HOMEfires - Vol. 1 No. 9, August 1, 1998

Q: What are the HOME and other Federal requirements that apply to property receiving HOME downpayment assistance?

A: The HOME Program has become an increasingly popular source of funds to assist new homebuyers with downpayment and closing costs. During Fiscal Year 1997, 20,678 units were acquired using HOME funds, representing 23.2% of HOME funds used last year. Based on widespread use of HOME money for downpayment assistance, it is important for participating jurisdictions (PJs) to review their program designs to ensure that they meet HOME Program requirements relating to property values, eligible applicants and the recapture/resale provisions. In addition to these requirements, there are HOME and other Federal requirements that apply to the properties being acquired through downpayment assistance programs.

PROPERTY STANDARDS

Each property acquired with HOME downpayment and closing cost assistance is subject to the HOME property standards in 24 CFR 92.251 (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr92.251.htm). These properties must meet all applicable State and local housing quality standards and code requirements. If there are no such standards or code requirements, the housing must meet the Housing Quality Standards in 24 Code of Federal Regulations (CFR) 982.401.

ENVIRONMENTAL REQUIREMENTS

Acquisition of single family properties is a categorically excluded activity. This means that an activity does not have a significant effect on the environment and does not require an environmental assessment or environmental impact statement. Categorically excluded projects must still comply with non-NEPA (National Environmental Policy Act) statutes and regulations and the ERR (Environmental Review) must document this compliance. Single-family acquisition includes projects which involve an individual action on a one- to four-family dwelling or a project of five or more units on scattered sites more that 2000 feet apart. (See 24 CFR (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr92.352.htm) 92.352 and CPD Notice 94-18)

RELOCATION

PJs must ensure that it has taken all reasonable steps to minimize the displacement of persons as a result of a project assisted with HOME funds. For downpayment and closing cost programs, the PJ must inform the seller of property, in writing, that the prospective homebuyer does not have the power of eminent domain and, therefore, will not acquire the property if negotiations fail to result in an amicable agreement. The seller must also be informed, in writing by the PJ, of the estimate of the fair market value of the property.

If the property being considered by the prospective homebuyer is tenant-occupied, the tenant must be provided relocation assistance. That assistance includes advisory services, certain notices, moving expenses, and replacement housing assistance. Replacement housing assistance consists of either rental assistance or downpayment assistance if the tenant wishes to become a homeowner. (24 CFR (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr92.353.htm) 92.353, 49 CFR 24.101)

LEAD-BASED PAINT

The HOME lead based paint (LBP) requirements apply to all activities including acquisition not involving rehabilitation (e.g. downpayment assitance programs.) In each unit receiving HOME assistance, all intact and nonintact interior and exterior surfaces in HOME-assisted projects must be inspected for presence of defective paint, i.e. cracking, scaling, chipping, peeling, or loose paint. Where defective paint is found, it must be treated to eliminate immediate hazards. At a minimum, treatment is removal of the defective paint and repainting of the surface. More details on HOME-project LBP requirements are contained in HOMEfires Volume 1, No. 7, April, 1998.