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($2,000.00). A deed of trust may be executed as security for all Rehab Loans of Two Thousand Dollars ($2,000.00) or less when deemed desirable by BANK. Any such deed of trust shall cover the property which is to be rehabilitated. 5. BANK may disapprove a loan if the amount of the loan, together with existing prior encumbrances, exceeds eighty percent (80%) of the appraised value of the property. BANK may disapprove a loan if the property which is security for the loan is subject to encumbrances or has title defects which are objectionable to BANK. C. Loan Documents BANK shall use a form of Note and Deed of Trust which it customarily uses for property improvement loans and shall use such other loan documents which it deems necessary or desirable. D. ' Loan 'Disbursement On the date a Rehab Loan is made, BANK shall prepare one or more cashier's checks in the total amount of the Rehab Loan. The checks shall be in amounts which are designated by CITY. The designation of check amounts and payees shall be made by CITY using a form such as is set out in "Exhibit B," attached hereto.and by this reference incor- porated herein. Upon notification from CITY, any portion of the loan proceeds which is not intended for the rehabilitation work shall be credited to loan principal. Checks shall be disbursed to CITY, providing Borrower has given prior authorization. CITY shall disburse checks upon satisfaction that the work has been completed and notify BANK in writing of date of said disbursement in a form substantially similar to that set out in "Exhibit C," attached hereto and by this reference incorporated herein. E. Defaults In the event any payment due under the terms of a Rehab Loan is more than thirty (30) days delinquent, BANK shall notify CITY and CITY may elect to pay such delinquent payment on behalf of the Borrower. BANK may proceed with -4-