A Rule by the Housing and Urban Development Department on 03/11/2003. This final rule revises the certification requirement of proposed § 906.40(a)(2), relating to non-public housing units acquired by the PHA for homeownership purposes (see § 906.41(a)(2)). One commenter stated that the rule should specify what constitutes an acceptable fair housing marketing strategy. 4332). Public Housing Homeownership Programs Comment: Two commenters opposed the requirement in proposed § 906.31 that PHAs use proceeds of sales for purposes related to low-income housing, stating that by restricting the use of proceeds in this manner, the PHA would be prohibited from using the proceeds to develop programs for low-income families such as economic development programs, children's activity programs, gang related prevention programs, and scholarship programs. updated on 4:15 PM on Friday, December 11, 2020, 19 documents Two commenters suggested that the homeownership program should be required to include a description of the method of sale that will be used, such as fee simple, lease-purchase, etc. Section 32 expressly grants the right of first refusal to residents occupying a public housing unit, but has made no similar provision for residents of non-public housing units. The PHA must demonstrate in its homeownership program that the PRE has the necessary legal capacity and administrative capability to carry out its responsibilities under the program. A. (ii) Any subsidy that will be available for such payments; (2) Down payment requirement. (iii) Non-public housing units owned or acquired by a PHA with the intent to use 1937 Act funds to finance the sale of the units, or otherwise provide assistance to purchasers of the units: Davis-Bacon rates apply; (2) New construction of non-public housing units pursuant to a contract for acquisition by a PHA for the purpose of sale under a homeownership program: Davis-Bacon rates apply; (3) Operation, rehabilitation, and repair of units operated as public housing units by a PRE: HUD rates apply to nonroutine maintenance, as defined in § 968.105 of this title, and routine maintenance. CHA’s Choose to Own Homeownership Program (CTO) allows qualified Public Housing and Housing Choice Voucher (HCV) families to use their housing subsidy to buy a home and receive monthly assistance with a portion of their mortgage payment. HUD criteria for reviewing a proposed homeownership program. (See 64 FR 49932.) (b) A family assisted under the homeownership option may be a newly admitted or existing participant in the program. This section creates no new substantive requirements, but provides for continuing enforceability of an already existing requirement. An estimate of the sale proceeds and an explanation of how they will be used, in accordance with § 906.31; (k) Records, accounts, and reports. Grant programs—housing and community development. Nothing in the statute or this rule purports to prohibit a PHA from operating separate homeownership programs. As in the 5(h) rule, the NPRM proposed a resident consultation requirement. (c) Financial capacity requirement. The new statutory homeownership requirements were proposed to be integrated with the 5(h) requirements that HUD determined appropriate to retain, such as proposed § 906.39, which is based upon § 906.20 of the 5(h) rule and covers what must be contained in a homeownership program. In addition, a PHA may only provide assistance to families under the statute to assist them in purchasing a principal residence. Comment: Among the documents that proposed § 906.41 requires to be submitted as supporting documentation for the proposed homeownership program is an opinion from the PHA's legal counsel that the proposed program complies with all Federal and local laws and regulations. The PHA or PRE must maintain records that are verifiable by HUD through audits regarding the source of this one percent contribution. Assistant Secretary for Public and Indian Housing. New Documents A Public Housing Authority (PHA) may sell all, or a portion of, a public housing development to eligible residents or resident organizations, for purposes of homeownership. This revision reflects the requirement in 42 U.S.C. HUD Response. The acquisition cost of each property is limited by the housing cost cap limit, as determined by HUD. The NPRM also proposed a requirement that, in cases where sales will be through a PRE, the plan contain a description of the PRE's responsibilities and information demonstrating that regulatory requirements applicable to a PRE have been met. (a) A homeownership program under this part may provide for sale of: (1) Units that are public housing units; and. HUD has decided to allow homeownership assistance under section 8(y) of the 1937 Act, 42 U.S.C. (1) If the program involves only financing assistance to the family purchasing the unit, the PHA need not specify property addresses, but it must describe the area(s) in which the assistance is to be used; (2) If the PHA is selling existing public housing, it must describe the property, including identification of the property by project number, or street address if there is no project number, and the specific dwellings to be sold, with bedroom distribution by size and type broken down by development; (3) If the PHA is acquiring units with 1937 Act funds to sell under the program, it must comply with the provisions of § 906.40 concerning this element of the program; (c) Repair or rehabilitation. are not part of the published document itself. Davis-Bacon rates apply to rehabilitation and repair that does not qualify as nonroutine maintenance. HUD Response. Financial viability, including the capability of purchasers to meet the financial obligations of homeownership, is a critical requirement. (b) A PHA may convert an existing homeownership program, or a specific number of the units in such a program, to a homeownership program under this part with HUD approval. 