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Recapture

Recapture is a potential repayment by a low-income borrower of a portion of the interest savings they received through a low interest rate loan. This is a federal requirement that is intended to recapture interest savings only from borrowers who have improved their financial position and no longer need the savings. Since the law has been in effect, the overwhelming majority of borrowers do not pay recapture. In the event they are required to pay, the amount of the recapture payment will never exceed the amount of interest savings the borrower received from the program.

Recapture payment is required when all three of the following events occur:

  • Home is resold during the first nine years of ownership
  • There is a net profit on the sale of the home
  • Borrower has a substantial increase in income

 

The amount of recapture that a borrower is subject to is computed by using a formula that takes into consideration the following things:

  • Date of sale or transfer of the home
  • Borrowers income in the year of the sale or transfer
  • Amount of gain from the sale or transfer

 

Click here for more detailed information about recapture payments: Recapture Brochure

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