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Used Mobile Homes, CHAF Assistance - DATE HERE

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Used Mobile Homes, CHAF Assistance - DATE HERE

    NORTH CAROLINA DEPARTMENT OF CRIME CONTROL AND PUBLIC SAFETY

    NORTH CAROLINA REDEVELOPMENT CENTER

Michael F. Easley, Governor Yolanda T. Abram, Director

    Bryan E. Beatty, Secretary

    2005 CHAF PROGRAM POLICY MEMORANDUM

TO: Local Government 2005 CHAF Program Recipients, Contractors and Administrators

FROM: Yolanda T. Abram, Director

DATE: December 19, 2005

RE: Clarification of CHAF Program policy regarding the purchase of used mobile homes

    Land-Home Package & Real Estate, Comparable Replacement Dwelling and Duplication

    of Benefits (DOB).

     This memorandum serves to clarify existing CHAF Program policy regarding the purchase of

    used mobile homes. The N.C. Redevelopment Center Raleigh Office (NCRC) was informed that some

    homeowners whose homes were damaged or destroyed by the Hurricanes and Tropical Storms of 2004

    may have purchased used mobile homes to replace their damaged or destroyed home. The NCRC was

    asked whether the purchase of a used mobile home disqualifies the applicant from the 2005 CHAF Repair

    & Rehabilitation or Replacement programs. The NCRC received inquiries regarding whether CHAF

    assistance can be provided to move a used mobile home from a rented lot to a new lot. The NCRC

    received inquiries regarding whether a used mobile home may serve as the CHAF replacement dwelling to

    replace the eligible homeowner‟s damaged or destroyed home. The NCRC was also asked how the

    purchase of a used mobile home unit impacts the amount of 2005 CHAF Repair & Rehabilitation or

    Replacement assistance that the eligible homeowner may receive. Lastly, the NCRC was asked if the

    homeowner is required to sell the newly purchased used mobile home in order to be eligible for the 2005

    CHAF Repair & Rehabilitation or Replacement programs, or in order to bring those funds, if considered a

    DOB with the CHAF assistance, to the closing on a new CHAF replacement home.

    A. Purchase of a used mobile homeHow does this affect eligibility for the 2005 CHAF Repair

    & Rehabilitation or Replacement programs?

    The purchase of a used mobile home does not automatically disqualify a homeowner from the

    2005 CHAF Repair & Rehabilitation or Replacement programs. To determine whether the homeowner

    may still receive 2005 CHAF Repair & Rehabilitation or Replacement assistance, the local government

    and its contractor must determine whether the homeowner meets the eligibility criteria for the 2005 CHAF

    Repair & Rehabilitation or Replacement programs. The local government and its contractor must also

    determine the eligible homeowner‟s “comparable replacement dwelling” and must perform Duplication of

    Benefits (DOB) analysis for assistance received by the eligible homeowner. After determining both

    eligibility and comparables, performing DOB and meeting any remaining CHAF Program requirements,

    CHAF assistance may be provided to the homeowner.

Used Mobile Home Policy Clarification

    Page 2 of 5

    B. Can the NCRC provide CHAF assistance to move a used mobile home from a rented lot to a

    new lot?

    The CHAF Guidelines and Policy Memorandum #10 require local governments and their

    contractors to comply with FHA new construction standards for manufactured housing as outlined in the

    FHA New Construction Workbook IV. Manufactured Housing (handbook 4145.1 REV 2, Chapter 3).

    Chapter 3, Section 3-4 lists certain criteria that manufactured housing and mobile homes must meet. The

    manufactured or mobile home “must be classified and taxed as real estate” and “the mortgage must cover

    both the manufactured unit and its site. The manufactured unit must not have been installed or occupied

    previously at any other site or location. “The exception to this would be manufactured units that can be

    repaired and have not been occupied by anyone other than the eligible CHAF homeowner. In cases where

    the mobile unit can be repaired and is moved from a rented lot to property purchased for the homeowner,

    the foundation installed shall be permanent.” The CHAF Guidelines state that replacement housing must

    qualify as a land home package. 2005 CHAF Replacement funds may be used to purchase manufactured

    housing if the home qualifies as real estate, i.e., it is permanently attached to the lot, underpinned, etc. . . .

