Special meeting of HOME consortium
From the city of Asheville:
A special meeting of the HOME Consortium Board will be held on Wednesday, April 24, 2013 from 3:00 PM to 4:00 PM in the 6th Floor Training Room in the City Hall Building.
The primary agenda item for this meeting is the HOME Recapture Agreement. A draft of the proposed agreement is attached. There should be time to address other business as needed; however, a full meeting will be planned for June.
If you have any questions contact Jeff Staudinger at 259-5723.
Asheville Regional Housing Consortium will comply with the recapture and/or resale provisions outlined in the HOME Investment Partnerships program in accordance with 24 CFR 92.254(a) (4). The Consortium elects to exclusively use “recapture” provisions. Under the “recapture” provisions, if the property is sold or transferred during the affordability period, the original HOME-funded “direct homebuyer assistance” must be repaid at sale and used for other affordable, HOME-eligible housing activities.
HOME-funded direct homebuyer assistance includes any HOME funds used to provide downpayment assistance, closing cost assistance, or direct financing to the assisted homebuyer(s). It also includes any reduction in the sales/purchase price below market value. All direct assistance to the buyer will be included in the junior loan and deed of trust. Direct assistance to the buyer does not include any HOME funds used towards the development of a HOME-unit covering costs in excess of the property’s value upon completion.
The process for disposition of any and all HOME-funded direct assistance provided, including any program income used, will be evidenced by a written agreement executed between the Homebuyer(s), Consortium and CHDO or non-profit developer for the entire period of affordability. It will include at a minimum, period of affordability, principal residences requirement, terms and conditions of the recapture requirement and directions on program income use. The written agreement will be distinct from, separately, enforceable, and in addition to loan documents, including a note and deed of trust, between the homebuyer(s) and the CHDO or subrecipient providing direct homebuyer assistance.
The recapture provisions will ensure that each HOME assisted unit will remain affordable for at least a minimum period of time determined by the schedule below, established in accordance with 24 CFR Part 92.254(a)(4):
HOME Funds Provided as Direct Assistance
Period of Affordability
Less than $15,000
$15,000 - $40,000
More than $40,000
In accordance with the applicable homebuyer recapture provision outlined in 24 CFR Part 92.254, the Asheville Regional Housing Consortium has adopted the following Recapture Provisions for its HOME assisted homeownership activities that are “Direct Homebuyer Assistance”, for which only the “Direct Homebuyer Assistance” is subject to these Recapture Provisions:
• All CHDO’s, subrecipients and other non-profit entities who administer HOME assistance programs will follow these recapture provisions that have been adopted by the Consortium.
• The Consortium requires the recapture of its HOME-funded direct homebuyer assistance from net sales proceeds when the original HOME-assisted homebuyer(s) sells or otherwise transfers ownership of the unit during the affordability period, either voluntarily or involuntarily, i.e. foreclosure or short sale. If the assisted homebuyer(s) do not maintain their status as owner occupants, the HOME project is out of compliance and the full HOME investment in the project, including any direct homebuyer assistance and any development subsidy, are subject to repayment.
• Net sales proceeds are the cash funds remaining from the sale of the property by the original homebuyer less the repayment of the outstanding balance on any superior mortgage(s) and seller’s closing cost. The amount of recaptured funds from net proceeds may not exceed the amount of net proceeds available from the sale. When net sales proceeds are equal or exceed the original HOME-funded direct homebuyer assistance (plus any shared appreciation per Section E(f)(i) below), that assistance will be repaid in full. Any net sales proceeds remaining after the recapture of the direct homebuyer assistance and any shared appreciation will be returned to the original homebuyer(s).
• In the event the homebuyer sells the unit during the affordability period and the net proceeds are not sufficient to recapture the entire HOME-funded direct homebuyer assistance and any shared appreciation, all net sales proceeds will be recaptured.
• Housing that is acquired for homeownership using HOME funds will comply with the following:
• The purchase price may not exceed the HOME Maximum Purchase Price for single-family housing for the area.
• If repairs are necessary, the appraised value of the property (after rehabilitation) may not exceed the HOME Maximum Purchase price.
• The household must have an annual income of 80% or less of the HUD established area median, adjusted for household size.
• The property must be used as the household’s principal residence.
• The HOME assistance is limited to the minimum required to make the unit affordable.
• HOME-funded direct homebuyer assistance will be provided as loans in one of two ways. The HOME loan will extend for as long as the original homebuyer owns the home, including any period of ownership beyond the HOME affordability period. The local CHDO or subrecipient administering a homebuyer program for the City may choose among the following two options on a “program by program basis”, meaning that all of the units funded through a given CHDO or subrecipient must use the same form of assistance. The two loan structures include:
• A non-amortizing, non-forgivable, 0% interest rate, deferred second mortgage loan.
• A non-amortizing, non-forgivable deferred payment loan that will be repaid at the same rate as the appreciation of the value of the house. A home’s appreciation will be the difference between the original homebuyer’s purchase price and the price at which it is later sold. For example, a buyer received $10,000 in direct homebuyer assistance as part of their purchase of a home for $120,000. The initial buyer sells the house later for $150,000. The home’s value has appreciated by 25%, so the total repayment under the HOME loan will be $12,500 (subject to the availability of net proceeds per Section C).
• The recapture provision is enforced through execution of deed restrictions and liens, which identifies the period of affordability, primary residency requirement, and terms and conditions required when using the recapture provision, 24 CFR Part 92.254(a)(5)(i)(A). The City of Asheville, as a Participating Jurisdiction must be included as a party, along with the CHDO or subrecipient the written agreement associated with the HOME funds provided to eligible homebuyers. Any note or deed of trust documents, if not made in the City’s name, shall be assignable to the City by the funded CHDO or subrecipient, if the CHDO or subrecipient was no longer participating in the City’s HOME program, was in danger of closing, or had monitoring findings.
• Recaptured funds may be retained by the CHDO that developed and sold the house to the original buyer and must be used for HOME eligible activities in accordance with the requirements of the HOME statute and regulations. The funds are not considered “CHDO proceeds.”
• Recaptured HOME funds provided by a subrecipient, including non-profits that are not CHDOs, will be recaptured by the Consortium to be used for HOME eligible activities in accordance with the requirements of the HOME statute and regulations.
CHDO and Subrecipient financial records must include complete information on the receipt and expenditure of all recaptured funds, as well as all program income and CHDO proceeds. If the Subrecipient is allowed to retain program income, the program income must be disbursed before the City provides additional funds to the CHDO or Subrecipient.
Approved by the Asheville Regional Housing Consortium