CDBG Entitlement FAQ

What if the prospective CDBG-assisted homebuyer doesn't complete the process?

For example, Ms. C. completed the homebuyer education and credit counseling courses. She changed her mind about purchasing a home once she found out how much work she needed to do to clear items from her credit report. She advised the grantee that she was dropping out of its homeownership assistance program. What about the costs incurred by Ms. C's participation to date?

Date Published: March 2019

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The costs of the homebuyer education and credit counseling courses may still be charged as activity delivery costs of homeownership assistance under 24 CFR 570.201(n), but only if the grantee enters all its homeownership assistance activities for the program year in IDIS under one activity. Although the participant did not complete the homebuying process, the courses she completed were not standalone courses and were required to be completed to participate in the homeownership assistance program. Therefore, as part of the homeownership assistance program, the cost of the courses is allowed as activity delivery costs under 570.201(n), although the homebuying process was not completed.

However, if the grantee enters each household assisted under separate IDIS activities, the grantee may recategorize the activity delivery costs incurred as a program administration cost [24 CFR 570.206], provided it does not cause the grantee to exceed the 20 percent planning and administration cap. The grantee may be able to recategorize costs such as homebuyer education and credit counseling as a public service (provided the public service cap is not exceeded). If neither of these is possible, the grantee must cancel the activity and reimburse its CDBG program for the costs.

Tags: CDBG Entitlement Program Homebuyer Assistance