    The manufactured unit must have a permanent foundation and meet the requirements in Policy

    Memorandum #10 Permanent Foundation, Manufactured Homes dated February 9, 2001.” Therefore,

    CHAF assistance cannot be provided to move a used mobile home from a rented lot to a new lot because

    the unit must not have been installed or occupied previously at any other site or location (unless the

    manufactured unit can be repaired and has not been occupied by anyone other than the eligible CHAF

    homeowner and the unit is placed on a permanent foundation on another lot as noted above). Also, a mobile home on a rented lot does not qualify as real estate and does not qualify as a land home package.

    Although CHAF assistance cannot be provided to move a used mobile home from a rented lot to a

    new lot, the eligible homeowner may still qualify for 2005 CHAF Repair & Rehabilitation or Replacement

    assistance. If the home can be repaired and was occupied only by the eligible homeowner, then, 2005

    CHAF Repair & Rehabilitation or Replacement assistance can be provided to purchase a new lot, move

    the mobile home to the new lot and place it upon a permanent foundation. If the eligible homeowner is

    unable to obtain mortgage insurance on the relocated mobile home, or if the mobile home cannot be

    repaired, the local government and its contractor must determine the eligible homeowner‟s “comparable replacement dwelling” and must perform DOB analysis for assistance received by the eligible homeowner

    in order to determine the amount of CHAF Replacement assistance that can be provided to the eligible

    homeowner. See Architectural Processing and Inspections for Home Mortgage Insurance Directive

    Number 4145.1 REV-2, Chapter 3, Section 3-4, C. Criteria for Existing Properties which states

    Mortgage insurance is not allowed if the manufactured home was moved from another site and See 24

    C.F.R. ?203.43f.

    C. Can a used mobile home serve as the CHAF Replacement dwelling to replace the eligible

    homeowner‟s damaged or destroyed home?

    Section 3-4 of Chapter 3 of the FHA new construction standards for manufactured housing as

    outlined in the FHA New Construction Workbook IV states that “the manufactured unit must not have been installed or occupied previously at any other site or location.” Further, under the 2005 CHAF Replacement program, the eligible homeowner must receive a “comparable replacement dwelling” as

    defined under the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as

    amended, (URA) and as defined under the CHAF Optional Coverage Relocation Plan adopted by the local

    20325 Mail Service Center, Raleigh, NC 27699-0325

    Phone: (919) 733-1566 Fax: (919) 733-0518 Internet: www.ncredevelopment.org

Used Mobile Home Policy Clarification

    Page 3 of 5

government. The local government and its contractor must determine the “comparable replacement

    dwelling” for the eligible homeowner. The damaged or destroyed home must be used to determine the

    comparable replacement dwelling for the eligible homeowner. The used mobile home should not be used

    to determine the comparable replacement dwelling for the eligible homeowner. The local government and

    its contractor should identify at least three comparable replacement dwellings. To determine the

    comparable replacement home for the eligible homeowner, local governments and their contractors may

    use HUD form, HUD-40061 “Selection of Most Representative Comparable Replacement Dwelling for

    Computing a Replacement Housing Payment. HUD form 40061 is available at the U.S. HUD website at:

     www.hud.gov. (Click on “Handbooks/forms,” “forms,” “HUD forms,” then, enter “HUD-40061”).

    Therefore, a used mobile home may not serve as the replacement dwelling for the eligible homeowner

    because it has been installed or occupied previously at another site or location and because the used

    mobile home may not be a “comparable replacement dwelling” under the URA and the CHAF Optional

    Coverage Relocation Plan. Although the used mobile home may not serve as the replacement dwelling

    for the eligible homeowner‟s damaged or destroyed home, the eligible homeowner may still qualify for CHAF Replacement assistance. After determining the eligible homeowner‟s “comparable replacement

    dwelling,” performing DOB analysis for assistance received by the eligible homeowner and meeting any

    remaining CHAF Program requirements, the local government and its contractor will be able to determine

    the amount of 2005 CHAF Replacement assistance that can be provided to the eligible homeowner.

