Agenda 06-18-19 Item 8-v - Proposed Changes to the Long-Term Housing Affordability Policy

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15 closing costs.The net proceeds may be divided proportionally as set forth in the following mathematical formulas: HOMEinvestment x Net proceeds = HOME amount to be recaptured HOME i nvestment+homeowner investment homeowner investment x Net proceeds =amount to homeowner HOME investment +homeowner investment (4)Owner investment returned first.The participating jurisdiction may permit the homebuyer to recover the homebuyer's entire investment (downpayment and capital improvements made by the owner since purchase) before recapturing the HOME investment. (5)Amount subject to recapture.The HOME investment that is subject to recapture is based on the amount of HOME assistance that enabled the homebuyer to buy the dwelling unit.This includes any HOME assistance that reduced the purchase price from fair market value to an affordable price, but excludes the amount between the cost of producing the unit and the market value of the property (i.e., the development subsidy).The recaptured funds must be used to carry out HOME-eligible activities in accordance with the requirements of this part. If the HOME assistance is only used for the development subsidy and therefore not subject to recapture,the resale option must be used. (6)Special considerations for single-family properties with more than one unit. If the HOME funds are only used to assist a low-income homebuyer to acquire one unit in single-family housing containing more than one unit and the assisted unit will be the principal residence of the homebuyer, the affordability requirements of this section apply only to the assisted unit. If HOME funds are also used to assist the low-income homebuyer to acquire one or more of the rental units in the single-family housing, the affordability requirements of§ 92.252 apply to assisted rental units, except that the participating jurisdiction may impose resale or recapture restrictions on all assisted units (owner-occupied and rental units) in the single family housing. If resale restrictions are used,the affordability requirements on all assisted units continue for the period of affordability. If recapture restrictions are used, the affordability requirements on the assisted rental units may be terminated, at the discretion of the participating jurisdiction, upon recapture of the HOME investment. (If HOME funds are used to assist only the rental units in such a property then the requirements of§ 92.252 would apply and the owner-occupied unit would not be subject to the income targeting or affordability provisions of§ 92.254.) (7)Lease-purchase.HOME funds may used to assist homebuyers through lease-purchase programs for existing housing and for housing to be constructed.The housing must be purchased by a homebuyer within 36 months of signing the lease'purchase agreement.The homebuyer must qualify as a low- income family at the time the lease-purchase agreement is signed. If HOME funds are used to acquire housing that will be resold to a homebuyer through a lease-purchase program,the HOME affordability requirements for rental housing in § 92.252 shall apply if the housing is not transferred to a homebuyer within forty-two months after project completion. (8)Contract to purchase. If HOME funds are used to assist a homebuyer who has entered into a contract to purchase housing to be constructed,the homebuyer must qualify as a low-income family at the time the contract is signed. (9)Preserving affordability of housing that was previously assisted with HOME funds.