Current through Reg. 50, No. 13; March 28, 2025
(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.
