[Code of Federal Regulations]
[Title 24, Volume 4]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR904.110]

[Page 319-321]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
CHAPTER IX--OFFICE OF ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 904_LOW RENT HOUSING HOMEOWNERSHIP OPPORTUNITIES--Table of Contents
 
                Subpart B_Turnkey III Program Description
 
Sec. 904.110  Earned Home Payments Account (EHPA)

    (a) Credits to the account. The LHA shall establish and maintain a 
separate EHPA for each homebuyer. Since the homebuyer is responsible for 
maintaining the home, a portion of his required monthly payment equal to 
the LHA's estimate, approved by HUD, of the monthly cost for such 
routine maintenance, taking into consideration the relative type and 
size of the homebuyer's home, shall be set aside in his EHPA. In 
addition, this account shall be credited with
    (1) Any voluntary payments made pursuant to paragraph (f) of this 
section, and
    (2) Any amount earned through the performance of maintenance as 
provided in paragraph (d) of this section and Sec. 904.111(c).
    (b) Charges to the account. (1) If for any reason the homebuyer is 
unable or fails to perform any item of required maintenance as described 
in Sec. 904.107(a), the LHA shall arrange to have the work done in 
accordance with the procedures established by the LHA and the HBA and 
the cost thereof shall be charged to the homebuyer's EHPA. Inspections 
of the home shall be made jointly by the LHA and the HBA.
    (2) To the extent NRMR expense is attributable to the negligence of 
the homebuyer as determined by the HBA and approved by the LHA (see 
Sec. 904.111), the cost thereof shall be charged to the EHPA.
    (c) Exercise of option; required amount in EHPA. The homebuyer may 
exercise his option to buy the home, by paying the applicable purchase 
price pursuant

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to Sec. 904.113 or Sec. 904.115, only after satisfying the following 
conditions precedent:
    (1) Within the first two years of his occupancy, he has achieved a 
balance in his EHPA equal to 20 times the amount of the monthly EHPA 
credit as initially determined in accordance with paragraph (a) of this 
section;
    (2) He has met, and is continuing to meet, the requirements of the 
Homebuyers Ownership Opportunity Agreement;
    (3) He has rendered, and is continuing to render, satisfactory 
performance of his responsibilities to the HBA.

When the homebuyer has met these conditions precedent, the LHA shall 
give the homebuyer a certificate to that effect. After achieving the 
required minimum EHPA balance within the first two years of his 
occupancy, the homebuyer shall continue to provide the required 
maintenance, thereby continuing to add to his EHPA. If the homebuyer 
fails to meet either his obligation to achieve the minimum EHPA balance, 
as specified, or his obligation thereafter to continue adding to the 
EHPA, the LHA and the HBA shall investigate and take appropriate 
corrective action, including termination of the Agreement by the LHA in 
accordance with Sec. 904.107(m).
    (d) Additional equity through maintenance of common property. 
Homebuyers may earn additional EHPA credits by providing in whole or in 
part any of the maintenance necessary to the common property of the 
development. When such maintenance is to be provided by the homebuyer, 
this may be done and credit earned therefor only pursuant to a prior 
written agreement between the homebuyer and the LHA (or the home owners 
association, depending on who has responsibility for maintenance of the 
property involved), covering the nature and scope of the work and the 
amount of credit the homebuyer is to receive. In such cases, the agreed 
amount shall be charged to the appropriate maintenance account and 
credited to the homebuyer's EHPA upon completion of the work.
    (e) Investment of excess. (1) When the aggregate amount of all EHPA 
balances exceeds the estimated reserve requirements for 90 days, the LHA 
shall notify the HBA and shall invest the excess in federally insured 
savings accounts, federally insured credit unions, and/or securities 
approved by HUD and in accordance with any recommendations made by the 
HBA. If the HBA wishes to participate in the investment program, it 
should submit periodically to the LHA a list of HUD-approved securities, 
bonds, or obligations which the association recommends for investment by 
the LHA of the funds in the EHPAs. Interest earned on the investment of 
such funds shall be prorated and credited to each homebuyer's EHPA in 
proportion to the amount in each such reserve account.
    (2) Periodically, but not less often than semi-annually, the LHA 
shall prepare a statement showing (i) the aggregate amount of all EHPA 
balances; (ii) the aggregate amount of investments (savings accounts 
and/or securities) held for the account of all the homebuyers' EHPAs, 
and (iii) the aggregate uninvested balance of all the homebuyers' EHPAs. 
This statement shall be made available to any authorized representative 
of the HBA.
    (f) Voluntary payments. To enable the homebuyer to acquire title to 
his home within a shorter period, he may, either periodically or in a 
lump sum, voluntarily make payments over and above his required monthly 
payments. Such voluntary payments shall be deposited to his credit in 
his EHPA.
    (g) Delinquent monthly payments. Under exceptional circumstances as 
determined by the HBA and the LHA, a homebuyer's EHPA may be used to pay 
his delinquent required monthly payments, provided the amount used for 
this purpose does not seriously deplete the account and provided that 
the homebuyer agrees to cooperate in such counseling as may be made 
available by the LHA or the HBA.
    (h) Annual statement to homebuyer. The LHA shall provide an annual 
statement to each homebuyer specifying at least (1) the amount in his 
EHPA, and (2) the amount in his NRMR. During the year, any maintenance 
or repair done on the dwelling by the LHA which is chargeable to the 
EHPA or to the NRMR shall be accounted for through a work order. A 
homebuyer shall receive

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a copy of all such work orders for his home.
    (i) Withdrawal and assignment. The homebuyer shall have no right to 
assign, withdraw, or in any way dispose of the funds in its EHPA except 
as provided in this section or in Sec. 904.113 and Sec. 904.115.
    (j) Application of EHPA upon vacating of dwelling. (1) In the event 
a Homebuyers Ownership Opportunity Agreement with the LHA is terminated 
or if the homebuyer vacates the home (see Sec. 904.107 (m), (n) and 
(o)), the LHA shall charge against the homebuyer's EHPA the amounts 
required to pay
    (i) The amount due the LHA, including the monthly payments the 
homebuyer is obligated to pay up to the date he vacates;
    (ii) The monthly payment for the period the home is vacant, not to 
exceed 30 days from the date of notice of intention to vacate, or, if 
the homebuyer fails to give notice of intention to vacate, 30 days from 
the date the home is put in good condition for the next occupant in 
conformity with Sec. 904.107; and
    (iii) The cost of any routine maintenance, and of any nonroutine 
maintenance attributable to the negligence of the homebuyer, required to 
put the home in good condition for the next occupant in conformity with 
Sec. 904.107.
    (2) If the EHPA balance is not sufficient to cover all of these 
charges, the LHA shall require the homebuyer to pay the additional 
amount due. If the amount in the account exceeds these charges, the 
excess shall be paid to the homebuyer.
    (3) Settlement with the homebuyer shall be made promptly after the 
actual cost of repairs to the dwelling has been determined (see 
paragraph (j)(1)(iii) of this section), provided that the LHA shall make 
every effort to make such settlement within 30 days from the date the 
homebuyer vacates. The homebuyer may obtain a settlement within 7 days 
of the date he vacates, even though the actual cost of such repair has 
not yet been determined, if he has given the LHA notice of intention to 
vacate at least 30 days prior to the date he vacates and if the amount 
to be charged against his EHPA for such repairs is based on the LHA's 
estimate of the cost thereof (determined after consultation with the 
appropriate representative of the HBA).