Issue Date
April 13, 2010
Audit Report Number
2010-CH-0002
TO: Yolanda Chávez, Deputy Assistant Secretary for Grant Programs, DG
FROM: Heath Wolfe, Regional Inspector General for Audit, 5AGA
SUBJECT: The Office of Affordable Housing Programs’ Oversight of Resale and Recapture
Provisions for HOME Investment Partnerships Program-Assisted
Homeownership Projects Was Inadequate
HIGHLIGHTS
What We Audited and Why
We audited the U.S. Department of Housing and Urban Development’s (HUD)
Office of Affordable Housing Programs’ (Office) oversight of resale and
recapture provisions for HOME Investment Partnerships Program (Program)-
assisted homeownership projects (project). The audit was part of the activities in
our fiscal year 2009 annual audit plan to contribute to improving HUD’s
execution of and accountability for its fiscal responsibilities and our strategic plan
to help HUD resolve its major management challenges. Our objective was to
determine whether HUD’s Office had adequate oversight of participating
jurisdictions’ use of resale and recapture provisions to enforce HUD’s
affordability requirements for Program-assisted projects.
What We Found
HUD’s Office did not ensure that participating jurisdictions complied with HUD’s
requirements in their use of resale and recapture provisions to enforce HUD’s
affordability requirements for Program-assisted projects.
Of the 40 projects selected for review, 27 participating jurisdictions did not
include appropriate resale and/or recapture provisions in their 29 consolidated
and/or action plans that were in effect at the time the participating jurisdictions set
up 32 projects in HUD’s Integrated Disbursement and Information System.
Further, 18 participating jurisdictions did not ensure that appropriate resale or
recapture provisions were implemented for 21 projects. In addition, three
participating jurisdictions did not ensure that HUD’s interest was sufficiently
protected in three projects for which more than $43,000 in Program funds was
used for home-buyer assistance.
What We Recommend
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs
require the Office to
• Ensure that the State of New York and Cobb County, GA, Consortium,
reimburse their Programs $30,000 and $9,947, respectively, for the two
projects for which they did not ensure that they met HUD’s affordability
requirements;
• Ensure that the State of Montana places a deed restriction, land covenant,
affidavit, and/or lien on a property to ensure that it would recoup all or a
portion of the $3,139 in Program funds used for a project if the housing does
not continue to be the principal residence of the household for the duration of
the affordability period or reimburse its Program $3,139; and
• Implement adequate procedures and controls to address the finding cited in
this audit report.
For each recommendation without a management decision, please respond and
provide status reports in accordance with HUD Handbook 2000.06, REV-3.
Please furnish us copies of any correspondence or directives issued because of the
audit.
Auditee’s Response
We provided our discussion draft audit report to HUD’s Deputy Assistant Secretary
for Grant Programs during the audit. We held an exit conference with HUD’s
Director of Affordable Housing Programs on March 16, 2010.
We asked the Deputy Assistant Secretary to provide comments on our discussion
draft audit report by April 4, 2010. The Deputy Assistant Secretary provided written
comments, dated March 31, 2010. The Deputy Assistant Secretary agreed with our
finding and recommendations. The complete text of HUD’s written comments,
along with our evaluation of that response, can be found in appendix B of this report.
2
TABLE OF CONTENTS
Background and Objective 4
Results of Audit
Finding: HUD’s Office Lacked Adequate Controls Over Participating
Jurisdictions’ Use of Resale and Recapture Provisions 5
Scope and Methodology 11
Internal Controls 13
Appendixes
A. Schedule of Questioned Costs 15
B. Auditee Comments and OIG’s Evaluation 16
C. HUD’s Requirements 18
D. Resale and/or Recapture Provisions in Participating Jurisdictions’ Consolidated
and/or Action Plans 20
E. Implementation of Resale or Recapture Provisions for Participating
Jurisdictions’ Projects 26
3
BACKGROUND AND OBJECTIVE
The Program. Authorized under Title II of the Cranston-Gonzalez National Affordable Housing
Act, as amended, the HOME Investment Partnerships Program (Program) is funded for the purpose
of (1) increasing the supply of affordable standard rental housing; (2) improving substandard
housing for existing homeowners; (3) assisting new home buyers through acquisition, construction,
and rehabilitation of housing; and (4) providing tenant-based rental assistance.
The U.S. Department of Housing and Urban Development (HUD) allocated more than $1.6 billion
in Program funds annually to all of the participating jurisdictions for Program years 2005 through
2009. The following table shows the amount of Program funds HUD awarded the participating
jurisdictions for Program years 2005 through 2009.
Program Program
year funds
2005 $1,789,051,305
2006 1,682,673,690
2007 1,681,516,834
2008 1,633,227,931
2009 1,816,947,050
Total $8,603,416,810
HUD’s Office of Affordable Housing Programs (Office) has oversight responsibility for the
Program. HUD’s Office relied on HUD’s Office of Community Planning and Development field
offices’ (field office) monitoring activities and consolidated and/or action plan reviews to ensure
that participating jurisdictions complied with HUD’s affordability requirements for Program-
assisted homeownership projects (project).
Our objective was to determine whether HUD’s Office had adequate oversight of participating
jurisdictions’ use of resale and recapture provisions to enforce HUD’s affordability requirements
for Program-assisted projects.
4
RESULTS OF AUDIT
Finding: HUD’s Office Lacked Adequate Controls Over Participating
Jurisdictions’ Use of Resale and Recapture Provisions
HUD’s Office did not ensure that participating jurisdictions complied with HUD’s requirements
in their use of resale and recapture provisions for Program-assisted projects. Of the 40 projects
statistically selected for review, 27 participating jurisdictions did not include appropriate resale
and/or recapture provisions in their 29 consolidated and/or action plans that were in effect at the
time the participating jurisdictions set up 32 projects in HUD’s Integrated Disbursement and
Information System (System). Further, 18 participating jurisdictions did not ensure that
appropriate resale or recapture provisions were implemented for 21 projects. In addition, three
participating jurisdictions did not ensure that HUD’s interest was sufficiently protected in three
projects for which more than $43,000 in Program funds was used for home-buyer assistance.
These conditions occurred because the Office lacked adequate procedures and controls to ensure
that participating jurisdictions appropriately followed HUD’s requirements. As a result, HUD
lacked assurance that appropriate resale or recapture provisions were imposed for and its interest
was sufficiently protected in participating jurisdictions’ projects.
