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a. Price Difference Differential <br />The Purchase Price Differential is based on three factors: <br />Acquisition Price: The price paid by the City of Santa Ana for the Project dwelling; <br />Actual Purchase Price: The actual price paid for a replacement dwelling, and; <br />Comparable Replacement Cost: The cost of a decent, safe, and sanitary dwelling <br />comparable to the dwelling acquired by the City of Santa Ana. <br />The purchase price differential amount is determined by comparing the price of the acquired <br />dwelling (including any proceeds obtained through condemnation) to the lesser of the actual <br />cost paid for a replacement home versus the price of the comparable dwelling used to compute <br />eligibility in the Notice of Eligibility (NOE) issued to the displaced owner. <br />In today's real estate market, many agencies have encountered owner - occupants with negative <br />equity, where the fair market value is less than the outstanding debt. The City will follow the <br />Programmatic Waiver of the Code of Federal Regulations methodology for calculating RHPs. <br />This waiver allows computing a RHP based upon the initial written offer of just compensation <br />rather than the administrative settlement amount. The qualifying conditions for use of the <br />Programmatic Waiver are: <br />• Applies only to those in a negative equity situation <br />• Applies only to owner - occupied homes <br />• Applies only to single - family homes <br />• Applies only to mortgages that are current <br />b. Mortgage Interest Differential <br />The purpose of the Mortgage Interest Differential Payment is to compensate homeowners for <br />increased costs between the acquired dwelling and the replacement dwelling. The payment for <br />increased mortgage interest cost shall be the amount that would reduce the mortgage balance <br />on a new mortgage to an amount that could be amortized with the same monthly payment for <br />principal and interest as that for the mortgage(s) on the displacement dwelling. In addition, <br />payments shall include other debt service costs, if not paid as part of incidental costs. To be <br />eligible for this payment, the mortgage on the dwelling being acquired must have been in place, <br />as a valid lien, for at least go days prior to the City's initial written offer to purchase. <br />C. Incidental Expenses — Closing Costs <br />One -time, non - recurring closing costs associated with the purchase of a comparable, <br />replacement dwelling are compensable. Examples of such compensable expenses include costs <br />for: a property survey; preparation of a legal description and deed; recording fees; title <br />insurance; revenue stamps and transfer taxes; loan application fees; loan origination fees; <br />appraisal fees; a credit report; certification for structural soundness; and, termite inspection, <br />when required. Prepaid recurring expenses for mortgage interest, property taxes and insurance <br />are not compensable. <br />The total RHP is the sum of the Purchase Price Differential, Mortgage Interest Differential, and <br />compensable Incidental Expenses. <br />tg <br />55A -31 <br />