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55 <br /> • Specify the required period of affordability, whether it is the minimum 15 years or longer. <br /> • Specify whether the investment of HOME funds may be jurisdiction-wide or limited to a <br /> specific geographic area, such as a neighborhood identified in a neighborhood revitalization <br /> strategy under 24 CFR 91.215(e)(2) or a Federally Designated Empowerment Zone or <br /> Enterprise Community. <br /> • State that HOME funds cannot be used to refinance multifamily loans made or insured by any <br /> federal program, including CDBG. <br /> RECAPTURE PROVISIONS <br /> The HOME recapture provisions are established in §92.253(a)(5)(ii), and unlike the resale <br /> approach, permit the original homebuyer to sell the property to any willing buyer during the <br /> period of affordability while the Pi is able to recapture all or a portion of the HOME-assistance <br /> provided to the original homebuyer. Two key concepts in the recapture requirements — direct <br /> subsidy to the homebuyer and net proceeds - must be understood in order to determine the <br /> amount of HOME assistance subject to recapture, and the applicable period of affordability on <br /> the unit. The recapture approach requires that all or a portion of the direct subsidy provided to <br /> the homebuyer be recaptured from the net proceeds of the sale. <br /> Direct HOME subsidy is the amount of HOME assistance, including any program income that <br /> enabled the homebuyer to buy the unit.The direct subsidy includes down payment, closing costs, <br /> interest subsidies, or other HOME assistance provided directly to the homebuyer. In addition, <br /> direct subsidy includes any assistance that reduced the purchase price from fair market value to <br /> an affordable price. If HOME funds are used for the cost of developing a property and the unit is <br /> sold below fair market value,the difference between the fair market value and the purchase price <br /> is considered to be directly attributable to the HOME subsidy. <br /> Net proceeds are defined as the sales price minus superior loan repayment (other than HOME <br /> funds) and any closing costs. Under no circumstances can the Pi recapture more than is available <br /> from the net proceeds of the sale. <br /> Recapture provisions cannot be used when a project receives only a development subsidy and is <br /> sold at fair market value, because there is no direct HOME subsidy to recapture from the <br /> homebuyer. Instead, resale provisions must be used. <br /> The recapture option is used by most Pis because it is generally easier to administer than the <br /> resale option. The recapture option works well when the sale of the property will most likely <br /> preserve affordability without the imposition of resale restriction. <br /> Annual Action Plan 46 <br /> OMB Control No:2506-0117(exp.07/31/2015) <br />