    D. How does the purchase of a used mobile home unit impact the amount of 2005 CHAF

    Repair & Rehabilitation or Replacement assistance received by an eligible homeowner?

    Before providing federal disaster assistance, FEMA requires that it must make a finding that

    federal assistance under the Stafford Act is necessary to supplement the efforts and available resources of

    the State, local governments, disaster relief organizations, and compensation by insurance for disaster-

    related losses. See 44 C.F.R. ?206.36(b)(2). The Stafford Act and its implementing regulations and

    FEMA policy require that agencies perform DOB analysis. See 42 U.S.C. ?5155, 44 C.F.R. ?206.191 and

    ?206.101(g)(4). The Hurricane Recovery Act of 2005 states “CRITICAL NEEDS NOT MET BY

    EXISTING STATE AND FEDERAL PROGRAMS AND FUNDS Section 2.1.(a) The General Assembly finds that State and federal disaster relief initiatives are not intended to make individuals whole after a

    loss; they are intended to assist the affected areas in recovering from the damage caused by the six

    hurricanes that struck North Carolina.” This provision in state law enables the State to receive assistance

    from federal agencies such as FEMA and enables the State to provide state assistance to its citizens. See

    Section 2.1(a) of the Hurricane Recovery Act of 2005. Without this provision, FEMA could assert that

    the State does not need FEMA assistance because state funds could be used to meet the State‟s needs

    because there would be no “unmet needs.” In accordance with state law at Section 2.1.(a) of the

    Hurricane Recovery Act of 2005, CHAF Repair & Rehabilitation or Replacement assistance is provided to

    meet critical unmet needs. For this reason, the 2005 CHAF Repair & Rehabilitation and Replacement

    programs require local governments and its contractors to perform DOB analysis for the assistance

    received by eligible homeowners. The CHAF Guidelines state “The local government applicant must establish a process that verifies the family‟s efforts to access federal and state assistance and that ensures that there is no duplication of benefits. A Duplication of Benefits (DOB) analysis must be performed for

     assistance received from federal, state or private resources.” See page 3 of the 2005 CHAF Guidelines. all

     DOB analysis must be performed on a case-by-case basis and DOB is unique for each individual because

    DOB is determined by the amount and kind of assistance received by the applicant and is determined by

    how the assistance was used by the applicant.

    20325 Mail Service Center, Raleigh, NC 27699-0325

    Phone: (919) 733-1566 Fax: (919) 733-0518 Internet: www.ncredevelopment.org

Used Mobile Home Policy Clarification

    Page 4 of 5

    Therefore, certain funds may constitute a DOB with CHAF assistance. Whether the funds used to purchase a used mobile home constitute a DOB with CHAF assistance is determined by the source of the

    funds and how the funds are used. For instance, a homeowner may receive FEMA funds. FEMA outlines

    in its letter to the homeowner specific purposes for which the funds may be used. If the homeowner uses

    the funds for purposes other than those required by FEMA, then, the FEMA funds may constitute a DOB

    with CHAF Repair & Rehabilitation or Replacement assistance. Local governments and its contractors

    should encourage eligible homeowners to use FEMA and/or SBA funds for the purposes outlined in the

    FEMA and/or SBA letters to the homeowner so as to not constitute a DOB with CHAF Repair &

    Rehabilitation or Replacement assistance. The funds used to purchase the used mobile home may

    constitute a DOB with CHAF Repair & Rehabilitation or Replacement assistance if the federal or state

    entity that provided the funds required the homeowner to use the funds for a specific purpose and the

    homeowner used the funds for a different purpose. For instance, if the homeowner purchased the used

    mobile home with FEMA funds or funds from another federal or state agency, and FEMA or the other

    federal or state agency required the funds to be used for a different purpose, it is possible that those funds

    may constitute a DOB with CHAF Repair & Rehabilitation or Replacement assistance.

    Further, if a homeowner receives insurance proceeds or a private loan, then, such funds may constitute a DOB with CHAF Repair & Rehabilitation or Replacement assistance. If the homeowner

    purchased the used mobile home with the insurance proceeds or the loan proceeds, then, it is possible that

    those funds may constitute a DOB with CHAF Repair & Rehabilitation or Replacement assistance.

