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Right of first refusal: A fourth requirement for shared <br />equity programs under Duty to Serve is the right for <br />programs to elect to repurchase homes at resale, <br />usually called the right of first refusal. Overall, 319 out <br />of4801H programs with known information or about <br />66%, retain a preemptive rightto.purchase inclusionary <br />units at the time of resale. The majority of IH programs <br />in states outside of California, Massachusetts, and <br />New Jersey, or about 61%, do not -provide IH programs <br />with the right of first refusal (Figure 9). Two-thirds of <br />programs in California retain the right. All IH programs <br />in Massachusetts retain the right barring the existence <br />of the state's right of first refusal. In contrast, there are <br />no for sale IH programs in New Jersey with the right <br />of f rst ref usa L <br />A variety of programs meet Duty to Serve criteria. <br />As a component of its Qnderse!ved Market Play for <br />affordable housing preservation in the single-family <br />segment, Fannie Mae has sought to increase mortgage <br />purchase activity for loans to buyers in shared equity <br />programs. As IH programs are a primary mechanism <br />forthe creation of new shared equity housing supply, <br />it is i m porta nt to know to what extent IH programs <br />meetthe definition for shared equity homeownership <br />underthe DTS rule. Most of the programs with a <br />legal mechanism to preserve affordability, 93%, also <br />require a resale formula in the legal agreementto limit <br />homeowners' proceeds at resale. On the other hand, <br />fewer programs— abouttwo-thirds— require review <br />and pre -approval of any refinances and home equity <br />lines of credit. Also, about two-thirds require a right of <br />first refusal. Given all four eligibility criteria, the study <br />identified 314 IH programs that would qualify under <br />Duty to Serve as shared equity programs. <br />Some examples of programs that meet the specific <br />eligibility criteria for shared equity programs underthe <br />Duty to Serve rule include the City of West Hollywood, <br />CA, 20% Inclusionary Requirement Program; the New <br />Castle County, DE, Workforce Housing Program; and the <br />City of Cambridge, MA, Inclusionary Housing Program. <br />0 20% 40% 60% 80% 100% <br />All (n = 480) <br />U.S., excluding CA, ~ <br />MA, & NJ In =145) <br />California (n = 62) <br />Massachusetts (n-221) <br />New Jersey In = 52) <br />le Yes • No <br />Survey results related to multifamily rental <br />programs: The Duty to Serve rule also delineates <br />specific eligibility criteria for multifamily rental <br />programs associated with mortgage loans purchased <br />by Fannie Mae and for which itseeksto receive credit, <br />under itsAfforda✓Jle Housing Preservation Pian. <br />The GSN study also evaluated the compliance for <br />multifamily rental IH programs with those criteria <br />to provide a better understanding of programs that <br />comply with the rule's requirements. <br />Figure 9. Breakdown of <br />whether "right of first <br />refusal" exists (n =480, <br />or 70% of all) <br />Fannie Mae Multifamily loan purchases financingthe <br />creation or preservation of multifamily rentals developed <br />under IH programs may qualify for credit under the <br />activity "Other Comparable State or Local affordable <br />Housing Programs" For Duty to Serve credit, properties <br />in state or local affordable housing programs must <br />require at least 20% of units to be affordable at 80% <br />AMI and have rent and income restrictions. The study <br />identified 180 IH programs that appear to meet all four <br />requirements, indicating that they meet the Duty to <br />Serve criteria for state and local programs. <br />16 <br />N <br />