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FINAL 2018 Housing & Community Development Action Plan
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FINAL 2018 Housing & Community Development Action Plan
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6/13/2018 10:05:46 AM
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6/13/2018 10:00:42 AM
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City Council - City Clerk
City Counci - Date
6/12/2018
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during the period of affordability, and the PJ will recapture a portion of the HOME assistance <br /> provided to the original buyer. Should the homebuyer or homeowner breach the terms and <br /> conditions for any other reason, e.g. no longer occupies the property as his/her/their principal <br /> residence without having sold the property, the full amount of the direct subsidy is <br /> immediately due and payable. <br /> In general, the St. Jose h Count Housing Consortium forgives a portion of the direct HOME <br /> 9 p Y 9 9 P <br /> subsidy for each year a homebuyer occupies a home during the period of affordability. The <br /> remaining balance is equal to the amount of the original HOME direct subsidy less the forgiven <br /> portion. The percentage forgiven is determined by the years of affordability: <br /> PERIOD OF PERCENT OF TOTAL SUBSIDY FORGIVEN ' <br /> AFFORDABILITY <br /> 5 years 20% every year for 5 years <br /> 10 years 10% every year for 10 years ' <br /> 15 years 1 9.33% every year for 15 years <br /> 20 years 5% every year for 20 years <br /> The amount of HOME funds subject to recapture under 24 CFR Part 92, Section 92.254, with <br /> respect to such Unit, will be determined as follows: <br /> 1. HOME funds expended for the development only of a specific affordable housing unit, with <br /> no additional HOME investment to assist the homebuyer, will not be recaptured upon the <br /> initial sale by the recipient of HOME funds of said unit, but will instead be subject to resale <br /> provisions. <br /> 2. The total HOME investment in the unit that is subject to recapture upon sale of the unit <br /> by the homeowner is that portion of the investment (direct subsidy) that reduced the buyer's <br /> investment from the fair market value (as determined by an independent appraisal of the <br /> after-rehab value) to an affordable price, enabling the buyer to purchase the unit. <br /> h <br /> 3. The Consortium will not recapture an amount that exceeds the net sale proceeds from the <br /> sale of the property. Net proceeds are defined as the sales price minus superior loan <br /> repayment and any closing costs. The Consortium will recapture the outstanding balance <br /> based on the "Percent of Total Subsidy Forgiven" guidelines, however this amount will never. ' <br /> be greater than the net sale proceeds. If there are no net sale proceeds the Consortium will <br /> recapture zero. <br /> Resale Policy <br /> The resale provision ensures that HOME-assisted units remain affordable over the entire <br /> affordability period. This method is utilized when HOME funds are provided directly to a <br /> developer to reduce development costs, thereby making the price of the home affordable to <br /> the buyer. Referred to as a "development subsidy", these funds are not repaid by the <br /> developer to the PJ, but remain with the property for the length of the affordability period. <br /> The resale policy is explained to the prospective homebuyer(s) prior to signing a contract to <br /> purchase the HOME-assisted unit. The prospective homebuyer(s) sign an acknowledgement ' <br /> that they understand the terms and conditions applicable to the resale policy as they have <br /> a <br /> been explained. This document is included with the executed sales contract. (See attached <br /> Notification for Prospective Buyers). <br />
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