    However, if the homeowner uses the FEMA funds for the purposes outlined in the FEMA letters to the eligible homeowner, then, the funds may not constitute a DOB with CHAF Repair & Rehabilitation or

    Replacement assistance. Further, if a homeowner uses funds from his/her income or earnings to purchase

    a used mobile home, such funds may not constitute a DOB with CHAF assistance.

     Local governments and their contractors should determine whether the homeowner meets the

    eligibility criteria for the 2005 CHAF Repair & Rehabilitation or Replacement program. The local

    governments and their contractors should determine the “comparable replacement home” using the

    damaged or destroyed home. The local governments and their contractors should perform DOB analysis

    for the assistance received by the eligible homeowner. Whether the funds used to purchase the used

    mobile home constitute a DOB with CHAF assistance is determined by the source of the funds and how

    the funds are used. To determine whether the homeowner may receive 2005 CHAF Repair &

    Rehabilitation or Replacement assistance and to determine the amount of CHAF assistance that can be

    provided to the eligible homeowner, the local government and its contractor must determine the eligible

    homeowner‟s “comparable replacement dwelling,” perform DOB analysis, and meet any remaining CHAF

    Program requirements.

    E. Is the homeowner required to sell the newly purchased used mobile home in order to be

    eligible for the 2005 CHAF Repair & Rehabilitation or Replacement programs?

    If the funds that the homeowner used to purchase the used mobile home are a DOB with the

    CHAF assistance, can the eligible homeowner choose to sell the used mobile home and then

    combine the sale proceeds with his/her CHAF assistance and bring the sale proceeds to the

    closing for the new CHAF replacement home?

    20325 Mail Service Center, Raleigh, NC 27699-0325

    Phone: (919) 733-1566 Fax: (919) 733-0518 Internet: www.ncredevelopment.org

Used Mobile Home Policy Clarification

    Page 5 of 5

    The eligible homeowner is not required to sell the used mobile home in order to be eligible for the 2005 CHAF Repair & Rehabilitation or Replacement programs. The local government or its contractor

    should not require the homeowner to sell the newly purchased used mobile home in order to be eligible

    for the CHAF Repair & Rehabilitation or Replacement programs. Also, the local government or its

    contractor should not require the homeowner to sell the newly purchased used mobile home in order to

    bring those funds, if considered a DOB with the CHAF assistance, to the closing on a new CHAF

    replacement home unless the eligible homeowner chooses to do so.

    The eligible homeowner can choose to sell the used mobile home and then combine the sale proceeds with his/her CHAF assistance and bring the sale proceeds to the closing for the new CHAF

    replacement home. It is the homeowner's decision as to what he/she wants to do with the used mobile

    home. If the funds the eligible homeowner used to purchase the used mobile home are a DOB with the

    CHAF assistance, then he/she can choose whether to sell the used mobile home and combine the sale

    proceeds with his/her CHAF assistance and bring the sale proceeds to the closing on a new CHAF

    replacement home.

    Again, whether the funds used to purchase the used mobile home constitute a DOB with CHAF assistance is determined by the source of the funds and how the funds are used.

    If you have any questions regarding this matter, please feel free to contact the NCRC at (919) 733-1566. Thank you.

cc: Bryan E. Beatty, Secretary, Crime Control and Public Safety

     William C. Dudley, Chief Deputy Secretary, CC&PS

     The Honorable Bruce Goforth, Representative, North Carolina General Assembly

     The Honorable Ray Rapp, Representative, North Carolina General Assembly

     Franklin Freeman, Sr. Assistant for Governmental Affairs, Office of the Governor

     Doug Hoell, Director, North Carolina Emergency Management

     John C. Groom, Sr., Assistant Director, NCRC

     Britne N. Becker, Agency Legal Specialist, NCRC

     Cheryl A. Perry, Assistant Attorney General, NCDOJ, Crime Control Section

     David Kelly, Director, NCRC Western Office

     NCRC Offices

    20325 Mail Service Center, Raleigh, NC 27699-0325

    Phone: (919) 733-1566 Fax: (919) 733-0518 Internet: www.ncredevelopment.org

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