Participating Jurisdictions Did
Not Include Appropriate Resale
and/or Recapture Provisions in
Their Consolidated and/or
Action Plans
HUD’s Office did not ensure that participating jurisdictions included appropriate
resale and/or recapture provisions in their consolidated and/or action plans.
HUD’s regulations at 24 CFR (Code of Federal Regulations) 91.220(1)(2)(ii) state
that if a participating jurisdiction intends to use Program funds for home buyers, it
must state the guidelines for resale or recapture, as required in 24 CFR 92.254, in
its action plan. HUD’s regulations at 24 CFR 92.254(a)(5) state that to ensure
affordability, a participating jurisdiction must impose either resale or recapture
provisions that comply with the standards of section 92.254(a)(5) and include
those provisions in its consolidated plan.
We statistically selected for review 40 projects, which were administered by 35
different participating jurisdictions, to determine whether the participating
jurisdictions included appropriate resale and/or recapture provisions in their
consolidated and/or action plans. The projects totaled more than $1 million and
had completion dates in HUD’s System from June 30, 2008, through June 30,
2009.
5
Contrary to HUD’s requirements, 27 of the 35 participating jurisdictions selected
for review did not include appropriate resale and/or recapture provisions in their
29 consolidated and/or action plans that were in effect at the time the participating
jurisdictions set up 32 of the 40 projects in HUD’s System. The amount of
Program funds used for the 32 projects totaled nearly $698,000. Further, HUD’s
field offices reviewed and approved at least 27 of the 29 consolidated and/or
action plans, despite the plans’ not including appropriate resale and/or recapture
provisions. We could not determine whether HUD’s field offices reviewed and
approved two of the action plans since HUD’s field offices could not provide their
action plan review checklists for the two action plans.
We included in appendix D of this report specific details on the 27 participating
jurisdictions that did not include appropriate resale and/or recapture provisions in
their 29 consolidated and/or action plans.
Participating Jurisdictions Did
Not Ensure That Appropriate
Resale or Recapture Provisions
Were Implemented for Their
Projects
HUD’s Office did not ensure that appropriate resale or recapture provisions were
implemented for participating jurisdictions’ Program-assisted projects. HUD’s
regulations at 24 CFR 92.254(a)(4) state that Program-assisted housing must meet
HUD’s affordability requirements. Section 92.254(a)(5) states that to ensure
affordability, a participating jurisdiction must impose either resale or recapture
provisions that comply with the standards in section 92.254(a)(5).
Two of the forty projects selected for review, which were administered by two
participating jurisdictions, were not subject to the implementation of resale or
recapture provisions. As a result, we did not include the two participating
jurisdictions or projects as part of our review to determine whether the
participating jurisdictions ensured that appropriate resale or recapture provisions
were implemented for their projects.
Contrary to HUD’s requirements, 18 of the 33 participating jurisdictions did not
ensure that appropriate resale or recapture provisions were implemented for 21 of
the 38 projects reviewed. The amount of Program funds secured by inappropriate
resale or recapture provisions for the 21 projects totaled nearly $318,000.
Based on our statistical sample, we estimate that participating jurisdictions did not
ensure that appropriate resale or recapture provisions were implemented for at
least 8,825 of the 22,306 projects with a completion date in HUD’s System from
June 30, 2008, through June 30 2009. Our methodology for this estimate is
explained in the Scope and Methodology section of this audit report.
6
We included in appendix E of this report specific details on the 18 participating
jurisdictions that did not ensure that appropriate resale or recapture provisions
were implemented for 21 of their projects.
Participating Jurisdictions Did
Not Ensure That HUD’s
Interest Was Sufficiently
Protected in Three Projects
HUD’s Office did not ensure that HUD’s interest was sufficiently protected in
participating jurisdictions’ Program-assisted projects. HUD’s regulations at 24
CFR 92.254(a)(5) state that to ensure affordability, a participating jurisdiction
must impose either resale or recapture provisions that comply with the standards
in section 92.254(a)(5). Section 92.254(a)(5)(ii) states that a participating
jurisdiction’s recapture provisions must ensure that the participating jurisdiction
recoups all or a portion of the Program assistance to the home buyers if the
housing does not continue to be the principal residence of the household for the
duration of the period of affordability. If Program assistance is only used for
development subsidies, the resale option must be used. Chapter 5, part I, of
HUD’s “Building HOME: A Program Primer” states that a deed restriction, land
covenant, affidavit, and/or lien is the legal instrument that can be used to meet the
requirements of HUD’s recapture restrictions. Recapture provisions may not be
used for properties that only receive development subsidies. Part II states that
recapture provisions cannot be used when a direct Program subsidy is not
provided to the home buyer.
As previously mentioned, 2 of the 40 projects selected for review, which were
administered by two participating jurisdictions, were not subject to the
implementation of resale or recapture provisions. As a result, we did not include
the two participating jurisdictions or projects as part of our review to determine
whether HUD’s interest was sufficiently protected in participating jurisdictions’
Program-assisted projects.
Contrary to HUD’s requirements, 3 of the 33 participating jurisdictions did not
ensure that HUD’s interest was sufficiently protected in 3 of the 38 projects
reviewed. The participating jurisdictions’ projects did not meet HUD’s
affordability requirements. The amount of Program funds used for the three
projects totaled more than $43,000.
Home HeadQuarters, Incorporated (Home HeadQuarters), a community housing
development organization of the State of New York (State), used $30,000 in
Program funds for a development subsidy for a home under project number
23424. Additional Program funds were not used for the project, and the home
buyer did not receive direct Program assistance. However, the State did not
ensure that resale restrictions were placed on the property. Home HeadQuarters
7
inappropriately placed recapture restrictions on the property rather than resale
restrictions. Therefore, the State could not ensure that if the home did not
continue to be the principal residence of the household for the duration of the
period of affordability, the home would later be made available for purchase only
to a home buyer whose household qualified as a low-income family and who
would use the property as the household’s principal residence.
Cobb Housing, Incorporated, a community housing development organization of
the Cobb County, GA, Consortium (Consortium), used $9,947 in Program funds
to purchase a property which was eventually sold to a home buyer under project
number 2222. Additional Program funds were not used for the project, and the
home buyer did not receive direct Program assistance. However, the Consortium
did not ensure that resale restrictions were placed on the property. Therefore, the
Consortium could not ensure that if the home did not continue to be the principal
residence of the household for the duration of the period of affordability, the
home would later be made available for purchase only to a home buyer whose
household qualified as a low-income family and who would use the property as
the household’s principal residence.
