule and a 5.0% annual interest rate. All interest not paid by the foregoing payments shall accrue and shall be payable upon the Maturity Date (or acceleration thereot); however, such accrued interest shall not itself bear interest.
So, with the sale of the house, Ochoa owes the taxpayers of Monrovia eight years of 3% interest in arrears - PLUS the principal!
Also in the documents from that period is a repayment history which shows Ochoa was repaying the City at a rate of $460 a month on that $275k loan. Is it any wonder he's now in arrears?
Instead of making payments like the rest of Monrovia would - full interest plus principal - Ochoa paid interest only at an extremely generous rate. And now it seems even that wasn't generous enough to a guy who was paid nearly a quarter-million per year.
As a taxpayer and homeowner, I must ask: Why are we even having this discussion?
