Lesson 12: Assistance documents, liens and affordability

Reading

Match the documents to the activity

Assistance documentation follows the HRA classification and applicable program decision. Under 23.30, Reconstruction uses a grant agreement with a five-year affordability period; New Construction uses a zero-interest deferred loan with pro rata forgiveness and an applicable term. Do not convert one into the other in a staff spreadsheet. Obtain TDHCA's current preparation and closing instructions and confirm the approved amount, household, property and assistance type.

The household needs a clear explanation before signing. Describe principal-residence obligations, transfer and rental restrictions, insurance, the forgiveness or affordability schedule, and potential remedies using the actual approved agreement. Do not say "free house" or "nothing can ever be repaid." A course summary cannot provide the legal effect of documents that have not yet been prepared for that transaction.

Resolve title and liens with the closing professional

Confirm the legal description, ownership interests, lienholders and required signatures. HRA loan rules address circumstances requiring the Department's lien priority and prohibit specified existing home-equity liens. The application and closing file must contain required consents, including demolition and subordination where applicable. A title issue should be resolved through authorized professionals, not covered by a note that the owner "seems to own it."

Use the correct current title evidence and freshness requirements for the assistance route. Verify that the property described in the documents is the property receiving the work. Record how title exceptions were resolved or accepted by the authorized reviewer. An appraisal, title commitment and permit each answer a different question; none substitutes for all the others.

Establish value and approved terms

The program requires the applicable post-improvement value evidence and compliance with HOME homeownership value limits. Use the correct county, housing category and effective table. Distinguish an as-completed value opinion from today's unimproved assessment. Confirm which document TDHCA accepts at the particular preparation or closing stage. Do not assume a tax appraisal automatically satisfies a program appraisal requirement.

Use the approved loan or grant forms. Staff should not draft their own note, deed of trust, release or repayment formula from a training example. The federal affordability table and Texas recapture provisions require project-specific application. Confirm the actual term and annual forgiveness treatment with TDHCA rather than asserting that every HRA loan has one fixed term. Preserve approved disclosures and required counseling evidence.

Execute and record correctly

Before execution, compare names, parcel information, assistance type, amounts, dates, signatory authority and required attachments across the package. Check signatures and notarization through the closing process. Retain the executed version, required recorded instruments and proof of delivery of certified originals or other requested documents. An unsigned PDF in a draft folder is not an executed agreement.

Use an execution checklist with distinct states: prepared, approved for signing, executed, recorded where required, returned and accepted. Record dates and the responsible person. If the package is returned for correction, preserve the original and the authorized corrected version. Never backdate a signature or alter a signed document without the appropriate legal process.

Explain continuing obligations

The current state rule uses recapture as its primary method for applicable HOME homeownership assistance, with different treatment for events such as a sale and cessation of principal residence. Staff should not reduce all events to "no net proceeds means no repayment." That phrase has a particular place in the sale-related provisions and does not decide every breach or grant remedy. Route a sale, transfer, rental, death or other change to the designated program and legal reviewer.

At handoff, give the household accessible copies and a clear contact for questions. Log the affordability period and retention triggers separately from construction completion. The staff worksheet should flag a proposed change before it occurs when possible. Completion of construction does not itself release recorded restrictions, forgive a loan early or authorize disposal of the assistance file.

Apply it in the file

• Match assistance type to the approved activity.
• Resolve title, liens and required consents.
• Verify value evidence and approved terms.
• Track execution, recording and returned documents.
• Explain and calendar continuing obligations.

Authorities for this lesson

• 10 TAC Chapter 23: current official rule portal
• 10 TAC 23.20–23.29: text adopted without changes
• 24 CFR Part 92: HOME regulations
• TDHCA HRA Project File Documentation Checklist
• TDHCA current HRA subsidy and value limits

Practice questions

Glossary

Deferred loan

A loan with payment deferred under its approved terms.

Pro rata forgiveness

Forgiveness allocated over the approved schedule.

Deed of trust

A security instrument used for a loan against property.

Subordination

An approved change in lien priority.

Recapture

Recovery of assistance under applicable conditions.

Recorded instrument

A document filed in the applicable real-property records.