Northwest Montana Human Resources, Incorporated (Northwest), a community
housing development organization of the State of Montana (State), used $3,139 in
Program funds to assist a home buyer in purchasing a home under project number
3515. Northwest placed recapture restrictions on the property that were included
in a promissory note between Northwest and the home buyer in the amount of
$3,050. However, the promissory note was not dated. Further, the State did not
ensure that a deed restriction, land covenant, affidavit, and/or lien was placed on
the property. Therefore, the State did not ensure that it would recover all or a
portion of the Program funds if the housing did not continue to be the principal
residence of the household for the duration of the affordability period.
Based on our statistical sample, we estimate that participating jurisdictions did not
ensure that HUD’s interest was sufficiently protected in at least 151 of the 22,306
projects with a completion date in HUD’s System from June 30, 2008, through
June 30 2009. Our methodology for this estimate is explained in the Scope and
Methodology section of this audit report.
HUD’s Office Lacked Adequate
Procedures and Controls
The weaknesses regarding the participating jurisdictions (1) not including
appropriate resale and/or recapture provisions in their consolidated and/or action
plans, (2) not ensuring that appropriate resale or recapture provisions were
implemented for Program-assisted projects, and (3) not ensuring that HUD’s
interest was sufficiently protected in projects occurred because HUD’s Office
8
lacked adequate procedures and controls to ensure that participating jurisdictions
appropriately followed HUD’s requirements.
HUD’s Office relied on HUD’s field offices’ monitoring activities and
consolidated and/or action plan reviews to ensure that participating jurisdictions
complied with HUD’s affordability requirements for projects. The Office did not
have a formal process for reviewing the field offices’ oversight of participating
jurisdictions’ resale and recapture provisions. HUD conducted quality
management reviews to assess the field offices’ management practices. HUD’s
quality management review process generally did not include an assessment of
the field offices’ Program performance. However, when the Office participated in
quality management reviews, it also reviewed participating jurisdictions’ resale
and/or recapture provisions for compliance with HUD’s regulations at 24 CFR
92.254. When the Office identified issues with the participating jurisdictions’
resale and/or recapture provisions, it provided the field offices a list of the issues
and asked the field offices to follow-up with the participating jurisdictions to
correct the issues. However, the Office did not ensure that the field offices
followed-up with the participating jurisdictions to ensure the problems identified
with the resale and/or recapture provisions were corrected. In fiscal year 2007,
the Office decided to no longer participate in the quality management reviews.
During fiscal years 2000 through 2002, HUD’s Office began providing HUD’s
field offices’ staff Program management training covering the required elements
of participating jurisdictions’ consolidated and action plans and appropriate resale
and recapture provisions. The Office resumed these trainings in August 2006.
However, due to the Office’s increased workload, it has not been able to provide
the field offices with Program management training since April 2008.
HUD’s Deputy Director of Affordable Housing Programs said that it appeared
that the field offices did not understand the level of detail that participating
jurisdictions must include in their consolidated and action plans and legal
instruments regarding resale and recapture provisions. HUD’s Office planned to
issue an updated community planning and development notice and a new
HOMEfires (HUD’s official policy newsletter for the Program) to clarify HUD’s
requirements regarding resale and recapture provisions. Further, HUD’s Office of
Community Planning and Development was drafting a proposed rule to amend
HUD’s regulations at 24 CFR Part 91 to require specific written approval by the
field offices of the resale and/or recapture provisions in participating jurisdictions’
consolidated and action plans.
Conclusion
As previously mentioned, HUD’s Office lacked adequate procedures and controls to
ensure that participating jurisdictions appropriately followed HUD’s requirements in
their use of resale and recapture provisions for Program-assisted projects. Of the 40
9
projects statistically selected for review, 27 participating jurisdictions did not include
appropriate resale and/or recapture provisions in their 29 consolidated and/or action
plans that were in effect at the time the participating jurisdictions set up 32 projects
in HUD’s System. Further, 18 participating jurisdictions did not ensure that
appropriate resale or recapture provisions were implemented for 21 projects. In
addition, three participating jurisdictions did not ensure that HUD’s interest was
sufficiently protected in three projects for which more than $43,000 in Program
funds was used for home-buyer assistance. As a result, HUD lacked assurance that
appropriate resale or recapture provisions were imposed for and its interest was
sufficiently protected in participating jurisdictions’ projects.
Recommendations
We recommend that HUD’s Deputy Assistant Secretary for Grant Programs
require the Office to
1A. Implement adequate procedures and controls to ensure that participating
jurisdictions (1) include appropriate resale and/or recapture provisions in
their consolidated and/or action plans and (2) implement appropriate
resale or recapture provisions for their projects.
1B. Require the State of New York and Cobb County, GA, Consortium to
reimburse their Programs $30,000 and $9,947, respectively, from non-
Federal funds for the two projects that they did not ensure met HUD’s
affordability requirements.
1C. Require the State of Montana to place a deed restriction, land covenant,
affidavit, and/or lien on the property to ensure that it would recoup all or a
portion of the $3,139 in Program funds used for project number 3515 if
the housing does not continue to be the principal residence of the
household for the duration of the affordability period. If the State cannot
place a deed restriction, land covenant, affidavit, and/or lien on the
property, it should reimburse its Program $3,139 from non-Federal funds.
10
SCOPE AND METHODOLOGY
To accomplish our objective, we reviewed
• Applicable laws; HUD’s regulations at 24 CFR Parts 91 and 92; HUD’s “Building
HOME: A Program Primer”; HUD’s HOMEfires, volume 5, numbers 2, 4, and 5;
HUD’s Consolidated Plan Review Guide – HOME Program Elements; HUD’s field
offices’ action plan review checklists for the 35 participating jurisdictions, as
applicable; and Office of Inspector General (OIG) Audit Reports 2008-CH-1014,
issued September 26, 2008, and 2008-LA-1001, issued November 1, 2007.
• Financial and Program data from HUD’s System and the 35 participating
jurisdictions.
In addition, we interviewed HUD’s staff and the participating jurisdictions’ employees.
