CHAPTER 8 

MONITORING SINGLE FAMILY BULK SALES 

8.1	 OVERVIEW 

Some agencies will monitor one-to-four unit properties sold in bulk under 

a LURA entitled "Sale of Single Family Properties to Public Agencies and 

Nonprofit Organizations" -- also known as the Single Family Bulk Sale LURA. 

These properties may be operated as rental or sold for homeownership. 

Like owners of condominium units sold in bulk, public agencies and nonprofit 

groups purchasing these properties must comply with occupancy requirements 

and rent restrictions set forth in the LURA until the properties are sold to 

homebuyers. Only LI and VLI buyers may purchase these properties for 

homeownership. 

This chapter outlines procedures for ensuring owner compliance with the 

LURA when renting and selling these properties, as well as monitoring fees and 

other administrative requirements. 

8.2	 MONITORING RENTAL OF ONE-TO-FOUR UNIT PROPERTIES 

PURCHASED IN BULK 

The occupancy requirements and rent restrictions that apply to these 

properties when they are rented are very similar to those for AHP multifamily 

properties. Therefore, much like condominium units sold in bulk, agencies 

monitor owner compliance using the same procedures for monitoring multifamily 

properties discussed in the preceding chapters. However, there are two areas 

where the occupancy requirements for these Single Family Bulk Sale properties 

differ: 

1. All units must be for LI and VLI households; and 

2. There is no VLI Set-Aside governing these units. 

In contrast to the occupancy requirements for most AHP multifamily properties, 

under which only a portion of the units must be kept available for LI and VLI 

tenants, owners of these properties must make 100 percent of the units 

available for occupancy by LI households. There is no requirement to reserve 

and rent (or sell) a portion of the units to VLI households, but any tenants 

qualifying as VLI are entitled to a rent within the applicable VLI limits. 

As a result of these differences, the monitoring of these properties is 

simplified because there is no need to track the number of QUs, check that a 

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sufficient number of units are held available for VLI tenants, or monitor for NAU 

compliance. Nevertheless, the agency's principal monitoring activities remain: 

� Providing owners with compliance materials; 

� Initiating compliance reporting and establishing a monitoring file; 

� Monitoring pre-compliance performance; 

� Reviewing annual reports once full compliance is attained; 

� Performing periodic on-site reviews; 

� Taking enforcement actions in cases of non-compliance; 

� Collecting annual monitoring fee; and 

� Maintaining property monitoring files and reporting to FDIC. 

8.3 RESALES TO INDIVIDUAL HOMEBUYERS 

FDIC anticipates that owners eventually will resell these properties to 

individual homebuyers. Several conditions apply to these resales. 

Conditions of Property Resales to Homebuyers 

Sales Requirements. Properties may be sold only to income-eligible LI or 

VLI buyers. There is no requirement that owners sell some portion of the 

units to VLI buyers. 

Certification from Homebuyers. Owners must obtain a written income 

certification from buyers documenting their annual (gross) income, which 

must be verified and certified within the applicable limits by the owner using 

the procedures presented in Section 4.5 of the Owner's Manual before the 

certification is prepared. (Appendix M contains an FDIC-approved 

Homebuyer Income Certification (HIC) form and instructions.) 

Recapture LURA for Property Sales. Owners must have individual buyers 

execute a LURA (see Appendix N) which establishes that the purchaser will 

retain ownership of the property for 12 months after the date of sale, or a 

portion of the sales proceeds are subject to recapture by FDIC. 

Price Not Restricted for Property Sales. There is no regulatory limit on 

the price an owner can charge a buyer for a property. The property need 

only be purchased by an income eligible buyer. 

Notice to Monitoring Agency of Unit Sales Owners must notify the 

monitoring agency of all property sales and provide a copy of the sales 

contract for each property sold. 

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Pay Processing Fee to Agency Owners must pay the monitoring agency a 

reasonable fee to process an AHP Recapture LURA and release a property 

from the Single Family Bulk Sale LURA. 

In addition, bulk purchasers also must comply with all applicable Federal, state 

and local laws when reselling individual properties to eligible homebuyers. 

8.4 MONITORING PROPERTY SALES 

Agencies need to monitor owner compliance with the resale provisions of 

the Single Family Bulk Sale LURA, as well as the affordability requirements 

governing the rental of these properties. 

A. Procedures for Monitoring Sales 

No property subject to a LURA without the consent of the monitoring 

agency, which must determine that the property is being sold to an eligible 

homebuyer. When an owner notifies an agency of the anticipated sale of a 

property to a qualified household, the owner must provide the agency with: 

1.	 a completed Homebuyer Income Certification (HIC) establishing that the 

buyer is an income eligible household; 

2.	 a copy of the signed sales contract with the purchaser; 

3.	 a completed AHP Recapture LURA, signed by the owner and the buyer; 

and 

4.	 payment of a processing fee as required by the agency. 

These items are necessary for the agency to confirm that the property is being 

sold to a qualified buyer and can be released from the provisions of the Single 

Family Bulk Sale LURA. Monitoring staff must review the items submitted to 

assure that: 

�	 the homebuyer is an income eligible household; 

�	 the owner has accepted the purchaser's offer; and 

� the owner and buyer have properly executed the Recapture LURA. 

If each of the items has been properly submitted and the proposed buyer meets 

the applicable income limits, the agency should sign the Recapture LURA and 

forward the executed document to the closing agent for the sale. The agency 

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should instruct the closing agent to transmit a copy of the recorded Recapture 

LURA to the agency for its records. 

Once the Recapture LURA has been recorded, the individual unit may 

be released formally from the requirements of the Single Family Bulk Sale 

LURA (although other unsold properties remain subject to the Bulk Sale LURA). 

B. Changes in the Bulk Sale LURA 

Once the agency receives a copy of the recorded Recapture LURA from 

the closing agent, the agency must amend the Single Family Bulk Sale LURA to 

reduce the required number of set-aside units and update its monitoring file to 

reflect the revised number of units. Copies of all amended documents should 

be sent to the owner/manager. 

C. Monitoring Agency Purchases of One-to-Four Unit Properties in Bulk 

State housing agencies and other public agencies under contract with 

FDIC to act as compliance monitors are allowed to make bulk purchases of oneto-four unit properties covered by the Single Family Bulk Sale LURA. 

Compliance monitors that make purchases of one-to-four unit properties and 

hold them for less than 12 months will be allowed to self-monitor. However, if a 

monitoring agency maintains ownership for a period longer than 12 months, 

FDIC may assign an another agency to act as compliance monitor for the units 

in that purchase. 

8.5 FEES AND ADMINISTRATIVE REQUIREMENTS 

A. Annual Monitoring Fee 

The annual monitoring fee is to be provided for each property. The 

additional administrative fee for non-compliance is also set in the same way. 

These fees are based on the number of properties in the purchase. 

B. Processing Fee for Release from LURA 

Agencies may also charge owners a reasonable fee for processing 

Recapture LURAs and releasing properties sold to eligible buyers from the 

provisions of the Single Family Bulk Sale LURA. Such a fee should be paid 

when the owner notifies the agency of a sale and submits the Recapture LURA 

and other items for review. 

FDIC recommends that each agency establish a fee per property 

released that will remain in effect during the current monitoring fee period. 

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Monitoring staff could advise owners of revisions to the fee when sending the 

monitoring fee invoice for the coming period. 

C. Administrative Requirements 

As part of the agency's annual monitoring report to FDIC, monitoring 

staff should include the agency's monitoring activities regarding bulk sales of 

one-to-four unit properties and attach a listing of both the total rental properties 

and the number of properties reported as sold during the year. 

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