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If the net proceeds are insufficient to repay the full amount due under the recapture agreement,
the amount recaptured shall be limited to the available net proceeds. Under no circumstances
shall the City, NNRHA, or its subrecipients be required to recover more than the available net
proceeds, nor shall the homebuyer be required to repay any deficiency beyond the amount
available from the sale.
HOW IS THIS ENFORCED?
The City will enforce the recapture provision requirement in its contractual agreement with its
sub-recipients, developers and CHDOs. This recapture provision must be used by all sub-
recipients, developers and CHDO’s when there is a sale of property using HOME Investment
Partnership program. Therefore, all the sub-recipients, developers or CHDOs will be responsible
for passing the recapture provision requirement to the purchaser of the HOME assisted unit in
the form of a deed of trust that runs concurrently with the affordability period.
Noncompliance
During the period of affordability, the city will monitor the owner’s compliance with the
principal residency requirement. A homebuyer is noncompliant with the HOME affordability
requirements if he/she fails to reside in the unit as their principal residence without transferring
title (i.e., by either vacating or renting the unit to another occupant) or if he/she sells the property
without complying with the applicable recapture provisions. In the event of noncompliance, the
city reserves the right to require the buyer to repay the entire HOME investment (including the
direct subsidy and any other additional development subsidy provided).
Refinancing Policy
In order for new executed subordination agreements to be provided to the senior first lien holder,
the senior first lien refinance must meet the following conditions:
1. The new senior first lien will reduce the monthly payments to the homeowner, thereby
making the monthly payments more affordable; or
2. Reduce the loan term;
3. The new senior lien interest rate must be fixed for the life of the loan (Balloon or ARM
loans are ineligible);
4. No cash equity is withdrawn by the homeowner as a result of the refinancing actions;
5. City and/or /NNRHA will, at its discretion, agree to accept net proceeds in the event of a
short sale to avoid foreclosure
The refinancing request will be processed according to the following procedure:
1. Submit a written request to NNRHA Community Development Department to verify the
minimum refinancing requirements with one month in advance from the expected
closing;
2. City and/or /NNRHA will review the final HUD-1 Settlement Statement two weeks prior
to closing the refinance.
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