We statistically selected 40 of the 22,306 projects with a completion date in HUD’s System from
June 30, 2008, through June 30 2009, to determine whether participating jurisdictions (1)
included appropriate resale and/or recapture provisions in their consolidated and/or action plans,
(2) ensured that appropriate resale or recapture provisions were implemented for their Program-
assisted projects, and (3) ensured that HUD’s interest was sufficiently protected in their projects.
The 40 projects totaled more than $1 million in Program funds and were administered by 35
different participating jurisdictions. Our sample method was an unrestricted attribute sample
with a 90 percent confidence level and a precision level of plus or minus 10 percent. Two of the
forty projects selected for review, which were administered by two participating jurisdictions,
were not subject to the implementation of resale or recapture provisions. The State of Indiana’s
project number 23316 involved a community housing development organization predevelopment
loan for a project that never moved forward. The City of Muskegon, MI’s project number 507
was part of its lease-to-purchase program in which the lessee had yet to purchase the property.
As a result, we did not include the two participating jurisdictions or projects as part of our review
to determine whether the participating jurisdictions ensured that appropriate resale or recapture
provisions were implemented for their projects and ensured that HUD’s interest was sufficiently
protected.
Our sampling results determined that participating jurisdictions did not ensure that appropriate
resale or recapture provisions were implemented for 21 projects reviewed. Therefore, using
attribute sampling methodology and the most conservative approach, we estimate with 95
percent certainty that participating jurisdictions did not ensure that appropriate resale or
recapture provisions were implemented for at least 8,825 of the 22,306 projects with a
completion date in HUD’s System from June 30, 2008, through June 30 2009.
Our sampling results determined that participating jurisdictions did not ensure that HUD’s
interest was sufficiently protected in three projects reviewed. Therefore, using attribute sampling
methodology and the most conservative approach, we estimate with 95 percent certainty that
participating jurisdictions did not ensure that HUD’s interest was sufficiently protected in at least
11
151 of the 22,306 projects with a completion date in HUD’s System from June 30, 2008, through
June 30 2009.
We performed our audit work from July 2009 through February 2010 at HUD’s Chicago, IL,
regional office. The audit covered the period October 2007 through June 2009 and was expanded as
determined necessary.
We performed our audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence
to provide a reasonable basis for our finding and conclusions based on our audit objective. We
believe that the evidence obtained provides a reasonable basis for our finding and conclusions based
on our audit objective.
12
INTERNAL CONTROLS
Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are achieved:
• Program operations,
• Relevance and reliability of information,
• Compliance with applicable laws and regulations, and
• Safeguarding of assets and resources.
Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. They include the processes and procedures for planning,
organizing, directing, and controlling program operations as well as the systems for measuring,
reporting, and monitoring program performance.
Relevant Internal Controls
We determined that the following internal controls were relevant to our audit
objective:
• Program operations - Policies and procedures that management has
implemented to reasonably ensure that a program meets its objectives.
• Validity and reliability of data - Policies and procedures that management
has implemented to reasonably ensure that valid and reliable data are
obtained, maintained, and fairly disclosed in reports.
• Compliance with laws and regulations - Policies and procedures that
management has implemented to reasonably ensure that resource use is
consistent with laws and regulations.
• Safeguarding resources - Policies and procedures that management has
implemented to reasonably ensure that resources are safeguarded against
waste, loss, and misuse.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable
assurance that the process for planning, organizing, directing, and controlling
program operations will meet the organization’s objectives.
13
Significant Weakness
Based on our review, we believe the following item is a significant weakness:
• HUD’s Office lacked adequate procedures and controls to ensure that
participating jurisdictions appropriately followed HUD’s requirements in their
use of resale and recapture provisions (see finding).
14
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation
number Ineligible 1/
1B $39,947
1C 3,139
Total $43,086
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or Federal, State, or local
policies or regulations.
15
Appendix B
AUDITEE COMMENTS AND OIG’s EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
16
OIG’s Evaluation of Auditee Comments
Comment 1 We revised the report to state that HUD’s Office relied on HUD’s field offices’
monitoring activities and consolidated and/or action plan reviews to ensure that
participating jurisdictions complied with HUD’s affordability requirements for
projects. The Office did not have a formal process for reviewing the field offices’
oversight of participating jurisdictions’ resale and recapture provisions. HUD
conducted quality management reviews to assess the field offices’ management
practices. HUD’s quality management review process generally did not include
an assessment of the field offices’ Program performance. However, when the
Office participated in quality management reviews, it also reviewed participating
jurisdictions’ resale and/or recapture provisions for compliance with HUD’s
regulations at 24 CFR 92.254. When the Office identified issues with the
participating jurisdictions’ resale and/or recapture provisions, it provided the field
offices a list of the issues and asked the field offices to follow-up with the
participating jurisdictions to correct the issues. However, the Office did not
ensure that the field offices followed-up with the participating jurisdictions to
ensure the problems identified with the resale and/or recapture provisions were
corrected. In fiscal year 2007, the Office decided to no longer participate in the
quality management reviews.
We also revised the report to state that during fiscal years 2000 through 2002,
HUD’s Office began providing HUD’s field offices’ staff Program management
training covering the required elements of participating jurisdictions’ consolidated
and action plans and appropriate resale and recapture provisions. The Office
resumed these trainings in August 2006. However, due to the Office’s increased
workload, it has not been able to provide the field offices with Program
management training since April 2008.
We removed the recommendation that HUD’s Deputy Assistant Secretary for
Grant Programs require the Office to implement adequate procedures and controls
to ensure that participating jurisdictions’ projects meet HUD’s affordability
requirements.
17
Appendix C
HUD’S REQUIREMENTS
Section 215(b) of Title II of the Cranston-Gonzalez National Affordable Housing Act (Act), as
amended, states that housing that is for homeownership shall qualify as affordable housing under
Title II of the Act only if the housing is subject to resale restrictions that are established by the
participating jurisdiction and determined by HUD’s Secretary to be appropriate to (1) allow for
the later purchase of the property only by a low-income household at a price which will provide
the owner a fair return on investment and ensure that the housing will remain affordable to a
reasonable range of low-income home buyers or (2) recapture the Program investment to assist
other persons in accordance with the requirements of Title II of the Act, except when there are no
net proceeds or when the net proceeds are insufficient to repay the full amount of the assistance.
HUD’s regulations at 24 CFR 91.200(a) state that a complete consolidated plan consists of the
information required in 24 CFR 91.220.
