8.1 Requesting a Resale Price Determination.
(a) For Purpose of Resale. An owner who wishes to sell a WFH Unit during the applicable control period must notify the Department in writing of their intent to sell, and request a resale price determination.
(b) For Purposes of Refinancing. During the applicable control period, the owner of a WFH Unit must not refinance their WFH Unit for more than the approved resale price, as determined by the Department. Owners wishing to refinance must request a resale price determination, in writing, from the Department, and provide a copy of an appraisal of the WFH Unit indicating the current fair market value. Such a refinancing does not relieve the owner of the responsibility to pay to the Housing Initiative Fund the required amount of the excess proceeds as calculated under these regulations.
(c) The refinancing must not result in reducing the owner’s equity below $10,000.
8.2 Establishing the Maximum Resale Price and the Amount Returned to the Seller at Resale. The Department must calculate the maximum resale price and the amount returned to the seller for the WFH Unit according to the following procedures and factors:
(a) The base sales price is the original sales price paid for the WFH Unit, plus an allowance equal to the rate of increase in the consumer price index between the month and year of initial sale and the current month and year. Fees or points paid for permanent mortgage financing that were added to the original purchase price may be deducted from the base price used to calculate the resale price unless the terms of the resale include an assumption of the mortgage.
(b) The return to the seller is the base sales price, plus an appreciation allowance equal to 15% of the difference between the appraised fair market value at the time of the original purchase and the appraised fair market value at resale.
(c) To the above, the Department must add the current Fair Market Value of Capital Improvements, as determined by the Department, made to a unit after the date of purchase. Capital Improvements must be permanent in nature and clearly add to the market value of the house or property. Normal owner maintenance, general repair work, and decorative items or work must not be included in the resale price determination.
(1) The owner must provide an itemized list of all Capital Improvements and upgrades for which credit is requested as part of the resale price. All Capital Improvements claimed must be documented with receipts, contracts or other evidence supporting their value. The Department may establish standard fair market values for certain Capital Improvements, and this value may be use by the Department rather than cost data records of the Capital Improvements submitted by the owner.
(2) Where there is evidence of physical deterioration, abnormal wear and tear, or obsolescence because of neglect, abuse, or insufficient maintenance, the Fair Market Value of Capital Improvements will be reduced to account for the depreciation of the WFH Unit.
(3) Appliances will be depreciated on a 10 year straight-line basis from the initial purchase price.
(4) The owner must permit a representative of the Department to inspect the WFH Unit upon request to verify the existence and value of any Capital Improvements that are being claimed by the owner.
(d) The Department may approve a closing cost credit up to 3.5 percent of the maximum resale price to be added to the base price on behalf of the purchaser to pay for eligible closing costs. The seller must permit the purchaser to choose to purchase the WFH Unit at the base price, or at the base price plus the closing cost credit.
(e) No allowance is included in the resale price for the payment of real estate brokerage fees associated with the sale of the unit. A brokerage fee may be added to the resale price only if the unit is not sold during the Priority Marketing Period. The unit must have been actively marketed and included on the Department’s resale information list and the resale telephone information line. Failure by the seller to accept a bona-fide offer may be justification for the Department’s extending the Priority Marketing Period.
(f) If Veterans Administration (VA) financing is used to finance the purchase of a resale WFH Unit, the loan discount financing points must be added to the established maximum resale price. These points must not be included in any future resale price determination unless the purchaser utilizes VA financing or assumes the existing VA mortgage.
(g) Department Subsidy. The Department may provide a subsidy from the Housing Initiative Fund, or other such source as determined by the Department, in a form determined by the Department to ensure that the seller receives the return due to them while also ensuring that the resale price remains affordable to Certified Households in the Program. Any subsidy is calculated by subtracting the resale price from the amount of return due to the seller.
8.3 Resale Procedures.
(a) The Department or its designee, or the Commission has the right-of-first-refusal to purchase any resale WFH Unit. The owner must offer the WFH Unit for resale only to the Department or the Commission, in that order, during the first 60 days following the owner’s notification to the Department. The County may assign its right to purchase the unit to a third-party non-profit housing provider or to a Certified Household.
(b) The Department must notify the owner of the approved resale price within 21 days of receiving a request for a resale price determination containing all the required information.
(c) If the Department does not exercise its right to purchase, the Department will notify the Commission within 5 days and provide a description of the unit and the approved resale price. The Commission must notify the Department within 21 days if it wishes to purchase the WFH Unit. The Department must notify the owner within the 60 day period whether or not the Department or its designee, or the Commission, intends to purchase the unit, and of any other conditions of the purchase. If the WFH Unit is not purchased by the Department, its designee, or the Commission, the Department must notify the owner of the method that must be used to sell the unit. If the Department or its designee, or the Commission decides to purchase the unit, the appropriate agency must execute the purchase contract with the owner within 60 days of receiving notification from the owner.
(d) If the resale WFH Unit is purchased by the Department or its designee, or the Commission, these agencies may retain the WFH Unit or make it available to Certified Households selected through a lottery or other means as may be approved by the Department.
(e) If the unit is not purchased by the Department, its designee or the Commission, the Department will establish methods to inform households of the availability of the WFH Unit and the method to be used to select purchasers. The unit must be offered exclusively to Interested Households for a period of 60 days.
(f) If a lottery is used, the lottery drawing will commence by drawing first from among those Interested Households who have been assigned the highest number of points. The first Interested Household drawn must provide documentation of eligibility to the Department within 45 days fo the date of the lottery drawing, including:
(1) copies of the two most recent previously filed federal income tax returns;
(2) the applicant’s two most recent W-2 forms;
(3) copies of divorce or separation agreements (if applicable or if most recent tax return was filed as “married”);
(4) copies of the two most recent employment pay check stubs from each current employer;
(5) a pre-approval letter for mortgage financing from a lender in a form acceptable to the Department that indicates the maximum loan amount for which the interested household is eligible;
(6) any other information as required by the Department.
(g) Once eligibility has been verified by the Department the lottery winner will be given the exclusive right to enter into a contract for the purchase of the WFH Unit.
(h) When the WFH Unit is sold to a Certified Household, the required documents listed in Section 6.5(a) of this regulation must be executed and sent to the Department within the established time frames.
(i) The WFH Unit may be offered to the general public only after the 60 day period that the WFH Unit was available to Interested Households has expired. The owner must not offer WFH Units to the general public unless this period has ended, the Eligibility List of all Interested Households has been exhausted, and written approval has been obtained from the Department authorizing sale to the general public. The 60 day period is automatically extended unless the Department determines that no additional Interested Households are available to purchase the WFH Unit.