NSP FAQ
Q

How is the affordability period calculated and enforced?

Date Published: July 2013

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A

NSP grantees generally use the HOME regulations to establish affordability periods based on the amount of NSP assistance per unit. See charts below for specific amounts.

Rental housing activity NSP amount per-unit

Minimum period of affordability in years

Under $15,000

5

$15,000 to $40,000

10

Over $40,000 or rehabilitation involving refinancing

15

New construction or acquisition of newly constructed housing

20

 

Homeownership assistance NSP amount per-unit

Minimum period of affordability in years

Under $15,000

5

$15,000 to $40,000

10

Over $40,000

15

For Rental housing, the basis of the affordability period is the amount of NSP funds used per unit. For homeownership using the Resale Approach, it is the total amount of NSP funds used in developing the project, even if the funds are returned through sale proceeds. For homeownership using the Recapture Approach, it is the amount of Direct Subsidy, generally grants and loans below appraised value.

In all units subsidized with a recapture  agreement, liens should be placed on the property to secure the financial investment. In addition, for both recapture and resale methods, deed restrictions or covenants running with the land should be recorded to ensure compliance with the affordability period. If HOME and NSP funds are invested in the same unit, the affordability periods must run concurrently and both programs must use either a resale or recapture approach; one deed of trust can be used to specify the terms of each loan.


Tags: NSP Program Requirements - Affordability Period

FAQ ID:

461