HUD’s regulations at 24 CFR 91.220(1)(2)(ii) state that the action plan must include the
guidelines for resale or recapture, as required in 24 CFR 92.254, if a participating jurisdiction
intends to use Program funds for home buyers.
HUD’s regulations at 24 CFR 92.150 state that to receive its Program allocation, a participating
jurisdiction must submit a consolidated plan in accordance with 24 CFR Part 91. 24 CFR Part 91
includes requirements for the content of the consolidated plan, the process of developing the
consolidated plan including citizen participation, the submission date, HUD approval, and
amendments.
HUD’s regulations at 24 CFR 92.254(a)(4) state that Program-assisted housing must meet the
affordability requirements for not less than the applicable period specified in section
92.254(a)(4), beginning after project completion. Section 92.254(a)(5) states that to ensure
affordability, a participating jurisdiction must impose either resale or recapture provisions that
comply with the standards of section 92.254(a)(5) and include the provisions in its consolidated
plan. Section 92.254(a)(5)(i) states that a participating jurisdiction’s resale provisions must
ensure, if the housing does not continue to be the principal residence of the household for the
duration of the period of affordability, that the housing is made available for later purchase only
to a home buyer whose household qualifies as a low-income family and who will use the
property as the household’s principal residence. The resale provisions must also ensure that the
price at resale provides the original Program-assisted owner a fair return on investment and
ensure that the housing will remain affordable to a reasonable range of low-income home buyers.
Deed restrictions, covenants running with the land, or other similar mechanisms must be used to
impose the resale requirements. Section 92.254(a)(5)(ii) states that a participating jurisdiction’s
recapture provisions must ensure that the participating jurisdiction recoups all or a portion of the
Program assistance to the home buyers if the housing does not continue to be the principal
residence of the household for the duration of the period of affordability. In establishing its
recapture provisions, the participating jurisdiction is subject to the limitation that when the
18
recapture provision is triggered by a voluntary or involuntary sale of the housing unit and there
are no net proceeds or the net proceeds are insufficient to repay the Program investment due, the
participating jurisdiction can only recapture the net proceeds if any. The recaptured funds must
be used to carry out Program-eligible activities in accordance with the requirements of 24 CFR
Part 92. If the Program assistance is only used for development subsidy and, therefore, not
subject to recapture, the resale option must be used.
HUD’s regulations at 24 CFR 92.504(a) state that a participating jurisdiction is responsible for
managing the day-to-day operations of its Program, ensuring that Program funds are used in
accordance with all Program requirements and written agreements, and taking appropriate action
when performance problems arise. The use of state recipients, subrecipients, or community
housing development organizations does not relieve the participating jurisdiction of this
responsibility.
HUD’s HOMEfires, volume 5, number 5, requires a participating jurisdiction to select either
resale or recapture provisions for its Program-assisted home-buyer projects. The participating
jurisdiction may select resale or recapture provisions for all of its home-buyer projects or resale
or recapture provisions on a case-by-case basis. However, the participating jurisdiction must
select whether resale or recapture will be imposed for each home-buyer project at the time the
assistance is provided. A participating jurisdiction may adopt any one of four options in
designing its recapture provisions. All of the options the participating jurisdiction will employ
must be identified in its consolidated plan and approved by HUD.
Chapter 5, part I, of HUD’s “Building HOME: A Program Primer” states that a deed restriction,
land covenant, affidavit, and/or lien is the legal instrument that can be used to meet the
requirements of HUD’s recapture restrictions. Recapture provisions may not be used for
properties that only receive development subsidies. Part II states that recapture provisions
cannot be used when a direct Program subsidy is not provided to the home buyer.
19
Appendix D
RESALE AND/OR RECAPTURE PROVISIONS IN
PARTICIPATING JURISDICTIONS’ CONSOLIDATED AND/OR
ACTION PLANS
Allegheny County, PA, Consortium
Contrary to HUD’s requirements, the Consortium did not include appropriate resale and/or
recapture provisions in its fiscal year 2008 action plan. The Consortium inappropriately included
provisions that were a hybrid of HUD’s resale and recapture requirements. Further, the
Consortium’s resale aspect of its provisions was incomplete since it did not consider what would
occur if the resale price of a home was insufficient to pay off the first mortgage and return the
home buyer’s investment in the home. However, HUD’s Pittsburgh, PA, Office of Community
Planning and Development stated in its action plan review checklist, dated February 28, 2008,
that the Consortium’s fiscal year 2008 action plan contained appropriate resale and/or recapture
provisions.
Cobb County, GA, Consortium
Contrary to HUD’s requirements, the Consortium included recapture provisions in its fiscal year
2004 action plan that did not limit the amount of Program funds that could be recaptured to the
net proceeds from the sale of a home. Further, the Consortium did not include any resale
provisions in its fiscal year 2004 action plan although it was required to ensure that resale
restrictions were placed on the property under project number 2222. However, HUD’s Atlanta,
GA, Office of Community Planning and Development stated in its action plan review checklist,
dated January 14, 2004, that the Consortium’s fiscal year 2004 action plan contained appropriate
resale and recapture provisions.
State of Florida
Contrary to HUD’s requirements, the State included resale provisions in its program years 2006
to 2007 and 2008 to 2009 action plans that did not define a fair return on investment to the
original Program-assisted owner or affordability to a reasonable range of low-income home
buyers. However, HUD’s Jacksonville, FL, Office of Community Planning and Development
stated in its action plan review checklist, dated June 24, 2008, that the State’s program year 2008
to 2009 action plan contained appropriate resale provisions. HUD’s Jacksonville Office of
Community Planning and Development could not provide its action plan review checklist for the
State’s program year 2006 to 2007 action plan.
Fresno County, CA
Contrary to HUD’s requirements, the County included recapture provisions in its fiscal year
1996 to 1997 action plan that did not limit the amount of Program funds that could be recaptured
to the net proceeds from the sale of a home. Further, the County did not describe which option
of recapture it would use for its projects. HUD’s San Francisco, CA, Office of Community
Planning and Development could not provide its action plan review checklist for the County’s
fiscal year 1996 to 1997 action plan due to the expiration of the record retention period.
