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80% of the area median. However, if the property is sold during the affordability <br />period to a non - qualified homebuyer to be used as their principal residence, the net <br />sales proceed S2 or "equity" will be divided equally between the seller and the County. <br />If the initial County contribution does not have to be repaid because the sale occurs <br />more than 40 years after the County contribution is made, then the seller and the <br />County will divide the entire equity realized from the sale. <br />Any proceeds from the recapture of funds will be used to facilitate the acquisition, <br />construction, and /or rehabilitation of housing for the purposes of promoting <br />affordable housing. <br />3. If the PI will use HOME funds to refinance existing debt secured by <br />multifamily housing that is that is being rehabilitated with HOME funds, it <br />must state its refinancing guidelines required under § 92.206(b). The <br />guidelines shall describe the conditions under which the PI will refinance <br />existing debt. At a minimum these guidelines must: <br />a. Demonstrate that rehabilitation is the primary eligible activity and ensure <br />that this requirement is met by establishing a minimum level of <br />rehabilitation per unit or a required ratio between rehabilitation and <br />refinancing. <br />b. Require a review of management practices to demonstrate that <br />disinvestments in the property has not occurred; that the long -term needs <br />of the project can be met; and that the feasibility of serving the targeted <br />population over an extended affordability period can be demonstrated. <br />c. State whether the new investment is being made to maintain current <br />affordable units, create additional affordable units, or both. <br />d. Specify the required period of affordability, whether it is the minimum 15 <br />years or longer. <br />e. Specify whether the investment of HOME funds may be jurisdiction -wide <br />or limited to a specific geographic area, such as a neighborhood identified <br />in a neighborhood revitalization strategy under 24 CFR 91.215(e)(2) or a <br />Federally designated Empowerment Zone or Enterprise Community. <br />f. State that HOME funds cannot be used to refinance multifamily loans <br />made or insured by any federal program, including CDBG. <br />RECAPTURE PROVISIONS <br />The HOME recapture provisions are established at §92.253(a)(5)(ii), and unlike the <br />resale approach, permit the original homebuyer to sell the property to any willing <br />buyer during the period of affordability while the PI is able to recapture all or a <br />portion of the HOME - assistance provided to the original homebuyer. Two key <br />concepts in the recapture requirements — direct subsidy to the homebuyer and net <br />proceeds - must be understood in order to determine the amount of HOME <br />assistance subject to recapture, and the applicable period of affordability on the unit. <br />The recapture approach requires that all or a portion of the direct subsidy provided <br />to the homebuyer be recaptured from the net proceeds of the sale. <br />2 New sales proceeds equals the gross sales price less selling costs, the unpaid principal amount <br />of the original first mortgage and the unpaid principal amount of the initial County contribution and <br />any other initial government contribution secured by a deferred payment promissory note and <br />deed of trust. <br />Y 2013 -2014 Action Plan 37 <br />