(a) Recapture is the primary method the Department
will use to recoup HOME funds under 24 CFR §92.254(a)(5)(ii).
(b) To ensure continued affordability, the Department
has established the recapture provisions described in paragraphs (1)
- (4) of this subsection and further defined in 24 CFR §92.254(a)(5)(ii).
(1) In the event that a federal affordability period
is required and the assisted property is rented, leased, or no member
of the Household has it as the Principal Residence, the entire HOME
investment is subject to recapture. The Department will include any
loan payments previously made when calculating the amount subject
to recapture. Loan forgiveness is not the same thing as loan payments
for purposes of this subsection.
(2) In the event that a federal affordability period
is required and the assisted property is sold, including through a
short sale, deed in lieu of foreclosure, or foreclosure, prior to
the end of the affordability period, the Department will recapture
the available amount of net proceeds based on the requirements of
24 CFR §92.254, and as outlined in the State's One Year Action
Plan.
(3) The Household can sell the unit to any willing
buyer at any price. In the event of sale to a qualified low-income
purchaser of a HOME-assisted unit, the qualified low-income purchaser
may assume the existing HOME loan and assume the recapture obligation
entered into by the original buyer if no additional HOME assistance
is provided to the low-income purchaser. In cases in which the subsequent
homebuyer needs HOME assistance in excess of the balance of the original
HOME loan, the HOME subsidy (the direct subsidy as described in 24
CFR §92.254) to the original homebuyer must be recaptured. A
separate HOME subsidy must be provided to the new homebuyer, and a
new affordability period must be established based on that assistance
to the buyer.
(4) If there are no net proceeds from the sale, no
repayment will be required of the Household and the balance of the
loan shall be forgiven as outlined in the State's applicable One Year
Action Plan.
(c) The Department has established the resale provisions
described in paragraphs (1) - (7) of this subsection, only in the
event that the Department must impose the resale provisions of 24
CFR §92.254(a)(i).
(1) Resale is defined as the continuation of the affordability
period upon the sale or transfer, rental or lease, refinancing, and
no member of the Household is occupying the property as their Principal
Residence.
(2) In the event that a federal affordability period
is required and the assisted property is rented or leased, or no member
of the Household has it as the Principal Residence, the HOME investment
must be repaid.
(3) In the event that a federal affordability period
is required and the assisted property is sold or transferred in lieu
of foreclosure to a qualified low-income buyer at an affordable price,
the HOME loan balance shall be transferred to the subsequent qualified
buyer and the affordability period shall remain in force to the extent
allowed by law.
(4) The resale provisions shall remain in force from
the date of loan closing until the expiration of the required affordability
period.
(5) The Household is required to sell the home at an
affordable price to a reasonable range of low-income homebuyers that
will occupy the home as their Principal Residence. Affordable to a
reasonable range of low-income buyers is defined as targeting Households
that have income between 70 and 80 percent AMFI and meet all program
requirements.
(A) The seller will be afforded a fair return on investment
defined as the sum of down payment and closing costs paid from the
initial seller's cash at purchase, closing costs paid by the seller
at sale, the principal payments only made by the initial homebuyer
in excess of the amount required by the loan, and any documented capital
improvements in excess of $500.
(B) Fair return on investment is paid to the seller
at sale once first mortgage debt is paid and all other conditions
of the initial written agreement are met. In the event there are no
funds for fair return, then fair return does not exist. In the event
there are partial funds for fair return, then the appropriate partial
fair return shall remain in force.
(6) The appreciated value is the affordable sales price
less first mortgage debt less fair return.
(A) If appreciated value is zero, or less than zero,
then no appreciated value exists.
(B) The initial homebuyer's investment of down payment
and closing costs divided by the Department's HOME investment equals
the percentage of appreciated value that shall be paid to the initial
homebuyer or persons as otherwise directed by law. The balance of
appreciated value shall be paid to the Department.
(7) The property qualified by the initial Household
will be encumbered with a lien for the full affordability period.
(d) In the event the housing unit transfers by devise,
descent, or operation of law upon the death of the assisted homeowner,
forgiveness of installment payments under the loan may continue until
maturity or the penalty amount for noncompliance under the conditional
grant agreement may be waived, if the new Household qualifies for
assistance in accordance with this subchapter. If the new Household
does not qualify for assistance in accordance with this Chapter, forgiveness
of installment payments will cease and repayment of scheduled payments
under the loan will commence and continue until maturity or payment
of a penalty amount under the conditional grant agreement may be required
in accordance with the terms of the conditional grant agreement.
(e) Forgiveness of installment payments under the loan
may continue until maturity or the penalty amount under conditional
grant agreement may be waived by the Department if the housing unit
is sold by the decedent's estate to a purchasing Household that qualifies
for assistance in accordance with this Chapter.
(f) Grants subject to conditional grant agreements
are not subject to the entire penalty amount in the event the property
is no longer the Principal Residence of any Household member.
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