20
Harris County, TX
Contrary to HUD’s requirements, the County included recapture provisions in its program year
2008 action plan that did not limit the amount of Program funds that could be recaptured to the
net proceeds from the sale of a home. Further, the County did not describe which option of
recapture it would use for its projects. However, HUD’s Houston, TX, Office of Community
Planning and Development stated in its action plan review checklist, dated February 28, 2008,
that the County’s program year 2008 action plan contained appropriate recapture provisions.
Holyoke, MA, Consortium
Contrary to HUD’s requirements, the Consortium included recapture provisions in its fiscal year
2008 action plan that did not limit the amount of Program funds that could be recaptured to the
net proceeds from the sale of a home. However, HUD’s Boston, MA, Office of Community
Planning and Development stated in its action plan review checklist, dated July 1, 2008, that the
Consortium’s fiscal year 2008 action plan contained appropriate recapture provisions.
City of Huntsville, AL
Contrary to HUD’s requirements, the City included recapture provisions in its fiscal year 2009
action plan that did not limit the amount of Program funds that could be recaptured to the net
proceeds from the sale of a home. However, HUD’s Birmingham, AL, Office of Community
Planning and Development stated in its action plan review checklist, dated June 29, 2009, that
the City’s fiscal year 2009 action plan contained appropriate recapture provisions.
State of Indiana
Contrary to HUD’s requirements, the State included resale provisions in its fiscal year 2008
action plan that did not define a fair return on investment to the original Program-assisted owner.
However, HUD’s Indianapolis, IN, Office of Community Planning and Development stated in its
action plan review checklist, dated June 24, 2008, that the State’s fiscal year 2008 action plan
contained appropriate resale provisions.
Jefferson County, CO
Contrary to HUD’s requirements, the County included recapture provisions in its program year
2008 action plan that did not limit the amount of Program funds that could be recaptured to the
net proceeds from the sale of a home. Further, the County included resale provisions that did not
define a fair return on investment to the original Program-assisted owner or affordability to a
reasonable range of low-income home buyers. However, HUD’s Denver, CO, Office of
Community Planning and Development stated in its action plan review checklist, dated May 30,
2008, that the County’s program year 2008 action plan contained appropriate resale and
recapture provisions.
Commonwealth of Kentucky
Contrary to HUD’s requirements, the Commonwealth did not include resale and/or recapture
provisions in its fiscal year 2009 action plan. The Commonwealth stated in its fiscal year 2009
action plan that an administrator of its Program, the Kentucky Housing Corporation, would allow
applicants to choose either resale or recapture provisions after considering the needs of the
community and the income levels to be served. Further the Commonwealth stated that all
provisions would comply with HUD’s regulations at 24 CFR 92.254. However, HUD’s
21
Louisville, KY, Office of Community Planning and Development stated in its action plan review
checklist, dated June 25, 2009, that the Commonwealth’s fiscal year 2009 action plan contained
appropriate resale and/or recapture provisions.
City of Lawrence, MA
Contrary to HUD’s requirements, the City included recapture provisions in its program year
2008 to 2009 action plan that did not limit the amount of Program funds that could be recaptured
to the net proceeds from the sale of a home. Further, the City did not describe which option of
recapture it would use for its projects. However, HUD’s Boston, MA, Office of Community
Planning and Development stated in its action plan review checklist, dated July 1, 2008, that the
City’s program year 2008 to 2009 action plan contained appropriate recapture provisions.
Madison County, IL
Contrary to HUD’s requirements, the County included resale provisions in its fiscal year 2007
action plan that did not define a fair return on investment to the original Program-assisted owner.
However, HUD’s Chicago, IL, Office of Community Planning and Development stated in its
action plan review checklist, dated August 24, 2007, that the County’s fiscal year 2007 action
plan contained appropriate resale provisions.
State of Maine
Contrary to HUD’s requirements, the State did not include resale and/or recapture provisions in
its program year 2008 action plan. The State stated in its program year 2008 action plan that its
resale and recapture provisions would be consistent with the requirements of the Program and
with any other specifics identified in each individual financial agreement package. The State did
not provide nor did HUD’s Manchester, ME, Office of Community Planning and Development
request additional documentation regarding the State’s resale and/or recapture provisions.
However, HUD’s Manchester Office of Community Planning and Development stated in its
action plan review checklist, dated December 11, 2007, that the State’s program year 2008 action
plan contained appropriate resale and/or recapture provisions.
State of Montana
Contrary to HUD’s requirements, the State included resale provisions in its program year 2008
action plan that did not define a fair return on investment to the original Program-assisted owner.
However, HUD’s Denver, CO, Office of Community Planning and Development stated in its
action plan review checklist, dated March 4, 2008, that the State’s program year 2008 action plan
contained appropriate resale provisions.
City of New Britain, CT
Contrary to HUD’s requirements, the City did not include resale and/or recapture provisions in
its program year 2006 action plan. Further, the City did not state whether it would require resale
and/or recapture provisions to be imposed for its projects. However, HUD’s Hartford, CT,
Office of Community Planning and Development stated in its action plan review checklist, dated
June 28, 2006, that the City’s program year 2006 action plan contained appropriate resale and/or
recapture provisions.
22
State of New Mexico
Contrary to HUD’s requirements, the State included recapture provisions in its program year
2009 action plan that did not limit the amount of Program funds that could be recaptured to the
net proceeds from the sale of a home. However, HUD’s Albuquerque, NM, Office of
Community Planning and Development stated in its action plan review checklist, dated
December 2, 2008, that the State’s program year 2009 action plan contained appropriate
recapture provisions.
State of New York
Contrary to HUD’s requirements, the State included resale provisions in its program years 2008
and 2009 action plans that did not define a fair return on investment to the original Program-
assisted owner or affordability to a reasonable range of low-income home buyers. However,
HUD’s New York, NY, Office of Community Planning and Development stated in its action
plan review checklists, dated December 28, 2007, and December 29, 2008, that the State’s
program years 2008 and 2009 action plans, respectively, contained appropriate resale provisions.
State of North Dakota
Contrary to HUD’s requirements, the State did not include resale and/or recapture provisions in
its program year 2008 action plan. However, the State’s program year 2008 action plan included
a Web address for its 2008 Program description, which contained the State’s resale and recapture
provisions. The State included resale provisions in its 2008 Program description that did not
define a fair return on investment to the original Program-assisted owner. HUD’s Denver, CO,
Office of Community Planning and Development stated in its action plan review checklist, dated
March 17, 2008, that the State’s program year 2008 action plan did not contain appropriate resale
and recapture provisions. However, HUD’s Denver Office of Community Planning and
Development approved the State’s program year 2008 action plan.
