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RECAPTURE POLICY
CITY OF NEWPORT NEWS, VIRGINIA
HOMEOWNERSHIP PROGRAMS
PURPOSE
The City utilizes HOME Investment Partnerships Program (HOME) funds to assist eligible
homebuyers in achieving affordable homeownership. In accordance with federal HOME
regulations, homebuyers receiving HOME assistance must occupy the assisted property as their
principal residence for a specified affordability period.
The Newport News Redevelopment and Housing Authority (NNRHA), on behalf of the City,
administers HOME-funded homebuyer assistance programs and is responsible for ensuring
compliance with all applicable HOME regulations, including recapture requirements.
RECAPTURE PROVISIONS
The City uses Recapture Provisions to ensure homes remain the buyers’ principal residence
throughout the affordability period.
For HOME-assisted homebuyer units under the recapture option, the period of affordability
is based upon the direct HOME subsidy provided to the homebuyer that enabled the
homebuyer to purchase the unit. In the event of a sale, foreclosure, or any other transfer of
the HOME assisted unit during the affordability period some or all of the HOME investment
must be repaid, depending on the manner in which the funds were originally provided. This
allows the owner to sell the home to any buyer and once the appropriate HOME funds are
repaid, the property is no longer subject to any federal, City or NNRHA restrictions.
Two key concepts in the recapture requirements – direct subsidy to the homebuyer and net
proceeds - must be understood in order to determine the amount of HOME assistance
subject to recapture, and the applicable period of affordability on the unit. The recapture
approach requires that all or a portion of the direct subsidy provided to the homebuyer be
recaptured from the net proceeds of the sale.
Direct subsidy is the amount of HOME assistance that enabled the household to purchase
the home. The direct subsidy includes federal funds used to cover down payment, closing
costs, principal reduction, interest subsidy, or other assistance provided directly to the
homebuyer. In addition, direct subsidy includes any assistance that reduced the purchase
price from the lesser of the HOME Homeownership Value Limit (maximum sale price) or
fair market value (which may be less than the value limit), to an affordable price. The
length of the affordability period is based on the direct subsidy:
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