NSP FAQ
Q

When an NSP homebuyer sells a property with either a recapture or resale provision, what happens to the revenue when the property's value has appreciated?

Date Published: October 2012

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A

Under recapture, the answer depends on whether the grantee has elected to impose a shared appreciation clause in the agreement with the buyer. If a shared appreciation model is used, then the negotiated percentage of appreciation that belongs to the borrower and to the grantee would be calculated and distributed upon sale. The grantee's portion of the recaptured funds would be treated as program income and subject to all NSP rules. If the grantee has not imposed a shared appreciation clause, the homeowner is allowed to retain any amounts due from the sale after the grantee collects its portion of the net proceeds. 

24 CFR Part 92.254 requires that, under the resale method, the grantee must ensure that the price at resale provides the original buyer a fair return on investment while assuring that the house remains affordable to a reasonable range of low, moderate, and middle income buyers. Because the resale requirement caps the sale price at an affordable level, it is highly unlikely that the homeowner will retain a significant return based on the appreciated value.


Tags: NSP Program Requirements - Resale/Recapture

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FAQ ID:

1102