State of Ohio
Contrary to HUD’s requirements, the State included resale provisions in its fiscal year 2005
consolidated plan that did not define a fair return on investment to the original Program-assisted
owner. However, HUD’s Columbus, OH, Office of Community Planning and Development
stated in its consolidated plan review checklist, dated June 16, 2005, that the State’s fiscal year
2005 consolidated plan contained appropriate resale provisions.
Orange County, CA
Contrary to HUD’s requirements, the County included resale provisions in its fiscal year 2008 to
2009 action plan that did not define a fair return on investment to the original Program-assisted
owner. Further, the County did not include recapture provisions in its fiscal year 2008 to 2009
action plan although the County was required to ensure that recapture provisions were placed on
the property under project number 1884. However, HUD’s Los Angeles, CA, Office of
Community Planning and Development stated in its action plan review checklist, dated June 11,
2008, that the County’s fiscal year 2008 to 2009 action plan contained appropriate resale and
recapture provisions.
23
Pinellas County, FL, Consortium
Contrary to HUD’s requirements, the Consortium included recapture provisions in its program
year 2007 to 2008 action plan that inappropriately stated that Program funds recaptured during a
project’s period of affordability would be used to assist other eligible home buyers in accordance
with Program regulations. However, HUD’s Jacksonville, FL, Office of Community Planning
and Development stated in its action plan review checklist, dated September 20, 2007, that the
Consortium’s program year 2007 to 2008 action plan contained appropriate recapture provisions.
City of Syracuse, NY
Contrary to HUD’s requirements, the City did not include resale and/or recapture provisions in
its program year 2008 to 2009 action plan. The City stated in its program year 2008 to 2009
action plan that the guidelines for resale and recapture would be incorporated into each
successful applicant’s signed promissory note. HUD’s Buffalo, NY, Office of Community
Planning and Development requested and received the City’s standard promissory note templates
as part of its review of the City’s program year 2008 to 2009 action plan. However, HUD’s
Buffalo Office of Community Planning and Development stated in its action plan review
checklist, dated April 29, 2008, that the City’s program year 2008 to 2009 action plan contained
appropriate resale and recapture provisions. Further, HUD’s Buffalo Office of Community
Planning and Development approved the City’s program year 2008 to 2009 action plan without
requiring the City to include its resale and recapture provisions.
State of Tennessee
Contrary to HUD’s requirements, the State included recapture provisions in its fiscal year 2008
to 2009 action plan that did not limit the amount of Program funds that could be recaptured to the
net proceeds from the sale of a home. However, HUD’s Knoxville, TN, Office of Community
Planning and Development stated in its action plan review checklist, dated June 19, 2008, that
the State’s fiscal year 2008 to 2009 action plan contained appropriate recapture provisions.
Commonwealth of Virginia
Contrary to HUD’s requirements, the Commonwealth did not include recapture provisions in its
program year 2008 to 2009 action plan. The Commonwealth stated in its program year 2008 to
2009 action plan that its recapture provisions were included in its Program details. HUD’s
Richmond, VA, Office of Community Planning and Development requested and received the
Commonwealth’s 2008 to 2009 homeownership program guidelines/details, which included the
Commonwealth’s recapture provisions, as part of its review of the Commonwealth’s program
year 2008 to 2009 action plan. However, HUD’s Richmond Office of Community Planning and
Development stated in its action plan review checklist, dated June 25, 2008, that the
Commonwealth’s program year 2008 to 2009 action plan contained appropriate recapture
provisions. Further, HUD’s Richmond Office of Community Planning and Development
approved the Commonwealth’s program year 2008 to 2009 action plan without requiring the
Commonwealth to include its recapture provisions.
Washington County, OR, Consortium
Contrary to HUD’s requirements, the Consortium included recapture provisions in its program
year 2008 action plan that did not limit the amount of Program funds that could be recaptured to
the net proceeds from the sale of a home. However, HUD’s Portland, OR, Office of Community
24
Planning and Development stated in its action plan review checklist, dated June 20, 2008, that
the Consortium’s program year 2008 action plan contained appropriate recapture provisions.
Waterloo, IA, Consortium
Contrary to HUD’s requirements, the Consortium included resale provisions in its fiscal year
2008 action plan that did not define a fair return on investment to the original Program-assisted
owner or affordability to a reasonable range of low-income home buyers. However, HUD’s
Omaha, NE, Office of Community Planning and Development stated in its action plan review
checklist, dated June 26, 2007, that the Consortium’s fiscal year 2008 action plan contained
appropriate resale provisions.
City of Worcester, MA
Contrary to HUD’s requirements, the City included recapture provisions in its program year
2008 to 2009 action plan that did not limit the amount of Program funds that could be recaptured
to the net proceeds from the sale of a home. Further, the City did not describe which option of
recapture it would use for its projects. However, HUD’s Boston, MA, Office of Community
Planning and Development stated in its action plan review checklist, dated August 12, 2008, that
the City’s program year 2008 to 2009 action plan contained appropriate recapture provisions.
25
Appendix E
IMPLEMENTATION OF RESALE OR RECAPTURE
PROVISIONS FOR PARTICIPATING JURISDICTIONS’
PROJECTS
Allegheny County, PA, Consortium
The Consortium did not ensure that its subrecipient, the Allegheny County Residential Finance
Authority, implemented appropriate resale or recapture provisions for project number 4500.
Although the mortgage between the Authority and the home buyer included affordability
requirements for the project, the mortgage inappropriately included provisions that were a hybrid
of HUD’s resale and recapture requirements.
Cobb County, GA, Consortium
The Consortium did not ensure that its community housing development organization, Cobb
Housing, Incorporated, implemented resale provisions for project number 2222. Cobb Housing
used $9,947 in Program funds to purchase property which was eventually sold to a home buyer.
Additional Program funds were not used for the project, and the home buyer did not receive
direct Program assistance. However, the Consortium did not ensure that resale restrictions were
placed on the property.
State of Florida
The State did not ensure that its administrator of the Program, the Florida Housing Finance
Corporation, implemented appropriate recapture provisions for project numbers 8031, 8954, and
9844. Although the mortgages and the promissory notes between the Corporation and each
home buyer included affordability requirements for the projects, neither the mortgages nor the
promissory notes contained language that limited the amount of Program funds that the
Corporation could recapture to the net proceeds from the sale of the home.
