Date Published: October 2012
When resale restrictions are used, the affordability period is determined by the per unit total NSP investment. When recapture provisions are used, the period is determined by the per unit amount of NSP assistance that enabled the homebuyer to purchase the property (the direct subsidy.)
Consider the following scenario and how the period of affordability changes depending on the approach: $50,000 of NSP funds is provided to a developer for an NSP assisted unit and an additional $5,000 of NSP funds is provided to the homebuyer for down payment assistance.
If the grantee has chosen to use the HOME affordability regulations as safe harbor, then under the resale approach, the affordability period is 15 years based on the $55,000 of NSP assistance. Under the recapture approach, the affordability period is 5 years based on the $5,000 of direct NSP assistance, assuming that none of the $50,000 of developer assistance rolled over into a direct homebuyer subsidy.