1437z-4(a), which states that “an agency may transfer a unit pursuant to a homeownership program only if the program is authorized under this section and approved by the Secretary.” Therefore, HUD has made no change as a result of this comment. The rule now has a similar provision. HUD Response. Discounted purchase prices may be determined on a unit-by-unit basis, based on the particular purchaser's ability to pay, or may be determined by any other fair and reasonable method (e.g., uniform prices for a group of comparable dwellings, within a range of affordability by potential purchases). On an average monthly estimate, the amount of the applicant's payments for mortgage principal and interest, plus insurance, real estate taxes, utilities, maintenance, and other regularly recurring homeownership costs (such as condominium, cooperative, or other homeownership association fees) will not exceed the sum of: (i) 35 percent of the applicant's adjusted income as defined in 24 CFR part 913; and. (b) The PHA's program under this part may provide for consideration of any factors the PHA considers appropriate in determining how much of the gain from appreciation and assistance to recapture, including but not limited to the following: (1) The aggregate amount of assistance provided under the homeownership program to the family; (2) The contribution of equity by the purchasing family; (3) The period of time elapsed between purchase by the homebuyer under the homeownership program and resale by the homebuyer; (5) Any improvements made by the family purchasing under the homeownership program; (6) Any appreciation in the value of the property; and. PHA's Office of General Counsel assists Homeownership clients with document preparation. (See 24 CFR 968.110(e).). Contact your local public housing agency for details. The NPRM proposed expanding the definitions of units that may be sold. Additional PHA eligibility requirements. Public housing residents who do not exercise their right of first refusal and whose unit is sold would be statutorily entitled to benefits, including: 90 days advance notice prior to the displacement date; an offer of comparable housing that meets housing quality standards and is located in an area that is generally not less desirable than the location of the displacee's original housing; any necessary counseling; and payment of actual and reasonable moving expenses. The PHA (Public Housing Authority) uses its normal voucher program payment standard schedule to determine the amount of subsidy for the homeownership program. Affordable Home. The NPRM proposed giving a right of first refusal to the resident or residents occupying a public housing unit to be sold. On September 14, 1999, HUD published for public comment a notice of proposed rulemaking (NPRM) to implement the section 32 Homeownership program. Eligible purchasers in the 5(h) program were residents of public housing, or tenants assisted under section 8 who have been lawful residents of their units for some minimum time specified in the homeownership plan, but in any case not less than 30 days prior to conveyance of title of the dwelling to be purchased. This final rule makes a clarifying amendment to proposed § 906.3(b). The requirement for a legal opinion is found at § 906.40(f) of this final rule. Comment: Three commenters suggested additions to proposed § 906.39, which sets forth the required components of a homeownership program. Register (ACFR) issues a regulation granting it official legal status. The program must be clear and complete enough to serve as a working document for implementation, as well as a basis for HUD review. Further, the property must be in good repair, with the major Start Printed Page 11723components having a remaining useful life that is sufficient to justify a reasonable expectation that homeownership will be affordable by the purchasers. Such sales may be financed with below-market financing. The NPRM proposed to eliminate the requirement for a replacement housing plan, as replacement housing is no longer required by law. HUD has accepted comments that the financial capacity guidance from HUD's 5(h) program regulations be included in this new homeownership regulation. Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on state and local governments and is not required by statute, or the rule preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. One commenter stated that cooperatives should be able to set their own requirements on the basis of their unique circumstances. documents in the last year, 309 Comment: Two commenters stated that proposed § 906.15(c) should be more specific as to financial capacity requirements for purchasing families. HUD does not believe that further clarification of the term in this rule is necessary. (b) Legality. (d) PHA performance in homeownership. A description of resident input obtained during the resident consultation process required by the PHA Plan under part 903 of this title. The family meets any other initial eligibility requirements set by the PHA. The President of the United States communicates information on holidays, commemorations, special observances, trade, and policy through Proclamations. This requirement will assist HUD in determining the program's feasibility under § 906.45(a). documents in the last year, 111 If the housing units were constructed under a contract or an agreement that they be sold to the PHA, a certification that the developer/owner complied with all Davis-Bacon wage rate requirements under § 906.37, including all required contractual provisions and compliance measures, and that the PHA received all applicable HUD environmental approvals and all applicable HUD releases of funds before executing the contract or agreement, in accordance with § 906.47(d). Office. on documents in the last year. The family must attend and satisfactorily complete the PHA's pre-assistance homeownership and housing counseling program. HUD Response. Comment: Four commenters questioned either the types of dwelling units that may be sold or the homeownership interest that may be conveyed. Proposed § 906.23 provides, as one of the protections for residents who are displaced because of a sale under the program, that the residents will receive counseling regarding their rights to comparable housing. Comment: Two commenters noted that proposed § 906.27(c), which provides for an appraisal by a certified appraiser within 1 month before the resale, does not specify who pays for the appraisal. Section 8(y) assistance may now be used in conjunction with a homeownership program under this rule. 1437z-4 and 3535(d). Dwelling units and types of assistance that a PHA may make available under a homeownership program under this part. In addition, in response to comments as to whether a leasehold interest is the kind of interest that can be transferred in a homeownership program, the rule clarifies that lease with option to purchase is such an interest. 4821-4846), the Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 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