FINAL 2018 Housing & Community Development Action Plan

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