[Code of Federal Regulations]

[Title 24, Volume 4]

[Revised as of April 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR904.113]



[Page 317-318]

 

                 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.  904.113  Achievement of ownership by initial homebuyer.



    (a) Determination of initial purchase price. The LHA shall determine 

the initial purchase price of the home by two basic steps, as follows:



    Step 1: The LHA shall take the Estimated Total Development Cost 

(including the full amount for contingencies as authorized by HUD) of 

the development as shown in the Development Cost Budget in effect upon 

award of the Main Construction Contract or execution of the Contract of 

Sale, and shall deduct therefrom the amounts, if any, attributed to (1) 

relocation costs, (2) counseling and training costs, and (3) the cost of 

any community, administration or management facilities including the 

land, equipment, and furnishings attributable to such facilities as set 

forth in the development program for the development. The resulting 

amount is herein called Estimated Total Development Cost for Homebuyers.

    Step 2: The LHA shall apportion the Estimated Total Development Cost 

for Homebuyers among all the homes in the development. This 

apportionment shall be made by obtaining an FHA appraisal of each home 

and adjusting such appraised values (upward or downward) by the 

percentage difference between the total of the appraisal for all the 

Homes and the Estimated Total Development Cost for Homebuyers. The 

adjusted



[[Page 318]]



amount for each home shall be the initial purchase price for that home.



    (b) Purchase price schedule. Each homebuyer shall be provided with a 

Purchase Price Schedule showing (1) the monthly declining purchase price 

over a 30-year period,\1\ commencing with the initial purchase price on 

the first day of the month following the effective date of the 

Homebuyers Ownership Opportunity Agreement and (2) the monthly debt 

service amount upon which the Schedule is based. The Schedule and debt 

service amount shall be computed on the basis of the initial purchase 

price, a 30-year period,\2\ and a rate of interest equal to the minimum 

loan interest rate as specified in the Annual Contributions Contract for 

the Project on the date of HUD approval of the Development Cost Budget, 

described in paragraph (a) of this section, rounded up, if necessary, to 

the next multiple of one-fourth of one percent (\1/4\ percent).

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    \1\ Change to 25-year period where appropriate pursuant to Sec.  

904.101(b)(3).

    \2\ Under section 234(c) of the National Housing Act, as of the date 

of publication of this subpart, mortgage insurance for a condominium 

unit in a multi-family project is generally authorized only if the 

project is currently or has been covered by a mortgage insured under 

another section of the National Housing Act. There is, however, a 

proviso which authorizes mortgage insurance for a condominium unit in a 

multi-family project even though the project is not or has not been 

covered by such a project mortgage, if the project involves eleven or 

less units.

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    (c) Methods of purchase. (1) The homebuyer may achieve ownership 

when the amount in his EHPA, plus such portion of the NRMR as he wishes 

to use for the purchase, is equal to the purchase price as shown at that 

time on his Purchase Price Schedule plus all Incidental Costs 

(Incidental Costs mean the costs incidental to acquiring ownership, 

including, but not limited to, the costs for a credit report, field 

survey, title examination, title insurance, and inspections, the fees 

for attorneys other than the LHA's attorney, mortgage application and 

organization, closing and recording, and the transfer taxes and loan 

discount payment, if any). If for any reason title to the home is not 

conveyed to the homebuyer during the month in which such circumstances 

occur, the purchase price shall be fixed at the amount specified for 

such month and the homebuyer shall be refunded (i) the net additions, if 

any, credited to his EHPA subsequent to such month, and (ii) such part 

of the monthly payments made by the homebuyer after the purchase price 

has been fixed which exceeds the sum of the break-even amount 

attributable to the unit and the interest portion of the debt service 

shown in the Purchase Price Schedule.

    (2) Where the sum of the purchase price and Incidental Costs is 

greater than the amounts in the homebuyer's EHPA and NRMR as described 

in paragraph (c)(1) of this section, the homebuyer may achieve ownership 

by obtaining financing for or otherwise paying the excess amount. The 

purchase price shall be the amount shown on his Purchase Price Schedule 

for the month in which the settlement date for the purchase occurs.

    (d) The maximum period for achieving ownership shall be 30 years, 

but depending upon increases in the homebuyers income and the amount of 

credit which the homebuyer can accumulate through maintenance and 

voluntary payments, the period may be shortened accordingly.