Fresno County, CA
The County did not ensure that it implemented appropriate recapture provisions for project
number 130. Although the deed of trust and the promissory note between the County and the
home buyer included affordability requirements for the project, neither the deed of trust nor the
promissory note contained language that limited the amount of Program funds that the County
could recapture to the net proceeds from the sale of the home.
Jefferson County, CO
The County did not ensure that its subrecipient, the Colorado Housing Assistance Corporation,
implemented appropriate recapture provisions for project number 636. Although the deed of
trust and the promissory note between the Corporation and the home buyer included affordability
requirements for the project, neither the deed of trust nor the promissory note contained language
that limited the amount of Program funds that the Corporation could recapture to the net
proceeds from the sale of the home.
26
Commonwealth of Kentucky
The Commonwealth did not ensure that an administrator of its Program, the Kentucky Housing
Corporation, implemented appropriate recapture provisions for project numbers 13231 and
13516. Although the mortgages and the promissory notes between the Corporation and each
home buyer included affordability requirements for the projects, neither the mortgages nor the
promissory notes contained language that limited the amount of Program funds that the
Corporation could recapture to the net proceeds from the sale of the home.
City of Lawrence, MA
The City did not ensure that it implemented appropriate recapture provisions for project number
1944. Although the mortgage and the promissory note between the City and the home buyer
included affordability requirements for the project, neither the mortgage nor the promissory note
contained language that limited the amount of Program funds that the City could recapture to the
net proceeds from the sale of the home.
Madison County, IL
The County did not ensure that its administrator of the Program, Madison County Community
Development, implemented appropriate recapture provisions for project number 2610. Although
the mortgage and the promissory note between Madison County Community Development and
the home buyer included affordability requirements for the project, neither the mortgage nor the
promissory note contained language that limited the amount of Program funds that Madison
County Community Development could recapture to the net proceeds from the sale of the home.
State of Montana
The State did not ensure that its community housing development organization, Northwest
Montana Human Resources, Incorporated, implemented appropriate recapture provisions for
project number 3515. Although the promissory note between Northwest and the home buyer
included affordability requirements for the project, the promissory note did not contain language
that limited the amount of Program funds that Northwest could recapture to the net proceeds
from the sale of the home. Further, the State did not ensure that a deed restriction, land
covenant, affidavit, and/or lien was placed on the property purchased under project number 3515.
City of New Britain, CT
The City did not ensure that it implemented appropriate recapture provisions for project number
1317. Although the mortgage and the promissory note between the City and the home buyer
included affordability requirements for the project, neither the mortgage nor the promissory note
contained language that limited the amount of Program funds that the City could recapture to the
net proceeds from the sale of the home.
State of New York
The State did not ensure that its community housing development organization, Home
HeadQuarters, Incorporated, implemented appropriate resale provisions for project number
23424. Home HeadQuarters used $30,000 in Program funds for a development subsidy for a
home under project number 23424. Additional Program funds were not used for the project and
the home buyer did not receive direct Program assistance. However, the State did not ensure that
27
resale restrictions were placed on the property. Home HeadQuarters inappropriately placed
recapture restrictions on the property rather than resale restrictions.
State of North Carolina
The State did not ensure that its administrator of the Program, the North Carolina Housing
Finance Agency, implemented appropriate recapture provisions for project number 19200. The
Agency’s Program funding was loaned to the home buyer under a combination loan arrangement
in which a single loan was funded by the Agency and its program participant, Habitat for
Humanity of High Point, Archdale, and Trinity, Incorporated. Habitat was responsible for
servicing the combination loan and remitting to the Agency its pro rata share of the home buyer’s
payments. Although the deed of trust and the promissory note between Habitat and the home
buyer included affordability requirements for the project, neither the deed of trust nor the
promissory note contained language that limited the amount of Program funds that the Agency or
Habitat could recapture to the net proceeds from the sale of the home.
State of Ohio
The State did not ensure that its recipient, Fayette County, implemented appropriate recapture
provisions for project number 14627. Although the mortgage and the promissory note between
the County and the home buyer included affordability requirements for the project, neither the
mortgage nor the promissory note contained language that limited the amount of Program funds
that the County could recapture to the net proceeds from the sale of the home.
Orange County, CA
The County did not ensure that it implemented appropriate recapture provisions for project
number 1884. Although the deed of trust and the promissory note between the County and the
home buyer included affordability requirements for the project, neither the deed of trust nor the
promissory note contained language that limited the amount of Program funds that the County
could recapture to the net proceeds from the sale of the home.
City of Syracuse, NY
The City did not ensure that its subrecipient, Home HeadQuarters, Incorporated, implemented
appropriate recapture provisions for project number 3935. Although the mortgage and the
promissory note between Home HeadQuarters and the home buyer included affordability
requirements for the project, neither the mortgage nor the promissory note contained language
that limited the amount of Program funds that Home HeadQuarters could recapture to the net
proceeds from the sale of the home.
Commonwealth of Virginia
The Commonwealth did not ensure that its administrator of the Program, the Virginia
Department of Housing and Community Development, implemented appropriate recapture
provisions for project number 11265. Although the deed of trust and the promissory note
between the Department and the home buyer included affordability requirements for the project,
neither the deed of trust nor the promissory note contained language that limited the amount of
Program funds that the Department could recapture to the net proceeds from the sale of the
home.
28
Wheeling, WV, Consortium
The Consortium did not ensure that its member, Brooke County, implemented appropriate
recapture provisions for project number 1145. Although the deed of trust and the promissory
note between the County and the home buyer included affordability requirements for the project,
neither the deed of trust nor the promissory note contained language that limited the amount of
Program funds that the County could recapture to the net proceeds from the sale of the home.
City of Worcester, MA
The City did not ensure that it implemented appropriate recapture provisions for project number
1377. Although the mortgage and the promissory note between the City and the home buyer
included affordability requirements for the project, neither the mortgage nor the promissory note
contained language that limited the amount of Program funds that the City could recapture to the
net proceeds from the sale of the home.
29
The Office of Affordable Housing Programs' Oversight of Resale and Recapture Provisions for HOME Investment Partnerships Program-Assisted Homeownership Projects Was Inadequate
Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-04-13.
Below is a raw (and likely hideous) rendition of the original report. (PDF)