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183 <br /> <br />required by 24 CFR 92.254. For any homebuyer assistance activity implemented by <br />subrecipients or CHDOs, this recapture requirement shall also be used. <br />HOME affordability requirements are imposed based on the amount of direct HOME <br />subsidy pursuant to HUD regulations as follows: <br />Assistance under $25,000: 5-year affordability period <br />Assistance between $25,000 - $50,000: 10-year affordability period <br />Assistance over $50,000: 15-year affordability period <br />The amount subject to recapture is the direct HOME subsidy received by the homebuyer. <br />Direct HOME subsidy includes the HOME investment that enabled the homebuyer to <br />purchase the property. This includes down payment assistance, closing costs, or other <br />HOME assistance provided directly to the homebuyer or the difference between the fair <br />market value of the property (as determined by appraisal) and a reduced sales price, but <br />excludes any HOME assistance provided to develop the unit. <br />The recapture provision ensures that the entire amount of the City's direct HOME subsidy <br />to homebuyers is recaptured if the housing does not continue to be the principal residence <br />of the family for the duration of the applicable period of affordability (e.g., the home is sold, <br />the home is foreclosed, the assisted owner is no longer residing in the assisted residence, <br />or for any other breach of the agreement with the City). The HOME-assisted homebuyer <br />may sell their unit at any time during the period of affordability, to any willing buyer, and <br />at the price the market will bear. The recapture provision requires that the City’s direct <br />HOME subsidy and any interest due under the HOME loan (that has not previously been <br />repaid) is returned to the City from net proceeds, subject to the limitation that if there are <br />no net proceeds or the net proceeds are insufficient to repay the HOME investment due, <br />the City may only recapture the net proceeds, if any. Net proceeds are defined as the sales <br />price minus superior loan repayment (other than HOME funds), and any closing costs. <br />In the event of a mortgage default, a provision in the written agreement and long-term <br />affordability covenant stipulates that the City has the right of first refusal before foreclosure <br />and may use additional HOME funds or other resources to acquire the housing in order to <br />preserve the housing’s affordability. The home then will be resold to an eligible buyer with <br />a new long-term affordability covenant that imposes a period of affordability in accordance <br />with the total HOME investment, including the direct homebuyer assistance provided to the <br />homebuyer at the initial sale, plus any additional HOME funds invested to purchase the <br />property out of foreclosure. <br />Recaptured funds will be used for any HOME eligible activity. If the funds were provided <br />as a grant or zero interest loan, then the recaptured funds will be receipted into IDIS and <br />treated like program income, except that no portion of the funds will be used for <br />administrative costs. If the recaptured funds were provided as an interest-bearing loan, <br />EXHIBIT 1